1
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 sec. 240.14a-11(c) or sec. 240.14a-12
ATRIX LABORATORIES, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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[LOGO]
ATRIX LABORATORIES, INC.
Dear Shareholder:
On behalf of the Board of Directors, I cordially invite you to attend the
Annual Meeting of Shareholders of Atrix Laboratories, Inc. to be held on April
28, 1996 at 6:00 p.m. local time, at The Fort Collins Marriott, 350 East
Horsetooth Road, Fort Collins, Colorado.
At the meeting you are being asked to elect directors and to consider and
take action upon a proposal to ratify the Board of Directors' selection of
Deloitte & Touche LLP as the Company's independent auditors for the year ending
December 31, 1996.
You are urged to vote your Proxy even if you currently plan to attend the
Annual Meeting. Please remember to sign and date the proxy card; otherwise, it
is invalid. Returning your Proxy will not prevent you from voting in person but
will assure that your vote is counted if you are unable to attend the meeting.
This has been an eventful year for our Company. At the meeting, we will
review the Company's activities over the past year and its plans for the future.
An opportunity will be provided for questions by shareholders. I hope you will
be able to join us.
Sincerely,
/s/ Mr. John E. Urheim
Mr. John E. Urheim
Vice Chairman and
Chief Executive Officer
April 3, 1996
3
ATRIX LABORATORIES, INC.
2579 MIDPOINT DRIVE
FORT COLLINS, COLORADO 80525
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 28, 1996
---------------------
TO THE SHAREHOLDERS OF ATRIX LABORATORIES, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders (the
"Meeting") of Atrix Laboratories, Inc. (the "Company") will be held at The Fort
Collins Marriott, 350 East Horsetooth Road, Fort Collins, Colorado on April 28,
1996 at 6:00 p.m. local time, for the following purposes:
1. To elect three directors to the Board of Directors.
2. To ratify the Board of Directors' selection of Deloitte & Touche LLP
as the Company's independent auditors for the year ending December 31,
1996.
3. To transact such other business as may properly come before the
Meeting and at any and all postponements, continuations or
adjournments thereof.
Only shareholders of record at the close of business on April 1, 1996 are
entitled to notice of and to vote at the Meeting or any postponements,
continuations and adjournments thereof.
You are cordially invited and urged to attend the Meeting. All
shareholders, whether or not they expect to attend the Meeting in person, are
requested to complete, date and sign the enclosed form of proxy and return it
promptly in the postage paid, return-addressed envelope provided for that
purpose. By returning your proxy promptly you can help the Company avoid the
expense of follow-up mailings to ensure a quorum so that the Meeting can be
held. Shareholders who attend the Meeting may revoke a prior proxy and vote
their proxy in person as set forth in the Proxy Statement.
THE ENCLOSED PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS OF THE
COMPANY. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF THE
PROPOSED ITEMS. YOUR VOTE IS IMPORTANT.
By Order of the Board of Directors
/s/ John E. Urheim
John E. Urheim
Vice Chairman and
Chief Executive Officer
Fort Collins, Colorado
Dated: April 3, 1996
4
ATRIX LABORATORIES, INC.
2579 MIDPOINT DRIVE
FORT COLLINS, COLORADO 80525
---------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 28, 1996
---------------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies by and on behalf of the Board of Directors (the "Board") of Atrix
Laboratories, Inc., a Delaware corporation (the "Company"), for use at the
Annual Meeting of Shareholders of the Company to be held at The Fort Collins
Marriott, 350 East Horsetooth Road, Fort Collins, Colorado, on April 28, 1996 at
6:00 p.m. local time and at any postponements, continuations or adjournments
thereof (collectively the "Meeting"). This Proxy Statement, the accompanying
form of Proxy (the "Proxy") and the Notice of Annual Meeting will be first
mailed or given to the Company's shareholders on or about April 3, 1996.
All shares of the Company's $.001 par value common stock (the "Shares"),
represented by properly executed Proxies received in time for the Meeting will
be voted at the Meeting in accordance with the instructions marked thereon or
otherwise as provided therein, unless such Proxies have previously been revoked.
