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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 (Amendment No. )
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
Human Genome Sciences, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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:
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(2) Aggregate number of securities to which transaction applies:
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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):
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(4) Proposed maximum aggregate value of transaction:
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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 no.:
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(3) Filing party:
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(4) Date filed:
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HUMAN GENOME SCIENCES, INC.
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 23, 2001
------------------------
To the Stockholders of Human Genome Sciences, Inc.:
NOTICE IS HEREBY GIVEN that the 2001 Annual Meeting of Stockholders (the
"Annual Meeting") of Human Genome Sciences, Inc., a Delaware corporation (the
"Company"), will be held at the University System of Maryland-Shady Grove
Center, Auditorium, Building 1, 9640 Gudelsky Drive, Rockville, MD 20850 on
Wednesday, May 23, 2001 at 9:30 a.m., local time, for the following purposes:
1. To elect two directors for a three-year term ending in 2004.
2. To consider and vote upon a proposed amendment to the Company's Restated
Certificate of Incorporation (Fifth) to increase the Company's
authorized common stock from 250,000,000 shares to 400,000,000 shares.
3. To approve an amendment to the Company's 2000 Stock Incentive Plan.
4. To ratify the selection of Ernst & Young LLP as the Company's
independent auditors.
5. To act upon any other matter which may properly come before the Annual
Meeting or any adjournment thereof.
The Board of Directors of the Company has fixed the close of business on
March 30, 2001 as the record date for determining stockholders of the Company
entitled to notice of and to vote at the Annual Meeting. A list of the
stockholders as of the record date will be available for inspection by
stockholders at the Company's corporate headquarters during business hours for a
period of ten days prior to the Annual Meeting.
Your attention is directed to the attached Proxy Statement and to the
enclosed Annual Report of the Company for the fiscal year ended December 31,
2000.
By Order of the Board of Directors,
James H. Davis, Secretary
Rockville, Maryland
April 23, 2001
EVEN IF YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND
THE MEETING YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON.
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HUMAN GENOME SCIENCES, INC.
9410 KEY WEST AVENUE
ROCKVILLE, MARYLAND 20850-3338
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PROXY STATEMENT
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INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
This Proxy Statement is being furnished to stockholders of Human Genome
Sciences, Inc., a Delaware corporation (the "Company"), in connection with the
solicitation by the Board of Directors of proxies for use at the Annual Meeting
of Stockholders (the "Annual Meeting") to be held at the University System of
Maryland-Shady Grove Center, Auditorium, Building 1, 9640 Gudelsky Drive,
Rockville, MD 20850 on Wednesday, May 23, 2001 at 9:30 a.m., local time and at
any adjournments thereof.
SOLICITATION
The solicitation is being made primarily by the use of the mails, but
directors, officers and employees may also engage in the solicitation of proxies
by telephone. The Company has retained the services of Georgeson Shareholder
Communications, Inc. to assist it in soliciting proxies. Georgeson Shareholder
Communications, Inc. will solicit proxies by personal interview, telephone,
facsimile and mail. It is anticipated that the fee for those services will not
exceed $8,000 plus reimbursement for out-of-pocket expenses. The cost of
soliciting proxies will be borne by the Company. Other than the compensation of
Georgeson Shareholder Communications, Inc., no compensation will be paid by the
Company in connection with the solicitation of proxies, except that the Company
may reimburse the brokers, custodians, nominees and other recordholders for
their reasonable out-of-pocket expenses in forwarding proxy materials to the
beneficial owners.
This Proxy Statement and the accompanying form of proxy are being sent to
stockholders on or about April 23, 2001.
REVOCATION OF PROXIES
A proxy may be revoked at any time prior to its exercise by the filing of a
written notice of revocation with the Secretary of the Company, by delivering to
the Company a duly executed proxy bearing a later date or by attending the
Annual Meeting and voting in person. However, if you are a stockholder whose
shares are not registered in your own name, you will need documentation from
your record holder stating your ownership as of March 30, 2001 to vote
personally at the Annual Meeting.
QUORUM AND VOTING REQUIREMENTS
The close of business on March 30, 2001 has been fixed by the Board of
Directors of the Company as the record date (the "Record Date") for determining
the stockholders of the Company entitled to notice of and to vote at the Annual
Meeting. On the Record Date, there were 125,722,754 shares of the Company's
common stock, $.01 par value per share (the "Common Stock"), outstanding. The
presence at the Annual Meeting, in person or by a proxy relating to any matter
to be acted upon at the meeting, of a majority of the outstanding shares, or
62,861,378 shares, is necessary to constitute a quorum for the Annual Meeting.
Each outstanding share is entitled to one vote on all matters. For purposes of
the quorum and the discussion below regarding the vote necessary to take
stockholder action, stockholders of record who are present at the meeting in
person or by proxy and who abstain, including brokers holding customers' shares
of record who cause abstentions to be recorded at the Annual Meeting, are
considered stockholders who are present and entitled to vote and they count
toward the quorum. In the event that
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there are not sufficient votes for a quorum or to approve any proposal at the
Annual Meeting, the Annual Meeting may be adjourned in order to permit the
further solicitation of proxies.
Brokers holding shares of record for customers generally are not entitled
to vote on certain matters unless they receive voting instructions from their
customers. "Broker non-votes" mean the votes that could have been cast on the
matter in question if the brokers had received their customers' instructions,
and as to which the broker has notified the Company on a proxy form in
accordance with industry practice or has otherwise advised the Company that it
lacks voting authority.
Directors are elected by a plurality of votes. Abstentions and broker
non-votes will have no effect on the outcome of the election of Directors.
The proposal to amend the Company's Certificate of Incorporation requires
approval by the affirmative vote of a majority of the Company's outstanding
Common Stock entitled to vote at the Annual Meeting. Thus, broker non-votes and
abstentions will have the effect of a vote "AGAINST" the proposal to amend the
Company's Certificate of Incorporation.
On all other matters the affirmative vote of the majority of the shares
present in person or by proxy at the meeting and entitled to vote on the matter
is required to approve such matter. On such matters, broker non-votes are not
considered shares entitled to vote on the matter and therefore will not be taken
into account in determining the outcome of the vote on the matter. Abstentions
are considered shares entitled to vote on the matter and therefore will have the
effect of a vote against the matter.
All outstanding shares of the Company's Common Stock represented by
properly executed and unrevoked proxies received in the accompanying form in
time for the Annual Meeting will be voted. A stockholder may, with respect to
the election of directors (1) vote for the election of the named director
nominees, (2) withhold authority to vote for all such director nominees or (3)
vote for the election of all such director nominees other than any nominee with
respect to whom the stockholder withholds authority to vote by striking a line
through such nominee's name on the proxy. A stockholder may, with respect to
each other matter specified in the notice of meeting (1) vote "FOR" the matter,
(2) vote "AGAINST" the matter or (3) "ABSTAIN" from voting on the matter. Shares
will be voted as instructed in the accompanying proxy on each matter submitted
to stockholders. If no instructions are given, the shares will be voted "FOR"
the election of the named director nominees, "FOR" amendment of the Company's
Certificate of Incorporation, "FOR" approval of the amendment to the Company's
2000 Stock Incentive Plan and "FOR" the ratification of Ernst & Young LLP as the
Company's independent auditors.
The Board of Directors knows of no additional matters that will be
presented for consideration at the Annual Meeting. Execution of a proxy,
however, confers on the designated proxyholders the discretionary authority to
vote the shares in accordance with their best judgment on such other business,
if any, that may properly come before the Annual Meeting or any adjournment
thereof. Proxies solicited hereby will be tabulated by inspectors of election
designated by the Board of Directors.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the ownership of
Common Stock of the Company as of March 30, 2001, unless otherwise indicated, by
(1) all stockholders known by the Company to beneficially own more than five
percent of the outstanding Common Stock, (2) each of the directors and nominees
for director, (3) each executive officer of the Company, including those named
in the Summary Compensation Table and (4) all directors and executive officers
of the Company as a group. All share numbers reflect two two-for-one stock
splits paid in the form of a stock dividend on January 28, 2000 and October 5,
2000.
NUMBER OF
NAME AND ADDRESS OF BENEFICIAL OWNER(1) SHARES OWNED PERCENT OWNED
--------------------------------------- --------------- -------------
Janus Capital Corporation.............................. 14,402,725(2) 11.5%
100 Fillmore Street
Denver, Colorado 80206-4923
Sid R. Bass and Lee M. Bass Group...................... 12,547,464(3) 10.0%
201 Main Street
Fort Worth, Texas 76201-3131
FMR Corp. ............................................. 11,970,250(4) 9.5%
82 Devonshire Street
Boston, Massachusetts 02109-3614
DIRECTORS, NOMINEES, AND EXECUTIVE DIRECTORS
--------------------------------------------
William A. Haseltine, Ph.D. ........................... 6,415,953(5) 5.0%
c/o Human Genome Sciences, Inc.
9410 Key West Avenue
Rockville, Maryland 20850
Susan Bateson McKay.................................... 118,198(6) *
c/o Human Genome Sciences, Inc.
9410 Key West Avenue
Rockville, Maryland 20850
James H. Davis, Ph.D., J.D. ........................... 477,947(7) *
c/o Human Genome Sciences, Inc.
9410 Key West Avenue
Rockville, Maryland 20850
Jurgen Drews, M.D. .................................... 40,000(8) *
Firnhaberstrasse 14
D-82340 Feldafing Germany
Beverly Sills Greenough................................ 81,000(9) *
211 Central Park West, #4-F
New York, New York 10024
Robert Hormats......................................... 35,999(10) *
c/o Goldman Sachs & Co.
85 Broad Street
New York, New York 10128
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NUMBER OF
DIRECTORS, NOMINEES, AND EXECUTIVE DIRECTORS SHARES OWNED PERCENT OWNED
-------------------------------------------- --------------- -------------
Max Link, Ph.D. ....................................... 52,000(11) *
Tobelhofstr, 30
8044 Zurich, Switzerland
Arthur M. Mandell...................................... 453,579(12) *
c/o Human Genome Sciences, Inc.
9410 Key West Avenue
Rockville, Maryland 20850
Steven C. Mayer........................................ 587,105(13) *
c/o Human Genome Sciences, Inc.
9410 Key West Avenue
Rockville, Maryland 20850
Craig A. Rosen, Ph.D. ................................. 1,238,128(14) 1.0%
c/o Human Genome Sciences, Inc.
9410 Key West Avenue
Rockville, Maryland 20850
Alan G. Spoon.......................................... 35,999(15) *
Polaris Venture Partners
1000 Winter Street, Suite 3350
Waltham, Massachusetts 02451
David C. Stump, M.D. .................................. 170,841(16) *
c/o Human Genome Sciences, Inc.
9410 Key West Avenue
Rockville, Maryland 20850
Laura D'Andrea Tyson, Ph.D. ........................... 35,999(17) *
2015 Los Angeles Avenue
Berkeley, California 24707
James B. Wyngaarden, M.D. ............................. 79,000(18) *
3504 Stoneybrook Drive
Durham, North Carolina 27705
All directors and executive officers as a group (14
persons)............................................. 9,821,748(19) 7.5%
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* Percentage is less than 1% of the total number of outstanding shares of the
Company's Common Stock.
(1) Except as otherwise indicated, each party has sole voting and investment
power over the shares beneficially owned.
(2) As reported on a Schedule 13G filed by Janus Capital Corporation on
February 15, 2001.
(3) As reported on a Schedule 13G filed by Sid R. Bass and Lee M. Bass and 14
related and affiliated entities on February 13, 2001. In some cases the
entities have sole voting and investment power over their respective shares
of the Company's Common Stock; in other cases the entities share voting
and/or investment power with other entities in the group.
(4) As reported on a Schedule 13G filed by FMR Corp. on February 14, 2001. In
some cases the entities have sole voting and investment power over their
respective shares of the Company's
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Common Stock; in other cases the entities share voting and/or investment
power with other entities in the group.
(5) Includes 2,232,405 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days. Does not include 62,000 shares of
Common Stock owned by Dr. Haseltine's wife, as to which Dr. Haseltine
disclaims beneficial ownership, and 1,857,595 shares of Common Stock
issuable upon exercise of options held that are not exercisable within 60
days.
(6) Includes 100,698 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days. Does not include 189,802 shares of
Common Stock issuable upon exercise of options held that are not
exercisable within 60 days.
(7) Includes 474,947 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days. Does not include 502,053 shares of
Common Stock issuable upon exercise of options that are not exercisable
within 60 days.
(8) Includes 40,000 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days. Does not include 16,000 shares of
Common Stock issuable upon exercise of options that are not exercisable
within 60 days.