Unless instructions to the contrary are marked, or if no instructions are
specified, Shares represented by Proxies will be voted for the proposals set
forth on the Proxy, and in the discretion of the persons named as proxies, on
such other matters as may properly come before the Meeting. Any Proxy may be
revoked at any time prior to the exercise thereof by submitting another Proxy
bearing a later date or by giving written notice of revocation to the Company at
the address indicated above or by voting in person at the Meeting. Any notice of
revocation sent to the Company must include the shareholder's name and must be
received prior to the Meeting to be effective.
VOTING
Only holders of record of Shares at the close of business on April 1, 1996
(the "Record Date") will be entitled to receive notice of and to vote at the
Meeting. On the Record Date there were 8,484,567 Shares outstanding, each of
which will be entitled to one vote on each matter properly submitted for vote to
the shareholders at the Meeting. The presence, in person or by proxy, of holders
of a majority of Shares entitled to vote at the Meeting constitutes a quorum for
the transaction of business at the Meeting.
The election of each director nominee requires the affirmative vote of a
plurality of the Shares cast in the election of directors. An affirmative vote
of a majority of the votes cast at the Meeting is required to ratify the Board
of Directors' selection of Deloitte & Touche LLP as the Company's independent
auditors for the year ending December 31, 1996.
Votes cast by proxy will be tabulated by an automated system administered
by the Company's transfer agent. Votes cast by proxy or in person at the Meeting
will be counted by the persons appointed by the Company to act as election
inspectors for the Meeting. Abstentions, broker non-votes and Shares as to which
authority to vote on any proposal is withheld, are each included in the
determination of the number of Shares present and voting at the Meeting for
purposes of obtaining a quorum. Each will be tabulated separately. Abstentions
are counted in tabulations of the votes cast on proposals presented to
shareholders, whereas broker non-votes are not counted for purposes of
determining whether a proposal has been approved.
5
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation provides for a board of
directors made up of three classes. The members of each class serve three-year
staggered terms with one class to be elected at each annual meeting. As provided
in the Company's Bylaws, the Board has currently set the total number of
directors at nine, with four directors in Class A, two directors in Class B and
three directors in Class C. The current terms of the Class A and Class B
directors expire at the Company's Annual Meeting of Shareholders for the years
ended 1997 and 1996, respectively. The current term of the Class C directors
expires at the Meeting.
The Board has nominated Dr. G. Lee Southard, Mr. C. Rodney O'Connor, and
Mr. H. Stuart Campbell for election as Class C directors to serve for a
three-year term expiring at the Annual Meeting of Shareholders for the year
ended 1998 and until their successors are elected and qualified.
Each director nominee is currently a Class C director. Each of the nominees
has consented to be a nominee and to serve as a director if elected, and it is
intended that the Shares represented by properly executed Proxies will be voted
for the election of the nominees except where authority to so vote is withheld.
The Board has no reason to believe that any of the director nominees will be
unable to serve as directors or become unavailable for any reason. If, at the
time of the Meeting, any of the director nominees shall become unavailable for
any reason, the persons entitled to vote the Proxy will vote for such
substituted nominee or nominees, if any, as such persons shall determine in his
or her discretion.
Information is set forth below regarding the director nominees and the
directors who will continue in office after the Meeting, including the name and
age of each director and nominee, his principal occupation and business
experience during the past five years and the commencement of his term as a
director of the Company.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE PROPOSAL TO ELECT
DR. G. LEE SOUTHARD, MR. C. RODNEY O'CONNOR, AND MR. H. STUART CAMPBELL AS CLASS
C DIRECTORS.
NOMINEES FOR ELECTION
PRINCIPAL OCCUPATION OR EMPLOYMENT DURING THE DIRECTOR
NAME AND AGE PAST FIVE YEARS; OTHER DIRECTORSHIPS SINCE
- ----------------------- --------------------------------------------------------- --------
Dr. G. Lee Southard(1) President of the Company since 1987 and Chief Scientific 1986
(59) Officer of the Company since June 1993. Chief Executive
Officer from 1987 to 1993. Dr. Southard also serves as a
director of Mesa Laboratories, Inc.