(9) Includes 77,000 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days.
(10) Includes 27,999 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days. Does not include 45,001 shares of
Common Stock issuable upon exercise of options that are not exercisable
within 60 days.
(11) Includes 8,000 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days.
(12) Includes 413,079 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days. Does not include 446,421 shares of
Common Stock issuable upon exercise of options that are not exercisable
within 60 days.
(13) Includes 528,773 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days. Does not include 412,795 shares of
Common Stock issuable upon exercise of options that are not exercisable
within 60 days.
(14) Includes 762,524 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days. Also includes 104,000 shares of Common
Stock held in trust for Dr. Rosen's minor children, as to which Dr. Rosen
disclaims beneficial ownership. Does not include 802,476 shares of Common
Stock issuable upon exercise of options that are not exercisable within 60
days.
(15) Includes 27,999 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days. Does not include 52,001 shares of
Common Stock issuable upon exercise of options that are not exercisable
within 60 days.
(16) Includes 166,265 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days. Does not include 529,159 shares of
Common Stock issuable upon exercise of options that are not exercisable
within 60 days.
(17) Includes 35,999 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days. Does not include 60,001 shares of
Common Stock issuable upon exercise that are not exercisable within 60
days.
(18) Includes 79,000 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days.
(19) Includes 4,974,688 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days. Does not include 4,913,304 shares
issuable upon exercise of options that are not exercisable within 60 days.
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PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING
PROPOSAL 1. ELECTION OF CLASS I DIRECTORS
One class of directors, the Class I directors, consisting of Drs. Drews and
Wyngaarden, has a term of office expiring at the Annual Meeting. Drs. Drews and
Wyngaarden have each been nominated as the new Class I directors to serve for a
three-year term expiring at the annual meeting of stockholders in 2004 and until
their successors shall be elected and qualified.
The persons named in the enclosed proxy intend to vote properly executed
and returned proxies "FOR" the election of all nominees proposed by the Board of
Directors unless authority to vote is withheld. In the event that any nominee is
unable or unwilling to serve, the persons named in the proxy will vote for such
substitute nominee or nominees as they, in their discretion, shall determine.
The Board of Directors has no reason to believe that any nominee named herein
will be unable or unwilling to serve.
Set forth below is information concerning the nominees for election and
those directors whose terms continue beyond the date of the Annual Meeting.
NOMINEES FOR DIRECTOR FOR A THREE-YEAR TERM
EXPIRING AT THE 2004 ANNUAL MEETING.
DIRECTOR PRINCIPAL OCCUPATION AND BUSINESS
NOMINEE AGE SINCE EXPERIENCE DURING THE PAST FIVE YEARS
------- --- -------- -----------------------------------------------------
Jurgen Drews, M.D. .................. 67 1998 Member of the Executive and Nominating Committees of
the Company. Chairman and partner of International
Biomedicine Management Partners, Basel, Switzerland.
Managing Partner of Bear Stearns Health Innoventures,
LLC. Member of the Executive Committee of the Roche
Group, Hoffmann-La Roche, Inc., from 1986 until his
retirement in 1998. Dr. Drews also served as
President, Global Research for the Roche Group from
1996 until 1998. He was President, International
Research and Development at the Roche Group from 1991
until 1996. Before joining Roche in 1985, Dr. Drews
was Head of International Pharmaceutical Research and
Development of Sandoz, Ltd. in Basel, Switzerland.
Dr. Drews' board memberships include Protein Design
Labs, Inc., of Mountain View, CA, and MorphoSys GmbH
as well as Genomics Pharmaceutical Company, both in
Munich, Germany.
James B. Wyngaarden, M.D. ........... 76 1993 Founding Principal of the Washington Advisory Group,
LLC. Emeritus Professor of Medicine, Duke University;
Professor of Medicine and Sr. Associate Dean,
International Programs, University of Pennsylvania
Medical Center, 1995-1997. Foreign Secretary,
National Academy of Sciences and Institute of
Medicine and Associate Vice Chancellor for Health
Affairs at Duke University, 1990 to 1994. Served as
Director of the National Institutes of Health from
1982 to 1989 and as Associate Director for Life
Sciences, Office of Science and Technology Policy,
Executive Office of the President from 1989 to 1990.
Served as Director of Human Genome Organization from
1990 to 1991. Serves as Chairman of the Board of
Directors of Hybridon, Inc., and as a Director of
Genaera Corporation and Origenics Technologies.
Author of approximately 250 scientific publications.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ELECTION OF THE CLASS I
DIRECTORS.
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DIRECTORS CONTINUING IN OFFICE.
CLASS II DIRECTORS WHOSE TERMS WILL EXPIRE AT THE 2002 ANNUAL MEETING:
DIRECTOR PRINCIPAL OCCUPATION AND BUSINESS
NOMINEE AGE SINCE EXPERIENCE DURING THE PAST FIVE YEARS
------- --- -------- -----------------------------------------------------
Max Link, Ph.D....................... 60 1995 Member of the Executive, Compensation and Nominating
Committees of the Company. Dr. Link has held a number
of executive positions with pharmaceutical and
healthcare companies. Most recently he served as
Chief Executive Officer of Corange Limited, from May
1993 until June 1994. Prior to joining Corange
Limited, Dr. Link served in a number of positions
within Sandoz Pharma Ltd., including Chief Executive
Officer from 1987 until April 1992, and Chairman from
April 1992 until May 1993. Dr. Link currently serves
on the Boards of Directors of Access Pharmaceuticals,
Inc.; Alexion Pharmaceuticals, Inc.; Cell
Therapeutics, Inc.; Celsion Corporation; CytRx
Corporation; Discovery Laboratories, Inc.; Osiris
Therapeutics, Inc.; Protein Design Labs, Inc. and
Sulzer Medica Ltd. Dr. Link received his doctorate in
Economics from the University of St. Gallen.
Craig A. Rosen, Ph.D................. 43 1992 Executive Vice President of Research and Development
and Director of the Company. Employed by the Roche
Institute of Molecular Biology from 1987 to December
1992, serving as Chairman of the Department of Gene
Regulation from 1991 to December 1992 and in varying
positions in the Department of Molecular Oncology and
Virology from 1987 to 1991. Member of the Board and
Chairman of the Scientific Advisory Council for the
American Foundation for AIDS Research from 1990 to
1995 and serves on the Scientific Advisory Boards for
the Wistar Institute and the Institute for Human
Virology. Dr. Rosen serves as a Director of Vascular
Genetics, Inc. Author of approximately 130
publications and an editorial board member of several
scientific publications.
Beverly Sills Greenough.............. 71 1993 Chairman of the Lincoln Center for the Performing
Arts, Inc. since 1994. Managing Director of the
Metropolitan Opera in New York, a position held since
1991. President of the New York City Opera Board from
1989 to 1990. Served as General Director of the New
York City Opera Company from 1979 to 1989. Serves on
the Board of Directors of American Express Company,
Inc. and is Chairman of the Multiple Sclerosis
Society.
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CLASS III DIRECTORS WHOSE TERMS WILL EXPIRE AT THE 2003 ANNUAL MEETING:
DIRECTOR PRINCIPAL OCCUPATION AND BUSINESS
NOMINEE AGE SINCE EXPERIENCE DURING THE PAST FIVE YEARS
------- --- -------- -----------------------------------------------------
William A. Haseltine, Ph.D........... 56 1993 Chairman of the Board, Chief Executive Officer and
member of the Executive and Nominating Committees of
the Company. Consultant to the Company from December
1992 until May 1993. Chairman of the Board of
Trustees of the National Health Museum, member of The
Brookings Institution Board of Trustees and member of
The Trilateral Commission. Member of the faculty of
Harvard Medical School and the Dana Farber Cancer
Institute from 1976 to May 1993. Member of the
faculty of the Harvard School of Public Health from
1977 to May 1993 and Chief of Human Retrovirology at
the Dana Farber Cancer Institute from 1988 to May
1993. A founder of several biotechnology companies.
Author of approximately 250 scientific publications.
Laura D'Andrea Tyson, Ph.D........... 53 1998 Member of the Audit Committee of the Company. Dean of
the Walter A. Haas School of Business at the
University of California, Berkeley since 1998. Served
as the President's National Economic Advisor from
1995 to 1996 and as Chairman of the White House
Council of Economic Advisors from 1993 to 1995. Dr.
Tyson was a member of the National Bipartisan
Commission on the Future of Medicare and a principal
of the Law & Economics Consulting Group from June
1997 to December 2000. Dr. Tyson is a member of the
Boards of Directors of SBC Communications Inc.; the
Council on Foreign Relations; Eastman Kodak Company;
Fox Entertainment Group, Inc.; Morgan Stanley, Dean
Witter & Co.; Discover & Co and the Institute of
International Economics. She is a member of The
Trilateral Commission. She also serves on the Board
of Trustees of The Asia Foundation; the Advisory
Boards of E.M. Warburg, Pincus & Co., LLP;
Shorenstein Company, LP; E-piphany; Bartertrust; the
G7 Group, Inc.; H & Q Asia Pacific, Ltd. and the
Boards of Editors of The American Prospect and
California Management Review. She is a Senior
Director of Sebago Associates, Inc., an economic
consulting firm, and an Economic Viewpoint columnist
for Business Week magazine.
Robert D. Hormats.................... 58 1996 Member of the Executive, Audit and Compensation
Committees of the Company. Vice Chairman of Goldman
Sachs (International) since 1987. Served in various
capacities with Goldman, Sachs & Co. since 1982.
Served as a Senior Staff Member for International
Economic Affairs on the National Security Council
from 1974 to 1977. Served as Deputy Assistant
Secretary for Economic and Business Affairs at the
Department of State from 1977 to 1979, Ambassador and
Deputy U.S. Trade Representative from 1979 to 1981
and Assistant Secretary of State for Economic and
Business Affairs from 1981 to 1982. Appointed by
former President Clinton in 1993 to the Board of the
U.S.-Russia Investment Fund.
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DIRECTOR PRINCIPAL OCCUPATION AND BUSINESS
NOMINEE AGE SINCE EXPERIENCE DURING THE PAST FIVE YEARS
------- --- -------- -----------------------------------------------------
Alan G. Spoon........................ 49 1998 Member of the Executive, Audit and Compensation
Committees of the Company. Mr. Spoon is Managing
General Partner at Polaris Venture Partners, a
venture capital firm that he joined in May 2000. He
was Chief Operating Officer and Director of The
Washington Post Company, a public company, from 1991
until his retirement in March 2000; he also served as
President from May 1993 until his retirement. From
1989 to 1991, Mr. Spoon was President of Newsweek,
Inc. During that time he was also responsible for
Post-Newsweek television stations. From 1987 to 1989,
he was The Washington Post Company's Chief Financial
Officer. Mr. Spoon presently serves as a Director of
American Management Systems, Inc., Ticketmaster and
Danaher Corporation, each of which is a public
company. He is a Director of International Data Group
(IDG), a private company, and serves on the boards of
various Polaris portfolio companies. In addition, Mr.
Spoon is a Regent of The Smithsonian Institution.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CERTAIN COMMITTEES
The Board of Directors held three regular meetings and five telephonic
meetings during 2000. Dr. Drews and Mrs. Sills Greenough attended fewer than 75%
of the total number of meetings of the Board and of the Committees of which each
was a member during 2000. The Board of Directors has an Executive Committee, an
Audit Committee, a Compensation Committee and a Nominating Committee.
The Executive Committee, currently consisting of Drs. Haseltine, Link and
Drews and Messrs. Spoon and Hormats, has the authority to act on most matters
during the intervals between meetings of the Board of Directors. The Executive
Committee held two regular meetings and one telephonic meeting during 2000.
The Audit Committee, currently consisting of Messrs. Hormats and Spoon and
Dr. Tyson, provides the opportunity for direct contact between the Company's
independent auditors and the Board of Directors. Each member of the Audit
Committee is independent in accordance with the Nasdaq listing standards. The
Audit Committee makes recommendations concerning the engagement of independent
auditors, reviews with the independent auditors the plans and results of the
audit engagement, and reviews the adequacy of the Company's internal accounting
controls. The Audit Committee held four meetings during 2000.
The Compensation Committee, currently consisting of Dr. Link and Messrs.
Hormats and Spoon, determines all compensation paid or awarded to the Company's
executive officers and senior officers (those with the rank of vice president or
above) and administers the Company's 2000 Stock Incentive Plan and Employee
Stock Purchase Plan. The Compensation Committee held seven regular meetings and
three telephonic meetings during 2000.
The Nominating Committee, currently consisting of Drs. Haseltine, Link and
Drews, is responsible for proposing a slate of directors for election by the
stockholders at each annual meeting and proposing candidates to fill any
vacancies on the Board of Directors. The committee will consider nominees for
Board membership recommended by stockholders. Any stockholder wishing to propose
a nominee may submit a recommendation in writing to the Company's Secretary,
indicating the nominee's qualifications and other relevant biographical
information. The Nominating Committee did not meet during 2000.
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IDENTIFICATION OF EXECUTIVE OFFICERS
Set forth below is certain information regarding the positions and business
experience of each executive officer of the Company who is not also a director
of the Company.
EXECUTIVE OFFICER AGE POSITIONS
----------------- --- --------------------------------------------------------
Susan Bateson McKay.................. 46 Ms. Bateson McKay has served as Senior Vice President,
Human Resources of the Company since December 2000 and
served as Vice President, Human Resources of the Company
from January 1997 to December 2000. Prior to joining the
Company, Ms. Bateson McKay served as Director of Human
Resources and Administration at Finnegan, Henderson,
Farabow, Garrett & Dunner, L.L.P., from May 1994 to
December 1996. From 1983 to 1994, Ms. Bateson McKay was
employed by J.P. Morgan & Co., Incorporated and was
appointed Vice President, Human Resources in 1985. Ms.
Bateson McKay holds a masters degree in Business
Administration from New York University and a bachelors
degree, cum laude, in Economics from Mount Holyoke
College.
James H. Davis, Ph.D., J.D. ......... 50 Dr. Davis has served as Senior Vice President, General
Counsel and Secretary of the Company since May 1997.
From 1995 to 1997, Dr. Davis was of counsel to the
Washington D.C. law firm of Finnegan, Henderson,
Farabow, Garrett & Dunner, L.L.P. Prior to this time,
Dr. Davis served in a number of capacities with the
agricultural biotechnology company, Crop Genetics
International, including General Counsel from 1988 to
1995, Vice President of Research and Development from
1990 to 1995, Secretary from 1990 to 1995 and a member
of the Board of Directors from 1992 to 1995. Prior to
joining Crop Genetics, Dr. Davis was a partner in the
Washington, D.C. office of Weil, Gotshal & Manges. Dr.
Davis holds a doctorate degree in Organic and
Theoretical Chemistry from the California Institute of
Technology and a law degree from the University of
Virginia.
Arthur M. Mandell.................... 48 Mr. Mandell serves as Senior Vice President and Chief
Business Officer of the Company. Prior to joining the
Company, Mr. Mandell was a Principal of the consulting
firm ZS Associates and General Manager of the West Coast
office located in Menlo Park, California. Prior to
joining ZS Associates in 1995, Mr. Mandell spent over 13
years at Syntex Corporation where he held a number of
senior management positions in strategic planning,
business development, new product planning, product
marketing and financial management, including Regional
Vice President overseeing Business Development and
Market Planning for the Pacific Rim, Mexico and Canada.
Prior to entering the pharmaceutical industry, Mr.
Mandell was at Intel Corporation in Silicon Valley where
he developed planning processes and decision support
models. Mr. Mandell also serves as a Director of
Vascular Genetics, Inc.
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EXECUTIVE OFFICER AGE POSITIONS
----------------- --- --------------------------------------------------------
Steven C. Mayer...................... 47 Mr. Mayer has served as Senior Vice President and Chief
Financial Officer of the Company since September 1996.
From 1995 to 1996, Mr. Mayer was Vice President and
Chief Financial Officer of GenVec, Inc., an early-stage
gene therapy company. From 1991 to 1995, he served as
Vice President (subsequently Senior Vice President) and
Chief Financial Officer of TheraTech, Inc. Prior to
joining TheraTech, Inc., Mr. Mayer was involved in the
formation of Myriad Genetics and was Vice President and
Chief Financial Officer of NPI, an agricultural
biotechnology company. Mr. Mayer holds a masters degree
in Business Administration from Stanford University.
David C. Stump, M.D.................. 51 Dr. Stump has served as Senior Vice President, Drug
Development of the Company since November 1999. From
October 1995 to October 1999, he served as Vice
President, Clinical Research and Genentech Fellow at
Genentech, Inc. Dr. Stump first joined Genentech in 1989
as Director, Clinical Research and leader of its
thrombolytic therapy drug development program. Prior to
joining Genentech he was Associate Professor of Medicine
and Biochemistry at the University of Vermont. He
received his medical degree at Indiana University and
his postgraduate training at the University of Iowa as
well as the University of Leuven, Belgium. He is board
certified in Internal Medicine, Hematology and Medical
Oncology and is a Fellow of the American Colleges of
Physicians and the Council on Arteriosclerosis,
Thrombosis and Vascular Biology of the American Heart
Association. He is the author of approximately 60
scientific publications.
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PROPOSAL 2 -- APPROVAL OF AN AMENDMENT TO THE COMPANY'S
RESTATED CERTIFICATE OF INCORPORATION (FIFTH)
The Board of Directors has approved, and is recommending to the
stockholders for approval at the Annual Meeting, an amendment to Article III of
the Company's Restated Certificate of Incorporation (Fifth) to increase the
number of shares of Common Stock which the Company is authorized to issue from
250,000,000 to 400,000,000. The Board of Directors determined that this
amendment is advisable and should be considered at the Annual Meeting. The full
text of the proposed amendment to the Certificate of Incorporation is shown
below.
PURPOSE AND EFFECT OF THE AMENDMENT
Under the present Restated Certificate of Incorporation (Fifth), the
Company has the authority to issue 250,000,000 shares of Common Stock. As of
March 30, 2001, 125,722,754 shares of Common Stock were issued and outstanding
and 29,099,017 shares of Common Stock were reserved for issuance (1) upon the
exercise of the Company's stock options, (2) in connection with the Company's
employee stock purchase plan and (3) upon the conversion of the Company's 5 1/2%
Convertible Subordinated Notes due 2006, 5% Convertible Subordinated Notes Due
2007 and 3 3/4% Convertible Subordinated Notes Due 2007. Accordingly, as of
March 30, 2001, after taking into account the shares reserved for issuance,
approximately 95,178,229 shares of Common Stock were available for issuance. The
proposed amendment would provide for an additional 150,000,000 shares of Common
Stock available for issuance.
The additional Common Stock to be authorized by adoption of the proposed
amendment would have rights identical to the currently outstanding Common Stock
of the Company. Adoption of the proposed amendment and issuance of additional
shares of Common Stock would not affect the rights of the holders of currently
outstanding Common Stock, except for effects incidental to increasing the number
of shares of Common Stock outstanding, such as dilution of the earnings per
share and voting rights of current holders of Common Stock. The proposed
amendment would not change the par value of the Common Stock. If the amendment
is adopted, it will become effective upon filing a Certificate of Amendment to
the Company's Restated Certificate of Incorporation with the Secretary of State
of Delaware.
The purpose of the increase in authorized shares is to provide additional
shares of Common Stock that could be issued for corporate purposes without
further stockholder approval, unless required by applicable law or regulation.
The Board of Directors believes that it is in the best interests of the Company
to have additional shares of Common Stock authorized at this time to alleviate
the delay of holding a special meeting of stockholders to authorize additional
shares of Common Stock when the need arises. Possible purposes for additional
shares of Common Stock include effecting acquisitions of other businesses or
properties, establishing strategic relationships with other companies and
securing additional financing for the operation of the Company through the
issuance of additional shares or other equity-based securities. Purposes for
additional shares of Common Stock also include paying stock dividends or
subdividing outstanding shares through stock splits. The Company has no specific
plans for any of these actions at this time.
AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION (FIFTH)
If this proposal is approved, Article III(a) of the Company's Restated
Certificate of Incorporation (Fifth) will be amended to state as follows:
"(a) AUTHORIZATION. THE TOTAL NUMBER OF SHARES OF ALL CLASSES OF STOCK
WHICH THE CORPORATION SHALL HAVE AUTHORITY TO ISSUE IS 420,000,000 SHARES,
CONSISTING OF 20,000,000 SHARES OF PREFERRED STOCK, PAR VALUE $.01 PER
SHARE (THE "PREFERRED STOCK"), AND 400,000,000 SHARES OF COMMON STOCK, PAR
VALUE $.01 PER SHARE (THE "COMMON STOCK")."
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And Article III(c)(1) of the Company's Restated Certificate of
Incorporation (Fifth) will be amended to state as follows:
"(1) DESIGNATION AND AMOUNT. THE DESIGNATION OF THIS CLASS OF CAPITAL STOCK
SHALL BE COMMON STOCK, PAR VALUE $.01 PER SHARE ("COMMON STOCK"). THE
NUMBER OF SHARES, POWERS, TERMS, CONDITIONS, DESIGNATIONS, PREFERENCES AND
PRIVILEGES, RELATIVE, PARTICIPATING, OPTIONAL AND OTHER SPECIAL RIGHTS, AND
QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS, SHALL BE AS SET FORTH IN THIS
ARTICLE III(c). THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK IS
400,000,000. THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK MAY BE
INCREASED OR DECREASED (BUT NOT BELOW THE NUMBER OF SHARES THEREOF THEN
OUTSTANDING) BY THE AFFIRMATIVE VOTE OF THE HOLDERS OF THE MAJORITY OF THE
STOCK OF THE CORPORATION ENTITLED TO VOTE, IRRESPECTIVE OF THE PROVISIONS
OF SECTION 242(b)(2) OF THE DELAWARE GENERAL CORPORATION LAW."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSED AMENDMENT TO THE
COMPANY'S RESTATED CERTIFICATE OF INCORPORATION (FIFTH).
PROPOSAL 3 -- APPROVAL OF AN AMENDMENT TO THE COMPANY'S
2000 STOCK INCENTIVE PLAN
The Board of Directors has amended the Company's 2000 Stock Incentive Plan
(the "2000 Plan"), subject to stockholder approval. This proposed amendment will
adjust the provisions that establish the maximum number of shares of Common
Stock that may be issued under the 2000 Plan, and will make other modifications
generally to emphasize considerations of stockholders' interests with respect to
the 2000 Plan. As amended, the 2000 Plan will be known as the "Amended and
Restated 2000 Stock Incentive Plan."
The 2000 Plan is the stock-based compensation program under which we grant
stock options to our employees, consultants and non-employee directors. The plan
has been integral to the Company's ability to attract and retain key personnel,
and to foster motivation among our employees, directors and other service
providers by increasing their proprietary interest in the Company's success. The
amended 2000 Plan will continue to serve these important roles.
SUMMARY OF AMENDMENT
The proposed amendment to the 2000 Plan will establish a limit on the
number of shares of Common Stock that may be issued with respect to awards
granted each year. For 2001, 2002 and 2003, this limit will be equal to five
percent of the outstanding Common Stock as of the end of the preceding fiscal
year. Shares that are available for a year but not subject to awards granted in
that year will be carried forward ("Carryover Shares") to the following year.
Shares available and not subject to awards granted as of December 31, 2000 will
be carried forward to 2001, and shares available and not granted in 2003 will be
carried forward to later years. After 2003, only the carried forward shares and
the shares that are returned to the pool of available shares due to award
forfeitures and the like, will be available for issuance. The annual limit on
the shares available under the amended 2000 Plan as described above will replace
the limitation under the current terms of the plan on the aggregate number of
shares issuable over the ten-year plan term.
We believe the proposed adjustment to the share limitation under the 2000
Plan is appropriate to ensure sufficient stock option capacity under the 2000
Plan for the near future. The adjustment was based on the level of stock options
granted in recent years and expectations as to the continued increase in the
Company's work force. Given the nature of the Company's business and the
importance of its employees, stock options have been routinely and broadly
issued to employees, and the continued availability of the options as part of
the compensation program of the Company is critical to our success.
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The proposed amendment to the 2000 Plan also eliminates or modifies other
terms of the plan primarily to emphasize considerations of stockholders'
interests with respect to the plan. These changes include:
- eliminating the ability to reprice stock options without prior
stockholder approval,
- eliminating the ability to grant discounted stock options,
- requiring that the term of a stock option be ten years or less,
- specifying that the Board of Directors may not materially amend the 2000
Plan without obtaining stockholder approval, and
- limiting the types of awards available under the 2000 Plan to stock
options and stock appreciation rights.
No awards have been granted with respect to shares that will become
available pursuant to the proposed amendment to the 2000 Plan. For information
concerning stock options granted in 2000 to the Named Executive Officers of the
Company, see the table, "Options Granted in 2000," provided below in this Proxy
Statement. Other than the stock options for non-employee directors that will be
granted pursuant to a formula provided in the 2000 Plan (see "Types of
Awards -- Non-Employee Director Options," below), the Company has not determined
the awards that will be made under the amended terms of the 2000 Plan and,
consequently, the number of shares that will be covered by those awards and the
recipients of those awards currently cannot be determined.