C. Rodney O'Connor Chairman and Chief Executive Officer of Cameron 1987
(59) Associates, Inc. (a financial communications firm) since
1976.
H. Stuart Campbell(2) Owner of Highland Packaging Labs, Inc. (a specialty 1995
(67) packaging company for the pharmaceutical industry) since
1983. Mr. Campbell also serves as a director for
Biomatrix, Inc., Isomedix, Inc., and Mesa Laboratories,
Inc.
- ---------------
(1) Member of the Executive Committee.
(2) Member of the Compensation Committee.
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DIRECTORS WHOSE TERM OF OFFICE WILL CONTINUE AFTER THE MEETING
DIRECTOR
NAME AND AGE PRINCIPAL OCCUPATION AND OTHER DIRECTORSHIPS SINCE
- ---------------------------- ---------------------------------------------------- --------
William C. O'Neil, Jr.(1)(2)* Chairman, President and Chief Executive Officer of 1988
(61) ClinTrials Research, Inc. (a clinical research
services company) since 1989. Mr. O'Neil also serves
as a director of Sigma Aldrich Corp., American
Healthcorp, Central Parking and Advocate.
John E. Urheim(1)** Vice Chairman and Chief Executive Officer of the 1993
(55) Company since June 1993. Principal of Urheim
Consultants (a health care consulting firm) from
April 1989 to June 1993.
David R. Bethune(2)* President and Chief Executive Officer of Aesgen, 1995
(55) Inc. (a generic pharmaceutical company) since 1995.
Group Vice President of American Cyanamid Company
from 1992 to 1995 and President of the Lederle
Laboratories Division of American Cyanamid Company
from 1988 to 1992. Mr. Bethune also serves as a
director of Elan Corp., the American Foundation for
Pharmaceutical Education, Partnership for Prevention
and is a founding trustee of the American Cancer
Society Foundation.
Dr. R. Bruce Merrifield(3)** Professor at Rockefeller University since 1966 and 1986
(74) associate editor for the International Journal of
Peptide and Protein Research and a member of the
Editorial Board of Analytical Biochemistry. Dr.
Merrifield also serves as a director of Profile
Diagnostic Sciences, Inc.
Dr. Jere E. Goyan(3)** President and Chief Operating Officer of Alteon, 1986
(64) Inc. since May 1993, acting Chief Executive Officer
from May 1993 to August 1993, Senior Vice President,
Research and Development from April 1, 1993 to May
14, 1993, and a member of the board of directors
since January 1993. Dr. Goyan served as professor of
Pharmacy and Pharmaceutical Chemistry at, and Dean
of, the School of Pharmacy at the University of
California, San Francisco, from 1965 and 1967,
respectively, to 1993, and currently serves as
Emeritus Dean of the School of Pharmacy. Dr. Goyan
also serves as a director of Emisphere Technologies,
Sciclone, Inc., and the National Foundation of
Medical Education.
Dr. D. Walter Cohen(1)(3)** Chancellor of the Medical College of Pennsylvania 1992
(69) since July 1993 and President of the Medical College
of Pennsylvania from 1990 to 1993. Dr. Cohen also
has had a dental practice (specializing in
periodontics) since 1950.
- ---------------
(1) Member of the Executive Committee.
(2) Member of the Compensation Committee.
(3) Member of the Audit Committee.
* Class A Director.
** Class B Director.
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BOARD MEETINGS
During 1995 the Board met four times. No director attended fewer than 75%
of the aggregate of (i) the total number of meetings of the Board during 1995;
and (ii) the total number of meetings held by all Committees of the Board on
which he served during 1995.
COMMITTEES OF THE BOARD
Executive Committee. The Board has an Executive Committee and during 1995
its members were Mr. O'Neil, Chairman of the Executive Committee, Mr. Urheim,
and Drs. Southard and Cohen. Mr. O'Connor resigned as a member of the Executive
Committee in February 1995. The Executive Committee has the authority to conduct
the business and affairs of the Company, except where action of the entire Board
is specified by statute. The Executive Committee met once during 1995.