The amended 2000 Plan will become effective upon stockholder approval and
will remain in effect until February 15, 2010, unless it is terminated by the
Board of Directors at an earlier date.
A copy of the amended 2000 Plan is attached to this Proxy Statement as
Exhibit A. The above description of the amendment to the 2000 Plan and the
following summary description of the plan are qualified by reference to the
attached copy of the plan.
SUMMARY OF STOCK INCENTIVE PLAN, AS AMENDED
Number of Shares.
The number of shares of Common Stock available annually for awards granted
under the amended 2000 Plan during the Company's fiscal years 2001, 2002 and
2003 will be equal to (a) five percent of the outstanding Common Stock for the
end of the preceding fiscal year, plus (b) the Carryover Shares. For fiscal year
2001, the Carryover Shares are the 3,896,038 shares remaining available for
award under the 2000 Plan at the end of fiscal year 2000. For each year after
2001, the Carryover Shares will be the shares that were available for awards,
and that were not subject to any awards, as of the last day of the preceding
year.
If the Company acquires another entity through a merger or similar
transaction and issues replacement awards under the 2000 Plan to employees,
officers and directors of the acquired entity, those awards, to the extent
permitted under applicable laws and exchange rules, will be above and beyond,
and will not reduce, the share pool otherwise available under the amended 2000
Plan as discussed above. In addition, any shares covered by an award (or portion
of an award) granted under the 2000 Plan (or the prior plans that were merged
into the 2000 Plan) that expires or is otherwise forfeited, surrendered or
cancelled without exercise, or that are tendered to the Company as full or
partial payment of the exercise price or related tax withholding obligations,
will again be available for award under the 2000 Plan.
The following additional limitations are imposed under the amended 2000
Plan. The maximum number of shares of Common Stock that may be issued in
connection with incentive stock options granted after 2000 that are intended to
qualify under Internal Revenue Code section 422 is 15,000,000 shares. The
maximum number of shares subject to awards that may be granted during any one
fiscal year of the Company to any one person is 2,000,000 shares. To the extent
this maximum permissible award per person
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is not made in a year, the unused amount may be carried over to the subsequent
years. This carry-over feature is added by the proposed amendment to the 2000
Plan.
Administration; Eligibility.
Except with respect to the non-employee director options discussed below,
the selection of the participants in the 2000 Plan and the terms of awards
granted to each participant will be determined by the plan administrator. The
Compensation Committee of the Board of Directors is currently the plan
administrator. From time to time, one or more committees as may be appointed by
the Board of Directors may serve as plan administrator. All employees, officers
and directors of the Company and its subsidiaries are eligible to be selected to
receive awards under the 2000 Plan, as are non-employee service providers.
Non-employee directors of the Company will be eligible to receive only the
non-employee director options discussed below. Seven non-employee directors and
approximately 731 employees at present are eligible to receive awards under the
amended 2000 Plan.
Adjustments upon Corporate Transactions or Changes to Common Stock.
Subject to any required action by the Company or its stockholders, and
subject to the Delaware General Corporation Law, if the outstanding shares of
Common Stock are increased or decreased or changed into or exchanged for a
different number or kind of security by reason of any recapitalization,
reclassification, stock split, stock dividend, and the like, a proportionate and
appropriate adjustment will be made in the number of shares of Common Stock
underlying the outstanding awards. A commensurate change will also be made to
(1) the maximum number of shares issuable under the 2000 Plan, (2) the maximum
number of shares with respect to which awards may be granted during any one
fiscal year to any person and (3) the number of shares covered by non-employee
director options to be granted after such event.
Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company as a result of which the
securities then subject to the awards are changed into or exchanged for cash,
property and/or securities not of the Company's issue, or upon a sale of
substantially all the property of the Company to, or the acquisition of shares
of Common Stock representing more than 80% of the voting power of the
outstanding shares by, another corporation or person, the awards will terminate,
unless provision is made for the assumption of the awards, or the substitution
for the awards of any awards covering securities of a successor employer
corporation or its affiliate with appropriate adjustments as to the number and
kind of shares of stock and prices. If an award would terminate as described
above, the award holder will have the right to exercise the award, whether or
not the award is vested, for a designated period prior to the transaction that
will cause the termination.
Types of Awards
The amended 2000 Plan would allow the Company to grant stock options and
stock appreciation rights only. The proposed amendment to the 2000 Plan will
eliminate the ability to grant performance awards of stock or cash under the
plan. The Company may make or guarantee loans to participants to assist them in
exercising awards and satisfying their withholding tax obligations.
Stock Options: The 2000 Plan allows the Administrator to grant either
awards of incentive stock options as that term is defined in section 422 of the
Internal Revenue Code or non-qualified stock options. Incentive stock options,
however, will be available only for employees of the Company or any of its
subsidiaries. All options must have an exercise price per share that is not less
than the fair market value of a share of Common Stock on the date of grant. As
of March 30, 2001, the fair market value of a share of the Common Stock,
determined by the last reported sale price per share on that date as quoted on
The Nasdaq National Market, was $46.00. No stock option granted under the
amended 2000 Plan may have a term longer than 10 years. The option exercise
price may be paid in cash, by tender of shares of Common Stock, by a combination
of cash and shares or by any other means the Administrator approves.
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Non-Employee Director Options: Beginning with the 2000 Annual Meeting of
the Stockholders, each non-employee director is eligible to receive a
non-qualified option under the 2000 Plan for 48,000 shares upon initial
appointment or election and upon each re-election. Each such option will have an
exercise price equal to the fair market value of the stock on the date of grant,
and will become exercisable in 48 equal monthly installments. Because of the
staggered Board, there will be a two-year transition period after the 2000
annual meeting before all non-employee directors will have received their new
non-employee director options. During this transition period, the option grant
formula under the 1994 Stock Option Plan will be continued for non-employee
directors who have not yet received their first new non-employee director
options. Under that formula, the non-employee director will receive, during the
transition period, an option for 8,000 shares of Common Stock granted
immediately following the date of each annual meeting of stockholders as long as
that person is a member of the Board of Directors. Each such transition period
option will become exercisable in full on the first anniversary of the date of
grant.
Stock Appreciation Rights: The 2000 Plan allows the Administrator to grant
awards of stock appreciation rights. A stock appreciation right entitles the
holder to receive a payment in cash, in shares of Common Stock or in a
combination of both, having an aggregate value equal to the product of (i) the
excess of (a) the fair market value on the exercise date of one share of Common
Stock over (b) the base price per share specified in the grant agreement, times
(ii) the number of shares specified by the stock appreciation right, or portion
thereof, that is exercised.
Amendments
The Board of Directors may alter, amend, suspend or discontinue the 2000
Plan or any portion of the plan at any time, but no such action may be taken
without stockholder approval if it would materially amend the plan. The
Administrator may alter or amend awards under the amended 2000 Plan, but no such
action may be taken without the consent of the participant if it would
materially adversely affect an outstanding award granted to him or her, and no
such action may be taken without prior stockholder approval if it would result
in repricing a stock option to a lower exercise price other than to reflect a
capital adjustment of the Company such as a stock split.
Federal Income Tax Consequences
The following is a general summary of the United States federal income tax
treatment of incentive stock options and non-qualified stock options, which are
authorized for grant under the 2000 Plan, based upon the current provisions of
the Internal Revenue Code and regulations promulgated thereunder.
Incentive Stock Options. Incentive stock options under the 2000 Plan are
intended to meet the requirements of Internal Revenue Code section 422. No tax
consequences result from the grant of the option. If an option holder acquires
stock upon the exercise, no income will be recognized by the option holder for
ordinary income tax purposes (although the difference between the option
exercise price and the fair market value of the stock subject to option may
result in alternative minimum tax liability to the option holder) and the
Company will be allowed no deduction as a result of such exercise, if the
following conditions are met: (a) at all times during the period beginning with
the date of the granting of the option and ending on the day three months before
the date of such exercise, the option holder is an employee of the Company or of
a subsidiary and (b) the option holder makes no disposition of the stock within
two years from the date the option is granted nor within one year after the
stock is transferred to the option holder. If the option holder sells the stock
after complying with these conditions, any gain realized over the price paid for
the stock will ordinarily be treated as long-term capital gain, and any loss
will be treated as long-term capital loss, in the year of the sale.
If the option holder fails to comply with the employment requirements, the
tax consequences will be substantially the same as for a non-qualified option,
discussed below. If the option holder fails to comply with the holding period
requirements, the option holder will recognize ordinary income in an amount
equal to the lesser of (1) the excess of the fair market value of the stock on
the date the option was exercised over the exercise price or (2) the excess of
the amount realized upon such disposition over the adjusted
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tax basis of the stock. Any additional gain ordinarily will be recognized by the
option holder as capital gain, either long-term or short-term, depending on the
holding period of the shares. If the option holder is treated as having received
ordinary income because of his or her failure to comply with either condition
above, the Company will be allowed an equivalent deduction in the same year.
Non-Qualified Stock Options. No tax consequences result from the grant of
the option. An option holder who exercises a non-qualified stock option will
generally realize compensation taxable as ordinary income in an amount equal to
the difference between the exercise price and the fair market value of the
shares on the date of exercise, and the Company will be entitled to a deduction
from income in the same amount. Any subsequent gain or loss will be a capital
transaction.
Disallowance of Deductions. The Internal Revenue Code disallows deductions
for publicly held corporations with respect to compensation in excess of
$1,000,000 paid to the corporation's chief executive officer and its four other
most highly compensated officers. However, compensation payable solely on
account of attainment of one or more performance goals is not subject to this
deduction limitation if certain statutory requirements are satisfied. Under this
exception, the deduction limitation does not apply with respect to compensation
otherwise deductible on account of stock options and stock appreciation rights
granted at fair market value under a plan, such as the 2000 Plan, that limits
the number of shares that may be issued to any individual and that is approved
by the company's stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE AMENDMENT TO THE
STOCK INCENTIVE PLAN.
PROPOSAL 4 -- RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors has selected the firm of Ernst & Young LLP to serve
as independent auditors for the fiscal year ending December 31, 2001, subject to
the ratification of such appointment by the stockholders. A representative of
Ernst & Young LLP is expected to be present at the Annual Meeting and is
expected to be available to respond to appropriate questions from stockholders.
Ernst & Young LLP currently serves as the Company's independent auditors.
Unless marked to the contrary, the shares represented by the enclosed
proxy, if properly executed and returned, will be voted "FOR" the ratification
of the appointment of Ernst & Young LLP as the independent auditors of the
Company for the fiscal year ending December 31, 2001.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF ERNST & YOUNG
LLP.
AUDIT FEES
For the year ended December 31, 2000, the Company incurred from Ernst &
Young LLP an aggregate of $83,090 for audit fees, covering professional services
rendered for (1) the audit of the Company's annual financial statements included
in the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 2000 and (2) the reviews of the financial statements included in the
Company's quarterly reports on Form 10-Q for the first three quarters of 2000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
Ernst & Young LLP did not perform any financial information systems design,
implementation or related services for the Company during the year ended
December 31, 2000.
ALL OTHER FEES
For the year ended December 31, 2000, the Company incurred from Ernst &
Young LLP an aggregate of $107,744 for all other services, including $3,885 for
non-audit accounting services, $20,756 for tax related services and $83,103 for
other transaction related accounting services.
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AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors consists of three independent
directors, as required by Nasdaq listing standards. The Audit Committee operates
under a written charter adopted by the Board of Directors, which is attached as
Exhibit B to this Proxy Statement, and is responsible for overseeing the
Company's financial reporting process on behalf of the Board of Directors. The
members of the Audit Committee are Messrs. Hormats and Spoon and Dr. Tyson. Each
year, the Audit Committee recommends to the Board of Directors, subject to
stockholder ratification, the selection of the Company's independent auditors.
Management is responsible for the Company's financial statements and the
financial reporting process, including internal controls. The independent
auditors are responsible for performing an independent audit of the Company's
consolidated financial statements in accordance with auditing standards
generally accepted in the United States and for issuing a report thereon. The
Audit Committee's responsibility is to monitor and oversee these processes.
In this context, the Audit Committee has met and held discussions with
management and Ernst & Young LLP, the Company's independent auditors. Management
represented to the Audit Committee that the Company's consolidated financial
statements were prepared in accordance with accounting principles generally
accepted in the United States, and the Audit Committee has reviewed and
discussed the consolidated financial statements with management and the
independent auditors. The Audit Committee discussed with Ernst & Young LLP the
matters required to be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees). These matters included a discussion of
Ernst & Young LLP's judgments about the quality (not just the acceptability) of
the Company's accounting principles as applied to financial reporting.
Ernst & Young LLP also provided the Audit Committee with the written
disclosures and letter required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and the Audit Committee
discussed with Ernst & Young LLP that firm's independence. The Audit Committee
further considered whether the provision by Ernst & Young LLP of the non-audit
services described above is compatible with maintaining the auditors'
independence.
Based upon the Audit Committee's discussion with management and the
independent auditors and the Audit Committee's review of the representation of
management and the disclosures by the independent auditors to the Audit
Committee, the Audit Committee 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 for the year ended December 31, 2000, for filing with
the Securities and Exchange Commission. The Audit Committee and the Board of
Directors have also recommended the selection of Ernst & Young LLP as the
company's independent auditors for 2001, subject to stockholder ratification.
Audit Committee
Robert D. Hormats, Chairman
Alan G. Spoon
Laura D'Andrea Tyson, Ph.D.
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EXECUTIVE COMPENSATION AND OTHER MATTERS
COMPENSATION OF DIRECTORS
In 2000, each director who was not an employee of the Company, a consultant
to the Company, or associated with a collaborator of the Company, was eligible
to receive a director's fee of $25,000 per year and a fee of $1,000 for
participation in each meeting of a committee of the Board of Directors. Other
directors received no compensation for their services to the Company as
directors. Beginning with the 2000 Annual Meeting of the Stockholders, each
non-employee director was also entitled to receive an automatic grant of options
to purchase 48,000 shares of Common Stock on the date that such non-employee
director was first elected or appointed or re-elected as a director. In each
year before a non-employee director receives the automatic grant noted above,
such non-employee director will receive an annual automatic grant of an option
to purchase 8,000 shares of Common Stock. All directors are reimbursed for
expenses incurred in connection with attending meetings of the Board of
Directors.
EXECUTIVE COMPENSATION
The employees named in the following table were the Company's Chief
Executive Officer and the five highest-paid executive officers during 2000 (the
"Named Executive Officers").
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------------------------- -----------------------------
OTHER ANNUAL RESTRICTED STOCK ALL OTHER
SALARY(1) BONUS COMPENSATION(2) AWARDS(3) OPTIONS(4) COMPENSATION(5)
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($)
- --------------------------- ---- --------- ------- --------------- ---------------- ---------- ---------------
William A. Haseltine,
Ph.D. .................. 2000 448,077 200,000 82,615 650,000 2,625
Chief Executive Officer 1999 398,654 175,000 82,845 520,000 2,500
1998 364,539 160,000 66,287 920,000 2,500
Craig A. Rosen, Ph.D...... 2000 338,846 170,000 350,000 2,493
Executive Vice President 1999 309,115 160,000 300,000 2,493
1998 286,631 130,000 300,000 2,500
David C. Stump, M.D.(6)... 2000 275,000 105,000 81,530 200,000 2,625
Senior Vice President 1999 37,019 50,000 500,000
James H. Davis, Ph.D.,
J.D. ................... 2000 273,654 105,000 200,000 2,625
Senior Vice President 1999 239,000 85,000 160,000 2,500
1998 213,723 75,000 100,000 2,500
Steven C. Mayer........... 2000 273,654 105,000 200,000 2,573
Senior Vice President 1999 238,808 165,000 120,000 2,500
1998 208,569 75,000 140,000 2,500
Arthur M. Mandell......... 2000 273,654 105,000 200,000 2,625
Senior Vice President 1999 238,615 110,000 120,000 146,912(7)
1998 203,723 75,000 100,000 2,473
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(1) Includes amounts earned but deferred at the election of the Named Executive
Officer, such as salary deferrals under the Company's 401(k) Plan
established under Section 401(k) of the Internal Revenue Code.
(2) As permitted by rules promulgated by the Securities and Exchange Commission,
no amounts are shown with respect to certain perquisites (such as car and
housing allowances), where such amounts do not exceed the lesser of (i) 10%
of the sum of the salary and bonus of the Named Executive Officer, or (ii)
$50,000. Amounts reported for Dr. Haseltine include $55,680, $44,101 and
$47,436 in imputed interest for 2000, 1999 and 1998, respectively, on an
interest-free loan (See "-- Loans to Executive Officers"). Also included in
the amounts reported for Dr. Haseltine are $26,934, $22,143 and $17,352 for
car allowances for 2000, 1999 and 1998, respectively. The amount reported
for
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Dr. Stump represents relocation expenses for which he was reimbursed, as
well as gross-up for income tax purposes on these expenses.
(3) No cash dividends were paid on stock or restricted stock for the fiscal
years ended December 31, 2000, 1999 or 1998.
(4) The Company has awarded no Stock Appreciation Rights. Share amounts for all
years presented have been restated to reflect two two-for-one stock splits
paid in the form of a stock dividend on January 28, 2000 and October 5,
2000.
(5) Except as otherwise indicated, the amounts reported represent the Company's
contribution to the Named Executive Officer's account under its 401(k) Plan.
The amounts reported for 1999 and 1998 were inadvertently excluded from the
Company's annual Proxy Statements for those years and are being presented
here for the first time.
(6) Joined the Company November 1, 1999.
(7) The amount reported as "All Other Compensation" for Mr. Mandell in 1999
includes $2,500 representing the Company's 1999 contribution to Mr.
Mandell's 401(k) Plan account, $118,398 pertaining to the leasing, insurance
and early buy-out of a leased automobile and $26,014 pertaining to the
initiation fee and membership dues for a local country club, both of which
include a gross-up for income tax purposes.
The following table sets forth information concerning grants to the Named
Executive Officers of options to purchase shares of the Company's Common Stock
granted in 2000.
OPTIONS GRANTED IN 2000
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
---------------------------------------------------------- AT ASSUMED ANNUAL RATES OF
PERCENT OF TOTAL STOCK PRICE APPRECIATION
OPTIONS GRANTED TO EXERCISE PRICE FOR OPTION TERM(1)
OPTIONS ALL EMPLOYEES PER SHARE EXPIRATION ---------------------------
NAME (#) IN FISCAL YEAR ($) DATE 5%($) 10%($)
---- ------- ------------------ -------------- ---------- ------------ ------------
William A. Haseltine, Ph.D. ........... 650,000 9.2% 65.563 12/06/2010 26,800,942 67,918,849
Craig A. Rosen, Ph.D. ................. 350,000 5.0% 65.563 12/06/2010 14,431,276 36,571,688
David C. Stump, M.D. .................. 200,000 2.8% 65.563 12/06/2010 8,246,444 20,898,107
James H. Davis, Ph.D., J.D. ........... 200,000 2.8% 65.563 12/06/2010 8,246,444 20,898,107
Steven C. Mayer........................ 200,000 2.8% 65.563 12/06/2010 8,246,444 20,898,107
Arthur M. Mandell...................... 200,000 2.8% 65.563 12/06/2010 8,246,444 20,898,107
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(1) The assumed annual rates of stock price appreciation of 5% and 10% are
required by the Securities and Exchange Commission to be used for
illustration purposes and are not intended to forecast possible future
appreciation, if any, of the Company's Common Stock.
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The following table sets forth information with respect to option exercises
by and year-end values during 2000 for the Named Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND OPTION VALUES AT END OF FISCAL YEAR
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN-THE-
OPTIONS AT MONEY OPTIONS AT FISCAL
SHARES FISCAL YEAR-END (#) YEAR-END ($)(1)
ACQUIRED ON VALUE --------------------------- -----------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ------------ ----------- ------------- ------------ --------------
William A. Haseltine,
Ph.D. ................... 0 0 1,570,016 2,519,984 85,757,467 98,617,208
Craig A. Rosen, Ph.D. ..... 208,088 13,237,650 651,056 928,944 39,214,321 31,686,384
David C. Stump, M.D. ...... 4,576 244,101 103,756 591,668 4,925,168 19,341,890
James H. Davis, Ph.D.,
J.D. .................... 83,000 5,333,250 371,086 605,914 22,395,272 23,125,347
Steven C. Mayer............ 83,824 5,677,697 442,256 513,920 27,021,423 18,099,597
Arthur M. Mandell.......... 135,500 8,416,268 324,846 539,654 19,686,967 19,707,167
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(1) Value is based on the difference between the stock option exercise price and
the closing price of the Company's Common Stock on The Nasdaq National
Market on December 29, 2000 of $69.313 per share.
EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
In February 1997, the Company entered in an employment agreement with Dr.
Haseltine that superseded his May 1993 employment agreement. The employment
agreement is for an initial term that expired in February 2000 and has been and
will be automatically extended for additional one-year periods unless terminated
by either party four months prior to the end of the applicable term. The
employment agreement provides that Dr. Haseltine is entitled to an annual base
salary as determined by the Board of Directors ($485,000 as of January 1, 2001),
an annual bonus as determined by the Board of Directors and an annual car
allowance. The Company may terminate the employment agreement without cause, and
upon such termination, Dr. Haseltine will be entitled to severance equal to his
base salary for a period of 24 months. The Company sold to Dr. Haseltine
2,644,640 shares of restricted Common Stock on May 18, 1993 at a purchase price
of $.05 per share. The shares of Common Stock sold to Dr. Haseltine vested in
equal annual installments over a four-year period that commenced on May 11,
1993. All of the shares are subject to rights of first refusal by the Company on
sale (at a price per share equal to $.2825 less than the price of the proposed
sale).
In October 1992, the Company entered into an employment agreement with Dr.
Rosen in which Dr. Rosen agreed to serve as Senior Vice President, Research and
Development of the Company. Since 2000, he has served as Executive Vice
President, Research and Development. The employment agreement was for an initial
term that ended in October 1995 and has been and will be automatically extended
for additional one-year periods unless terminated by either party prior to the
end of the applicable term. Dr. Rosen is entitled to an annual base salary, as
determined by the Board of Directors ($365,000 as of January 1, 2001), an annual
bonus of between 10% and 20% of his base salary, and an annual car allowance.
The Company may terminate the employment agreement without cause, and upon such
termination, Dr. Rosen will be entitled to receive three months' base salary. In
April 1993, pursuant to the agreement, the Company sold to Dr. Rosen 563,908
shares of restricted Common Stock at a purchase price of $.0025 per share. All
of the shares are subject to rights of first refusal by the Company on sale (at
a price per share equal to $.0475 less than the price of the proposed sale).
In September 1999, the Company entered into an employment agreement with
Dr. Stump in which Dr. Stump agreed to serve as Senior Vice President, Drug
Development of the Company, effective November 1999. Dr. Stump is entitled to an
annual base salary, as determined by the Board of Directors ($295,000 as of
January 1, 2001) and an annual bonus of up to 30% of base salary. Upon
termination
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without cause, Dr. Stump will be entitled to receive base salary until the
earlier of (1) 12 months after termination of employment or (2) commencement of
other regular full-time employment.
In April 1997, the Company entered into an employment agreement with Dr.
Davis in which Dr. Davis agreed to serve as Senior Vice President, General
Counsel and Secretary of the Company. Dr. Davis is entitled to an annual base
salary, as determined by the Board of Directors ($295,000 as of January 1, 2001)
and an annual bonus of up to 30% of base salary. Upon termination without cause,
Dr. Davis will be entitled to receive base salary until the earlier of (1) 12
months after termination of employment or (2) commencement of other regular
full-time employment.
In August 1996, the Company entered into an employment agreement with Mr.
Mayer in which Mr. Mayer agreed to serve as Senior Vice President and Chief
Financial Officer of the Company. Mr. Mayer is entitled to an annual base
salary, as determined by the Board of Directors ($295,000 as of January 1, 2001)
and an annual bonus of up to 30% of base salary. Upon termination without cause,
Mr. Mayer will be entitled to receive base salary until the earlier of (1) 12
months after termination of employment or (2) commencement of other regular
full-time employment.
In January 1997, the Company entered into an employment agreement with Mr.
Mandell in which Mr. Mandell agreed to serve as Senior Vice President, Corporate
and Business Development of the Company. Since January 2001, he has served as
Senior Vice President and Chief Business Officer. Mr. Mandell is entitled to an
annual base salary, as determined by the Board of Directors ($295,000 as of
January 1, 2001) and an annual bonus of up to 30% of base salary. Upon
termination without cause or upon a constructive termination, Mr. Mandell will
be entitled to receive base salary until the earlier of (1) 12 months after
termination of employment, or (2) commencement of other regular full-time
employment.