Audit Committee. The Board has an Audit Committee and during 1995 its
members were Dr. Goyan, Chairman of the Audit Committee, and Drs. Merrifield and
Cohen. The Audit Committee's duties include the following: (i) making
recommendations to the Board as to the selection of the Company's independent
auditors; (ii) reviewing the results of the annual audit of the Company with the
independent auditors and appropriate management representatives; (iii) reviewing
with the independent auditors such major accounting policies of the Company as
are deemed appropriate for review by the Audit Committee; and (iv) reporting to
the Board at each meeting of the full Board following a meeting of the Audit
Committee concerning the Audit Committee's activities. The Audit Committee met
twice during 1995.
Compensation Committee. The Board has a Compensation Committee and during
1995 its members were Mr. Bethune, Chairman of the Compensation Committee, and
Messrs. Campbell and O'Neil. The Compensation Committee performs the following
duties: (i) considering and making recommendations to the Board with respect to
the overall compensation policies of the Company; (ii) approving the
compensation payable to all officers of the Company; (iii) reviewing proposed
compensation of executives as provided in the Company's executive compensation
plan; (iv) advising management on all other executive compensation matters as
requested; and (v) reporting to the Board as and when appropriate with respect
to all of the foregoing. The Compensation Committee met three times during 1995.
The Board does not presently have a separate nominating committee, the
function of which is performed by the Board as a whole.
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8
EXECUTIVE OFFICERS
Information is set forth below regarding the executive officers of the
Company, including their age, principal occupation during the last five years
and the date each first became an executive officer of the Company.
EXECUTIVE OFFICER
NAME AGE PRESENT EXECUTIVE OFFICE OF THE COMPANY SINCE
- -------------------- --- -------------------------------------------------- --------------------
John E. Urheim 55 Vice Chairman and Chief Executive Officer since 1993
June 1993. Principal of Urheim Consultants from
April 1989 to June 1993.
Dr. G. Lee Southard 59 President since 1987 and Chief Scientific Officer 1987
since June 1993. Chief Executive Officer from 1987
to 1993.
Dr. Richard L. Dunn 55 Vice President, Drug Delivery Research since 1992 1987
and Vice President, Research and Development from
1987 to 1992.
Dr. Charles P. Cox 43 Vice President, New Business Development since 1992
January 1996 and Vice President, Product
Development from September 1992 to January 1996.
Project Director of Research and Development,
Project Planning and Management for G.D. Searle &
Company from 1987 to September 1992.
Kimberly A. Marks 33 Corporate Controller and Assistant Secretary since 1991
February 1991 and Assistant Treasurer since
November 1992.
Dr. J. Steven Garrett 50 Vice President, Dental Clinical Research since 1995
April 1995. Professor of Periodontics at Loma
Linda University from 1986 to 1995 and in private
practice specializing in periodontics since 1978.
Michael R. Duncan 33 Vice President, Manufacturing since October 1995. 1995
Director of Production Operations and Packaging
Manager for Geneva Pharmaceuticals, Inc. from 1992
to 1995. Prior to 1992, Production Planner at
Roxanne Laboratories, Inc.
Rees M. Orland 51 Vice President, Marketing and Sales since January 1996
1996. Owner of RMO Consulting Group, (a healthcare
marketing consulting business) from 1992 to 1996.
Corporate Senior Vice President for Collagen
Corporation from 1991 to 1992.