In July 1998, the Company established a Key Executive Severance Plan for
the Chief Executive Officer, the President and other key employees of the
Corporation, and pursuant to that plan, the Company entered into agreements with
the Named Executive Officers. The agreements provide that in the event the
executive's employment is terminated by the Company without cause or by the
Executive for good reason, in either case within 18 months of a Change in
Control of the Company (as defined in the Plan), the Company shall make a cash
payment to the executive equal to 1.5 times the sum of the executive's annual
salary plus bonus (2.0 times in the case of the Chief Executive Officer) and the
executive will be entitled to continue to participate in the Company's group
medical, dental, life and disability programs for a period of eighteen months
(twenty-four months in the case of the Chief Executive Officer). In addition,
the Key Executive Severance Plan provides that upon a Change in Control, all
option plans will vest unless the options are assumed or replaced in connection
with the Change in Control and the assumed or replacement options will vest in
the event the executive's employment is terminated without cause or the
executive resigns for good reason, in either case within 18 months of the Change
in Control. Each executive also agreed to certain confidentiality and non-
solicitation provisions as a condition to participation in the Key Executive
Severance Plan.
LOANS TO EXECUTIVE OFFICERS
In November 1993, the Board of Directors authorized the extension of an
interest-free loan (the "Loan") to Dr. Haseltine, in an amount up to $1,000,000,
to enable Dr. Haseltine to pay certain tax liabilities relating to his purchase
of Common Stock in May 1993. The Loan was made on December 29, 1993 and was
evidenced by a promissory note dated March 4, 1994 in the original amount of
$872,845, replacing a promissory note dated December 29, 1993 (as replaced, the
"Note"). The principal amount of the Loan was increased to $891,488 on December
16, 1994. The Loan was secured initially by 457,888 shares of issued and
outstanding Common Stock of the Company, with a market value at that time equal
to 200% of the principal sum of the loan (the "Collateral") and is now secured
by 128,504 shares of Common Stock. The Loan is repayable in full on the earliest
to occur of (1) twenty business days after demand for repayment has been made by
the Company, (2) twenty business days after Dr. Haseltine's employment has been
terminated, (3) on the date Dr. Haseltine defaults on the Note or (4) Decem-
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ber 29, 2003. Dr. Haseltine is required to repay the Loan in full, or in some
instances, in part, if he sells any of the Collateral.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Compensation Committee is a current or former
officer or employee of the Company.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors consists entirely of
non-employee directors. The Compensation Committee determines all compensation
paid or awarded to the Company's executive officers and approves the Company's
overall compensation policies.
The Compensation Committee's goals are to attract and retain an executive
management team that is capable of taking full advantage of the Company's
opportunities, and to provide incentives for outstanding performance. In
arriving at an initial compensation offer to an individual, the Compensation
Committee considers determinants of the individual's market value, including
experience, education, accomplishments and reputation, as well as the level of
responsibility to be assumed, in relation to the market value of such
qualifications and industry standards. When determining subsequent adjustments
to an individual's compensation package, the Compensation Committee also
evaluates the importance to stockholders of that person's continued service.
This is a judgment process, exercised by the Compensation Committee with the
advice of Company management and a compensation consultant.
The executive officers' compensation structure consists of: (1) base
salary, (2) cash bonus and (3) stock options.
Base Salary. Each individual's base salary is determined by the
Compensation Committee after considering a variety of factors that make up
market value and prospective value to the Company, including the knowledge,
experience and accomplishments of the individual, the individual's level of
responsibility, and the typical compensation levels for individuals with similar
credentials. The Compensation Committee may change the salary of an individual
on the basis of its judgment for any reason, including the performance of the
individual or the Company, changes in responsibility and changes in the market
for executives with similar credentials. Salaries for 2001 were set based on the
above factors and after review of industry comparables and discussion with a
leading compensation consultant.
Cash Bonus. Bonuses are awarded for accomplishments during the past year.
Bonuses are determined by the Compensation Committee with advice from Company
Management, based upon the Committee's assessment of the individual's
contributions during the year, compared to, but not limited to, a list of
individualized goals previously approved by Management and the Compensation
Committee. In determining bonuses for the fiscal year ended December 31, 2000,
the Compensation Committee considered in addition to the individualized goals,
the Company's raising additional net proceeds of $1.4 billion from two debt and
one equity financing to support ongoing research and significant progress in
conducting clinical trials of new drug candidates and in identifying new
therapeutic proteins for internal development or out-licensing, completion of
the Company's leased process development and manufacturing facility and
initiation of construction of an expansion to the facility, continued progress
within collaborations previously established and establishment of new
collaborations in the area of antibodies, and further additions to the Company's
intellectual property and to its capability to convert this to product
development programs.
Stock Options. Stock options are prospective incentives, aimed at keeping
and motivating key people by letting them share in the value they create for
stockholders. They are awarded at times deemed appropriate by the Compensation
Committee in amounts calculated to secure the full attention and best efforts of
executives on whose future performance the Company's success will depend.
Executive officers other than the Chief Executive Officer (discussed below)
received options on 1,260,000 shares in 2000.
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Chief Executive Officer's Compensation. The Compensation Committee awarded
Dr. Haseltine a bonus of $200,000 for the fiscal year ended December 31, 2000.
In addition, effective January 1, 2001, Dr. Haseltine's base salary was
increased from $450,000 per year to $485,000 per year. The bonus and increase in
salary are based on the Compensation Committee's assessments of Dr. Haseltine's
role in the Company's performance in 2000. Under Dr. Haseltine's leadership, the
Company's capabilities and opportunities were significantly enhanced by raising
additional net proceeds of $1.4 billion from two debt and one equity financing
to support ongoing research efforts and initiating new collaborations in the
area of antibodies, which multiply the potential for converting the Company's
discoveries into products on a timely basis. At the same time, the Company has
made significant progress in developing new drug candidates. Organizational
development is keeping pace with the expanding opportunities.
Compensation Deduction Limit. The Compensation Committee has considered
the $1 million limit for federal income tax purposes on deductible executive
compensation that is not performance based, and believes all executive
compensation expenses will be deductible by the Company for the foreseeable
future.
Compensation Committee
Max Link, Ph.D., Chairman
Robert D. Hormats
Alan G. Spoon
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PERFORMANCE GRAPH
As part of the proxy statement disclosure requirements mandated by the
Securities and Exchange Commission, the Company is required to provide a
comparison of the cumulative total stockholder return on its Common Stock with
that of a broad equity market index and either a published industry index or a
company-constructed peer group index. The following graph compares the
performance of the Company's Common Stock for the periods indicated with the
performance of the Nasdaq U.S. Stock Market Total Return Index (the "TRI") and
the Nasdaq Pharmaceutical Index (the "NPI"). The comparison assumes $100 was
invested on December 31, 1995 in the Company's Common Stock and in each of the
foregoing indices and assumes the reinvestment of dividends.
[LINE GRAPH]
HUMAN GENOME SCIENCES NASDAQ US NASDAQ PHARMACEUTICALS
--------------------- --------- ----------------------
12/31/95 100.00 100.00 100.00
12/31/96 106.54 123.04 100.13
12/31/97 103.92 150.69 103.19
12/31/98 92.97 212.51 130.98
12/31/99 399.02 394.94 246.87
12/31/00 724.84 237.68 307.90
ADDITIONAL INFORMATION
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires that the Company's executive
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, file reports of ownership
and changes in ownership with the SEC and provide the Company with copies of
such reports. The Company has reviewed such reports received by it and written
representations from its directors and executive officers. Based solely on such
review, the Company believes that all ownership filing requirements were timely
during 2000, except for an inadvertent omission of a charitable gift of shares
owned by Mr. Steven C. Mayer on a Form 5 filed for the 2000 fiscal year. Mr.
Mayer subsequently filed an amended Form 5 reporting the charitable gift.
OTHER MATTERS
The Board of Directors of the Company knows of no other business that will
be presented for consideration at the Annual Meeting. Execution of a proxy,
however, confers on the designated proxyholders discretionary authority to vote
the shares in accordance with their best judgment on such other business, if
any, that may properly come before the Annual Meeting or any adjournments
thereof.
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THE COMPANY WILL PROVIDE WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000, INCLUDING
FINANCIAL STATEMENTS AND SCHEDULES, TO EACH OF THE COMPANY'S STOCKHOLDERS OF
RECORD ON MARCH 30, 2001, AND TO EACH BENEFICIAL OWNER OF STOCK ON THAT DATE,
UPON RECEIPT OF A WRITTEN REQUEST THEREFOR MAILED TO THE COMPANY'S OFFICES, 9410
KEY WEST AVENUE, ROCKVILLE, MARYLAND 20850-3338, ATTENTION: INVESTOR RELATIONS
OFFICE. IN THE EVENT THAT EXHIBITS TO SUCH FORM 10-K ARE REQUESTED, A FEE WILL
BE CHARGED FOR REPRODUCTION OF SUCH EXHIBITS. REQUESTS FROM BENEFICIAL OWNERS OF
COMMON STOCK MUST SET FORTH A GOOD FAITH REPRESENTATION AS TO SUCH OWNERSHIP.
PROPOSALS FOR THE 2002 ANNUAL MEETING
The deadline for submission of stockholder proposals to be considered for
inclusion in the proxy statement and form of proxy relating to the 2002 Annual
Meeting of Stockholders is December 26, 2001. Any such proposal received by the
Corporation's principal executive offices in Rockville, Maryland after such date
will be considered untimely and may be excluded from the proxy statement and
form of proxy.
The deadline for submission of stockholder proposals to be presented at the
2002 Annual Meeting of Stockholders, but which will not be included in the proxy
statement and form of proxy relating to such meeting, is March 26, 2002. Any
such proposal received by the Corporation's principal executive offices in
Rockville, Maryland after such date will be considered untimely and the persons
named in the proxy for such meeting may exercise their discretionary voting
power with respect to such proposal.
By Order of the Board of Directors,
James H. Davis, Secretary
April 23, 2001
THE BOARD OF DIRECTORS HOPES THAT YOU WILL ATTEND THE MEETING. WHETHER OR
NOT YOU PLAN TO ATTEND, PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED
PROXY IN THE ACCOMPANYING ENVELOPE PROMPTLY. IF YOU ATTEND THE MEETING, YOU MAY
WITHDRAW YOUR PROXY AND VOTE YOUR OWN SHARES.
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EXHIBIT A
HUMAN GENOME SCIENCES, INC.
AMENDED AND RESTATED 2000 STOCK INCENTIVE PLAN
1. ESTABLISHMENT, PURPOSE AND TYPES OF AWARDS
Human Genome Sciences, Inc., a Delaware corporation (the "Company"), hereby
establishes the Human Genome Sciences, Inc. Amended and Restated 2000 Stock
Incentive Plan (the "Plan"). The purpose of the Plan is to promote the long-term
growth and profitability of the Company by (i) providing key people with
incentives to improve stockholder value and to contribute to the growth and
financial success of the Company, and (ii) enabling the Company to attract,
retain and reward the best-available persons.
The Plan is the continuation of the Company's 1993 Incentive and
Non-qualified Stock Option Plan and 1994 Stock Option Plan (collectively, the
"Prior Plans"), which are hereby merged and restated as set forth herein. The
provisions of the Prior Plans shall continue to control with respect to any
outstanding options granted thereunder that are intended to qualify as
"incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code to the extent necessary to preserve such status.
The Plan permits the granting of stock options (including incentive stock
options qualifying under Code section 422 and nonqualified stock options) and
stock appreciation rights, in any combination.
2. DEFINITIONS
Under this Plan, except where the context otherwise indicates, the
following definitions apply:
(a) "Affiliate" shall mean any entity, whether now or hereafter existing,
which controls, is controlled by, or is under common control with, the Company
(including, but not limited to, joint ventures, limited liability companies and
partnerships). For this purpose, "control" shall mean ownership of 50% or more
of the total combined voting power or value of all classes of stock or interests
of the entity.
(b) "Award" shall mean any stock option or stock appreciation right granted
under the Plan or one of the Prior Plans.
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended, and
any regulations promulgated thereunder.
(e) "Common Stock" shall mean shares of common stock of the Company, par
value of one cent ($.01) per share.
(f) "Fair Market Value" shall mean, with respect to a share of the
Company's Common Stock for any purpose on a particular date, the value
determined by the Administrator in good faith. However, if the Common Stock is
registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934,
as amended, and listed for trading on a national exchange or market, "Fair
Market Value" shall mean, as applicable, (i) either the closing price or the
average of the high and low sale price on the relevant date, as determined in
the Administrator's discretion, quoted on the New York Stock Exchange, the
American Stock Exchange, or the Nasdaq National Market; (ii) the last sale price
on the relevant date quoted on the Nasdaq SmallCap Market; (iii) the average of
the high bid and low asked prices on the relevant date quoted on the Nasdaq OTC
Bulletin Board Service or by the National Quotation Bureau, Inc. or a comparable
service as determined in the Administrator's discretion; or (iv) if the Common
Stock is not quoted by any of the above, the average of the closing bid and
asked prices on the relevant date furnished by a professional market maker for
the Common Stock, or by such other source, selected by the Administrator. If no
public trading of the Common Stock occurs on the relevant date, then Fair Market
Value shall be determined as of the next preceding date on which trading of the
Common Stock does occur. For all purposes under this Plan, the term "relevant
date" as used in this Section 2(f) shall mean
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either the date as of which Fair Market Value is to be determined or the next
preceding date on which public trading of the Common Stock occurs, as determined
in the Administrator's discretion.
(g) "Grant Agreement" shall mean a written document memorializing the terms
and conditions of an Award and shall incorporate the terms of the Plan.
3. ADMINISTRATION
(a) Administration of the Plan. The Plan shall be administered by the
Board or by such committee or committees as may be appointed by the Board from
time to time (the Board, committee or committees hereinafter referred to as the
"Administrator").
(b) Powers of the Administrator. The Administrator shall have all the
powers vested in it by the terms of the Plan, such powers to include authority,
in its sole and absolute discretion, to grant Awards under the Plan, prescribe
Grant Agreements evidencing such Awards and establish programs for granting
Awards; provided, however, that the Administrator shall not have the discretion
to grant options to non-employee directors except as provided in Section 6(b) of
the Plan.
The Administrator shall have full power and authority to take all other
actions necessary to carry out the purpose and intent of the Plan, including,
but not limited to, the authority to: (i) determine the eligible persons to
whom, and the times at which Awards shall be granted; (ii) determine the types
of Awards to be granted; (iii) determine the number of shares to be covered by
or used for reference purposes for each Award; (iv) impose such terms,
limitations, restrictions and conditions upon any Award as the Administrator
shall deem appropriate; (v) modify, amend, extend or renew outstanding Awards,
or accept the surrender of outstanding Awards and substitute new Awards
(provided however, that, except as provided in Section 7(d) of the Plan, any
modification that would materially adversely affect any outstanding Award shall
not be made without the consent of the holder, and provided, further, that no
such modification, amendment or substitution that results in repricing the Award
to a lower exercise price shall be made without prior stockholder approval) and
(vi) accelerate or otherwise change the time in which an Award may be exercised
or becomes payable and to waive or accelerate the lapse, in whole or in part, of
any restriction or condition with respect to such Award, including, but not
limited to, any restriction or condition with respect to the vesting or
exercisability of an Award following termination of any grantee's employment or
other relationship with the Company.
The Administrator shall have full power and authority, in its sole and
absolute discretion, to administer and interpret the Plan and to adopt and
interpret such rules, regulations, agreements, guidelines and instruments for
the administration of the Plan and for the conduct of its business as the
Administrator deems necessary or advisable.
(c) Non-Uniform Determinations. The Administrator's determinations under
the Plan (including without limitation, determinations of the persons to receive
Awards, the form, amount and timing of such Awards, the terms and provisions of
such Awards and the Grant Agreements evidencing such Awards) need not be uniform
and may be made by the Administrator selectively among persons who receive, or
are eligible to receive, Awards under the Plan, whether or not such persons are
similarly situated.
(d) Limited Liability. To the maximum extent permitted by law, no member
of the Administrator shall be liable for any action taken or decision made in
good faith relating to the Plan or any Award.
(e) Indemnification. To the maximum extent permitted by law and by the
Company's charter and by-laws, the members of the Administrator shall be
indemnified by the Company in respect of all their activities under the Plan.
(f) Effect of Administrator's Decision. All actions taken and decisions
and determinations made by the Administrator on all matters relating to the Plan
pursuant to the powers vested in it hereunder shall be in the Administrator's
sole and absolute discretion and shall be conclusive and binding on all parties
concerned, including the Company, its stockholders, any participants in the Plan
and any other employee, consultant, or director of the Company, and their
respective successors in interest.
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31
4. SHARES AVAILABLE FOR THE PLAN; MAXIMUM AWARDS
Subject to adjustments as provided in Section 7(d) of the Plan, the number
of shares of Common Stock available for Awards granted during the Company's
fiscal years 2001, 2002 and 2003 shall equal (a) five percent of the outstanding
Common Stock, as of the end of the preceding fiscal year, plus (b) the Carryover
Shares, and the number of shares of Common Stock available for Awards granted
during any fiscal year of the Company after 2003 shall be equal to the Carryover
Shares. For fiscal year 2001, "Carryover Shares" means the 3,893,878 shares
representing the excess of (x) the shares which were available for issuance
under the Plan prior to 2001 (including shares transferred from the Prior
Plans), over (y) the shares which were issued under the Plan, or were subject to
outstanding Awards granted under the Plan or the Prior Plans, prior to 2001. For
each fiscal year after 2001, "Carryover Shares" means the shares which were
available for Awards, and which were not subject to any Awards, as of the last
day of the preceding fiscal year. Notwithstanding the foregoing, in no event
shall more than an aggregate of 15,000,000 shares of Common Stock be issued
pursuant to Awards granted after 2000 that are intended to qualify as incentive
stock options under Code section 422. The Company shall reserve as of the
beginning of each fiscal year a sufficient number of shares of Common Stock to
satisfy outstanding Awards under the Plan (including Awards outstanding under
the Prior Plans that are merged herein) and the number of additional shares
available for issuance in accordance with the formula set forth above.
If any Award, or portion of an Award, under the Plan expires or terminates
unexercised, becomes unexercisable or is forfeited or otherwise terminated,
surrendered or canceled as to any shares, or if any shares of Common Stock are
surrendered to the Company in connection with any Award (whether or not such
surrendered shares were acquired pursuant to any Award), or if any shares are
withheld by the Company, the shares subject to such Award and the surrendered
and withheld shares shall thereafter be available for further Awards under the
Plan; provided, however, that any such shares that are surrendered to or
withheld by the Company in connection with any Award or that are otherwise
forfeited after issuance shall not be available for purchase pursuant to
incentive stock options intended to qualify under Code section 422.
The maximum number of shares of Common Stock subject to Awards of any
combination that may be granted during any calendar year to any one person is
2,000,000 shares, subject to adjustments as provided in Section 7(d) of the
Plan; provided, however, that to the extent the maximum permissible award is not
made in a year, such amount may be carried over to subsequent years. Such
per-individual limit shall not be adjusted to effect a restoration of shares of
Common Stock with respect to which the related Award is terminated, surrendered
or canceled.
5. PARTICIPATION
Participation in the Plan shall be open to all employees, officers and
directors of, and other individuals providing bona fide services to or for, the
Company, or of any Affiliate of the Company, as may be selected by the
Administrator from time to time. Non-employee directors of the Company shall be
eligible to participate in the Plan only as provided in Section 6(b).
6. AWARDS
The Administrator, in its sole discretion, establishes the terms of all
Awards granted under the Plan. Awards may be granted individually or in tandem
with other types of Awards. All Awards are subject to the terms and conditions
provided in the Grant Agreement. The Administrator may permit or require a
recipient of an Award to defer such individual's receipt of the payment of cash
or the delivery of Common Stock that would otherwise be due to such individual
by virtue of the exercise of, payment of, or lapse or waiver of restrictions
respecting, any Award. If any such payment deferral is required or permitted,
the Administrator shall, in its sole discretion, establish rules and procedures
for such payment deferrals.
(a) Stock Options. The Administrator may from time to time grant to
eligible participants, other than non-employee directors of the Company, Awards
of incentive stock options as that term is defined in Code section 422 or
nonqualified stock options; provided, however, that Awards of incentive stock
options
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shall be limited to employees of the Company or of any current or hereafter
existing "parent corporation" or "subsidiary corporation," as defined in Code
sections 424(e) and (f), respectively, of the Company. All options granted under
the Plan must have an exercise price at least equal to Fair Market Value as of
the date of grant and no option granted under the Plan shall have a maximum term
in excess of ten (10) years. No stock option shall be an incentive stock option
unless so designated by the Administrator at the time of grant or in the Grant
Agreement evidencing such stock option.
(b) Non-Employee Director Options. Each director of the Company who is not
an employee of the Company (a "Non-Employee Director"), and who is appointed,
elected or re-elected as director on or after the date of the annual meeting of
stockholders for the Company's fiscal year ending December 31, 2000, shall
receive an option (a "Director Option") to purchase 48,000 shares of Common
Stock on the date of each such appointment, election or re-election. Until the
annual stockholders meeting for the fiscal year in which a Non-Employee Director
receives his or her first Director Option, such Non-Employee Director will
receive an automatic grant, on the day immediately following the date of each
annual meeting of stockholders as long as such director is a member of the
Board, of an option to purchase 8,000 shares of Common Stock (a "Transition
Period Director Option"). The exercise price for each share subject to a
Director Option or a Transition Period Director Option shall be equal to the
Fair Market Value of the Common Stock on the date of grant. Each Director Option
shall become exercisable in 48 equal monthly installments commencing on the date
of grant. Each Transition Period Director Option will become exercisable in full
on the first anniversary of the date of grant.
(c) Stock Appreciation Rights. The Administrator may from time to time
grant to eligible participants Awards of Stock Appreciation Rights ("SAR"). An
SAR entitles the grantee to receive, subject to the provisions of the Plan and
the Grant Agreement, a payment having an aggregate value equal to the product of
(i) the excess of (A) the Fair Market Value on the exercise date of one share of
Common Stock over (B) the base price per share specified in the Grant Agreement,
times (ii) the number of shares specified by the SAR, or portion thereof, which
is exercised. Payment by the Company of the amount receivable upon any exercise
of an SAR may be made by the delivery of Common Stock or cash, or any
combination of Common Stock and cash, as determined in the sole discretion of
the Administrator. If upon settlement of the exercise of an SAR a grantee is to
receive a portion of such payment in shares of Common Stock, the number of
shares shall be determined by dividing such portion by the Fair Market Value of
a share of Common Stock on the exercise date. No fractional shares shall be used
for such payment and the Administrator shall determine whether cash shall be
given in lieu of such fractional shares or whether such fractional shares shall
be eliminated.
7. MISCELLANEOUS
(a) Withholding of Taxes. Grantees and holders of Awards shall pay to the
Company or its Affiliate, or make provision satisfactory to the Administrator
for payment of, any taxes required to be withheld in respect of Awards under the
Plan no later than the date of the event creating the tax liability. The Company
or its Affiliate may, to the extent permitted by law, deduct any such tax
obligations from any payment of any kind otherwise due to the grantee or holder
of an Award. In the event that payment to the Company or its Affiliate of such
tax obligations is made in shares of Common Stock, such shares shall be valued
at Fair Market Value on the applicable date for such purposes and shall not
exceed the statutory minimum tax withholding requirement.
(b) Loans. The Company or its Affiliate may make or guarantee loans to
grantees to assist grantees in exercising Awards and satisfying any withholding
tax obligations.
(c) Transferability. Except as otherwise determined by the Administrator,
and in any event in the case of an incentive stock option or a stock
appreciation right granted with respect to an incentive stock option, no Award
granted under the Plan shall be transferable by a grantee otherwise than by will
or the laws of descent and distribution. Unless otherwise determined by the
Administrator in accord with the provisions of the immediately preceding
sentence, an Award may be exercised during the lifetime of the
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grantee, only by the grantee or, during the period the grantee is under a legal
disability, by the grantee's guardian or legal representative.
(d) Adjustments; Business Combinations.
(i) Subject to any required action by the Company (which shall be
promptly taken) or its shareholders, and subject to the provisions of the
Delaware General Corporation Law, if the outstanding Common Stock are
increased or decreased or changed into or exchanged for a different number
or kind of security by reason of any recapitalization, reclassification,
stock split, reverse stock split, combination of shares, exchange of
shares, stock dividend, or other distribution payable in capital stock, or
other increase or decrease in such Common Stock is effected without receipt
of consideration by the Company occurring after the date of grant of an
Award, a proportionate and appropriate adjustment shall be made in the
number of shares of Common Stock underlying the Award, so that the
proportionate interest of the Award holder immediately following such event
shall, to the extent practicable, be the same as immediately before such
event. A commensurate change will be made to (A) the maximum number of
shares reserved for issuance or with respect to which Awards may be granted
under the Plan and the maximum number of shares with respect to which
Awards may be granted during any one fiscal year of the Company to any
individual, as provided in Section 4 of the Plan and (B) the number of
shares covered by Director Options and Transition Period Director Options,
as provided in Section 6(b), to be granted after such event.
(ii) In addition to the adjustments covered under Section 7(d)(i)
above, any Award may contain provisions to the effect that upon the
occurrence of certain events, including a change in control of the Company
(as defined by the Administrator in the Grant Agreement), any outstanding
Awards not theretofore exercisable or free from restrictions, as the case
may be, shall either immediately, or upon a further determination made by
the Administrator at the time of the event, become fully exercisable or
free from restrictions.
(iii) The Administrator will make the adjustments and determinations
under Sections 7(d)(i) and 7(d)(ii), and its determination will be final,
binding and conclusive.
(iv) Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger, or consolidation of the Company as a result of
which the outstanding securities of the class of securities then subject to
the Awards are changed into or exchanged for cash or property or securities
not of the Company's issue, or any combination thereof, or upon a sale of
substantially all the property of the Company to, or the acquisition of
shares of Common Stock representing more than eighty percent (80%) of the
voting power of the shares of Common Stock then outstanding by, another
corporation or person, the Awards shall terminate, unless provision be made
in writing in connection with such transaction for the assumption of the
Awards theretofore granted, or the substitution for such Awards of any
awards covering the stock or securities of a successor employer
corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares of stock and prices, in
which event the Awards shall continue in the manner and under the terms so
provided. If an Award would otherwise terminate pursuant to the foregoing
sentence, the holder of such Award shall have the right, at such time
before the consummation of the transaction causing such termination as the
Company shall reasonably designate, to exercise the unexercised portions of
the Awards, including the portions thereof that would, but for this
subsection, not yet be exercisable.
(e) Substitution of Awards in Mergers and Acquisitions. Awards may be
granted under the Plan from time to time in substitution for Awards held by
employees, officers, consultants or directors of entities who become or are
about to become employees, officers, consultants or directors of the Company or
an Affiliate solely as the result of a merger or consolidation of the employing
entity with the Company or an Affiliate, or the acquisition by the Company or an
Affiliate of the assets or stock of the employing entity. The terms and
conditions of any substitute Awards so granted may vary from the terms and
conditions set forth herein to the extent that the Administrator deems
appropriate at the time of grant to conform the substitute Awards to the
provisions of the awards for which they are substituted. To the extent permitted
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34
under applicable law and exchange rules, any Awards granted pursuant to this
Section 7(e) shall not reduce the number of shares available for issuance
pursuant to Section 4.
(f) Termination, Amendment and Modification of the Plan. The Board may
terminate, amend or modify the Plan or any portion thereof at any time;
provided, however, that the Board may not materially amend the Plan without
obtaining shareholder approval.
(g) Non-Guarantee of Employment or Service. Nothing in the Plan or in any
Grant Agreement thereunder shall confer any right on an individual to continue
in the service of the Company or shall interfere in any way with the right of
the Company to terminate such service at any time with or without cause or
notice.
(h) No Trust or Fund Created. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company and a grantee or any other person. To the
extent that any grantee or other person acquires a right to receive payments
from the Company pursuant to an Award, such right shall be no greater than the
right of any unsecured general creditor of the Company.
(i) Governing Law. The validity, construction and effect of the Plan, of
Grant Agreements entered into pursuant to the Plan, and of any rules,
regulations, determinations or decisions made by the Administrator relating to
the Plan or such Grant Agreements, and the rights of any and all persons having
or claiming to have any interest therein or thereunder, shall be determined
exclusively in accordance with applicable federal laws and the laws of the State
of Delaware, without regard to its conflict of laws principles.
(j) Effective Date; Termination Date. The Plan initially became effective
February 16, 2000, and shall continue in effect as amended and restated herein,
subject to approval of the stockholders of the Company at the 2001 Annual
Meeting of the Stockholders or a special meeting of the stockholders at which
the Plan, as amended and restated, is presented for approval, provided that any
such special meeting is held within twelve months of the date this amended and
restated Plan is adopted by the Board. No Award shall be granted under the Plan
after the close of business on February 15, 2010. Subject to other applicable
provisions of the Plan, all Awards made under the Plan prior to such termination
of the Plan shall remain in effect until such Awards have been satisfied or
terminated in accordance with the Plan and the terms of such Awards.
Date Originally Approved by the Board: February 16, 2000
Date Approved by the Stockholders: May 24, 2000
Date Approved by the Board as Amended and Restated: February 14, 2001
Date Approved by the Stockholders as Amended and Restated:
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EXHIBIT B
HUMAN GENOME SCIENCES, INC.
AUDIT COMMITTEE CHARTER
The Audit Committee (the "Committee") of the Board of Directors (the
"Board") of Human Genome Sciences, Inc. (the "Corporation") will have the
oversight responsibility, authority and duties described in this Charter.
PURPOSE
The primary purpose of the Committee is to assist the Board in fulfilling
its oversight responsibilities with respect to (i) the annual financial
information to be provided to shareholders and the Securities and Exchange
Commission (the "SEC"); (ii) the system of internal accounting and financial
controls that management has established; and (iii) the internal and external
audit process. In addition, the Committee provides an avenue for communication
between the independent auditors, financial management and the Board. The
Committee's responsibility is one of oversight, recognizing that the
Corporation's management is responsible for preparing the Corporation's
financial statements and that the independent auditors are responsible for
auditing those financial statements. The independent auditors are ultimately
accountable to the Committee and the Board for such accountants' audit of the
financial statements of the Corporation.
COMPOSITION
The Committee shall be appointed annually by the Board and shall comprise
at least three directors, each of whom shall meet the independence and financial
literacy requirements of the National Association of Securities Dealers (the
"NASD"). In addition, at least one member of the Committee will possess
accounting or financial management expertise as defined by the NASD. The Board
shall designate one member as Chair of the Committee.
MEETINGS
The Committee shall hold meetings as deemed necessary or desirable by the
Chair of the Committee. In addition to such meetings of the Committee as may be
required to perform the functions described under "Duties and Powers" below, the
Committee shall meet at least annually with the chief financial officer and the
independent auditors to discuss any matters that the Committee or any of these
persons or firms believe should be discussed. The Committee may, at its
discretion, meet in executive session with or without the presence of the
independent auditors or corporate officers.
DUTIES AND POWERS
The following shall be the principal recurring functions of the Committee
in carrying out its oversight responsibilities. The functions are set forth as a
guide with the understanding that the Committee may modify or supplement them as
appropriate.
INDEPENDENT AUDITORS
1. Review the performance of the independent auditors and make
recommendations to the Board regarding the appointment or termination
of the independent auditors.
2. Ensure that the independent auditors prepare and deliver at least
annually a formal written statement delineating all relationships
between the independent auditors and the Corporation addressing at
least the matters set forth in Independence Standards Board, Standard
No. 1, Independence Discussions with Audit Committees, as amended.
3. Discuss with the independent auditors any disclosed relationships or
services that may impact the objectivity and independence of the
independent auditors and recommend that the Board take
B-1
36
appropriate action in response to the independent auditors' report to
satisfy itself of the independent auditors' independence.
4. Obtain from the independent auditors assurance that the audit was
conducted in accordance with auditing standards generally accepted in
the United States and rules and regulations set forth in Section 10A of
the Securities Exchange Act of 1934, as amended.
5. Review the fees charged by the independent auditors.
FINANCIAL STATEMENT AND REPORTS
6. Receive and review from management and the independent auditors a
timely analysis of significant financial reporting issues and
practices.
7. Discuss with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61, Communications
with Audit Committees, as amended.
8. Meet with management and/or the independent auditors to:
- review the annual audit plans of the independent auditors;
- discuss the annual financial statements;
- discuss any significant matters arising from any audit or report or
communication referred to in items 6 or 7 above relating to the
financial statements;
- discuss significant proposed or contemplated changes to the
Corporation's accounting principles, policies, controls, procedures,
practices and auditing plans; and
- inquire about significant risks and exposures, if any, and the steps
taken to monitor and minimize such risks.
9. Review the Corporation's quarterly financial statements with management
and the independent auditors prior to the filing of the Corporation's
Quarterly Report on Form 10-Q. The Chair of the Committee may represent
the entire Committee for purposes of this review.
REPORTING AND RECOMMENDATIONS
10. Determine, based on the reviews and discussions noted above, whether to
recommend to the Board that the audited financial statements be
included in the Corporation's Annual Report on Form 10-K for filing
with the SEC.
11. Prepare any report, including any recommendation of the Committee,
required by the rules of the SEC to be included in the Corporation's
annual proxy statement.
12. Maintain minutes or other records of meetings and activities of the
Committee.
13. Report its activities to the Board on a regular basis and make such
recommendations with respect to the above and other matters and take
such other actions as the Committee or the Board may deem necessary or
appropriate.
RESOURCES AND AUTHORITY
The Committee shall have the resources and authority appropriate to
discharge its responsibilities, including the authority to engage independent
auditors for special audits, review and other procedures and to retain special
counsel and other experts or consultants.
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ANNUAL REVIEW
The Committee shall review, on at least an annual basis, this Charter and
the scope of the responsibilities of this Committee. Any proposed changes, where
indicated, shall be referred to the Board for appropriate action.
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HUMAN GENOME SCIENCES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 23, 2001
The undersigned hereby appoints WILLIAM A. HASELTINE, Ph.D., and JAMES
H. DAVIS, Ph.D, J.D., and each of them, with full power of substitution to each,
as attorneys and proxies of the undersigned, to vote all shares which the
undersigned is entitled to vote at the Annual Meeting of Stockholders of Human
Genome Sciences, Inc. (the "Company") to be held at the University System of
Maryland, Shady Grove Center, Auditorium, Building 1, 9640 Gudelsky Drive,
Rockville, MD 20850, on May 23, 2001 at 9:30 a.m., local time, and at any
adjournments thereof, upon and in respect of the following matters and in
accordance with the following instructions, with discretionary authority as to
any and all other matters that may properly come before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. IT MAY BE REVOKED
AT ANY TIME PRIOR TO ITS EXERCISE BY SENDING WRITTEN NOTICE TO THE SECRETARY OF
THE COMPANY, BY DELIVERING TO THE COMPANY A DULY EXECUTED PROXY BEARING A LATER
DATE, OR BY ATTENDING THE ANNUAL MEETING AND VOTING IN PERSON.
THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE PERSON(S) SIGNING
IT. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF THE
NOMINEES INDICATED AND "FOR" THE OTHER PROPOSALS.
(CONTINUED ON OTHER SIDE)
39
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
HUMAN GENOME SCIENCES, INC.
MAY 23, 2001
\/ PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED \/
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A [X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
FOR ALL NOMINEES WITHHOLD
LISTED TO THE RIGHT AUTHORITY TO VOTE MANAGEMENT RECOMMENDS A VOTE "FOR" THE NOMINEES FOR DIRECTOR LISTED
(EXCEPT AS WRITTEN TO THE FOR ALL NOMINEES LISTED BELOW AND "FOR" PROPOSALS 2, 3 AND 4.
CONTRARY BELOW) TO THE RIGHT
FOR AGAINST ABSTAIN
1. To elect [ ] [ ] NOMINEES: Jurgen Drews, M.D. 2. To approve an amendment [ ] [ ] [ ]
2 directors James B. Wyngaarden, M.D. to the Company's
Restated Certificate of
Incorporation (Fifth).
3. To approve an amendment [ ] [ ] [ ]
To withhold authority to vote for any nominee(s), write to the Company's 2000
the name(s) of the nominee(s) below: Stock Incentive Plan.
_______________________________________________________ 4. To ratify the [ ] [ ] [ ]
appointment
_______________________________________________________ of Ernst & Young LLP
as the Company's
_______________________________________________________ independent auditors
for the fiscal year
ending December 31,
2001.
5. To act upon such other [ ] [ ] [ ]
matters which may
properly come before
the Annual Meeting or
any adjournments
thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE
VOTED IN THE MANNER DIRECTED HEREIN BY THE
STOCKHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED "FOR" THE ELECTION OF
THE NOMINEES INDICATED AND "FOR" THE OTHER
PROPOSALS.
The undersigned hereby acknowledges receipt
of a copy of the Company's 2000 Annual Report
and Notice of Annual Meeting and Proxy
Statement relating to such Annual Meeting.
The undersigned revokes all proxies
heretofore given for said Annual Meeting or
any adjournment(s) thereof.
PLEASE SIGN, DATE AND PROMPTLY RETURN THIS
PROXY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS
REQUIRED IF MAILED WITHIN THE UNITED STATES.
SIGNATURE(S) DATE
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NOTE: Please sign exactly as your name appears hereon. If the shares are registered in the names of two or more persons, each should
sign. Executors, administrators, trustees, guardians and attorneys-in-fact should give their full titles. If a signatory is a
corporation, please give the full corporate name and have a duly authorized officer sign, stating his or her title. If a
signatory is a partnership, please sign in partnership name by an authorized person.
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