Officers serve at the discretion of the Board and are elected at the first
meeting of the Board after each annual meeting of shareholders. There are no
family relationships among any directors and executive officers of the Company.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning compensation paid by
the Company for each of the last three fiscal years to (i) the Company's Chief
Executive Officer ("CEO") and (ii) the Company's other four most highly
compensated executive officers whose total annual compensation exceeded $100,000
during 1995 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
----------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) COMPENSATION($) OPTIONS(#) COMPENSATION($)
- ------------------------------------------ ---- --------- --------------- ------------ ---------------
John E. Urheim, 1995 $195,912 $ -0- 7,308 $ 2,970(1)
Vice Chairman and CEO 1994 183,000 40,180(4) -0- 2,020(1)
1993(2)(3) 44,000 19,700(4) -0- -0-
1993 56,042 20,125(4) 200,000 -0-
Dr. G. Lee Southard, 1995 $153,689 $ -0- 5,788 $ 4,489(1)
President and Chief Scientific Officer 1994 147,000 -0- -0- 4,620(1)
1993(2) 34,000 -0- -0- 1,100(1)
1993 137,025 -0- 10,000 4,378(1)
Dr. Richard L. Dunn, 1995 $121,054 $ -0- 4,615 $ 3,450(1)
Vice President, Drug Delivery Research 1994 117,000 -0- -0- 3,500(1)
1993(2) 29,000 -0- 13,100 860(1)
1993 113,264 -0- 6,000 3,400(1)
Dr. Charles P. Cox, 1995 $116,637 $ -0- 19,308 $ 3,220(1)
Vice President, New Business 1994 106,000 -0- -0- 3,185(1)
Development 1993(2) 26,000 -0- 11,600 -0-
1993 100,000 -0- 5,000 5,000(5)
Dr. J. Steven Garrett 1995(6) $106,304 $35,690(7) 55,769 $ -0-
Vice President, Dental Clinical Research
- ---------------
(1) Includes the Company's 50% matching contribution up to 6% of annual
compensation under the Company's 401(k) Plan.
(2) Change in fiscal year end from September 30 to December 31 and resulting
three month period December 31, 1993.
(3) Mr. Urheim joined the Company in June 1993.
(4) Moving and relocation reimbursement paid to Mr. Urheim.
(5) A short-term loan from the Company to Dr. Cox, which was paid in full in
1994.
(6) Dr. Garrett became an officer of the Company in April 1995.
(7) Moving and relocation reimbursement paid to Dr. Garrett.
The foregoing compensation table does not include certain fringe benefits
made available on a nondiscriminatory basis to all Company employees such as
group health insurance, dental insurance, long-term disability insurance,
vacation and sick leave. In addition, the Company makes available certain non-
monetary benefits to its executive officers with a view to acquiring and
retaining qualified personnel and facilitating job performance. The Company
considers such benefits to be ordinary and incidental business costs and
expenses. The aggregate value of such benefits in the case of the executive
officers, which cannot be precisely ascertained but which is less than the
lesser of (a) ten percent of the cash compensation paid to each such executive
officer or to the group, respectively, or (b) $50,000 or $50,000 times the
number of individuals in the group, as the case may be, is not included in such
table.
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OPTION GRANTS TABLE
The following table provides information relating to the grant of stock
options to the CEO and the Named Executive Officers during the fiscal year ended
December 31, 1995 under the Company's Amended and Restated Performance Stock
Option Plan.
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(1)
-------------------------------------------------------------- --------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES IN EXERCISE OR BASE EXPIRATION
NAME GRANTED(#)(2) FISCAL YEAR PRICE ($/SH)(3) DATE 5%($) 10%($)
- ------------------------------------- ------------- ------------ ------------------ ---------- ------ -------
Mr. John E. Urheim 7,308 4.8% $ 6.63 11/13/05 13,386 29,580
Dr. G. Lee Southard 5,788 3.8% $ 6.63 11/13/05 10,602 23,428
Dr. Richard L. Dunn 4,615 3.0% $ 6.63 11/13/05 8,454 18,680
Dr. Charles P. Cox 15,000 9.8% $ 6.88 05/01/05 28,512 63,005
4,308 2.8% $ 6.63 11/13/05 7,891 17,437
Dr. J. Steven Garrett 50,000 32.7% $ 6.75 04/17/05 93,245 206,047
5,769 3.8% $ 6.63 11/13/05 10,567 23,351
- ---------------
(1) Potential realizable value is based on an assumption that the stock price of
the common stock appreciates at the annual rate shown (compounded annually)
from the date of grant until the end of the ten-year option term. These
numbers are calculated based on the requirements promulgated by the
Securities and Exchange Commission and do not reflect the Company's estimate
of future stock price growth.
(2) Vest and become exercisable at the rate of one-third on the first, second
and third anniversaries of the grant date.
(3) All options were granted at the fair market value of the Shares on the date
of grant based on the closing bid price for the Shares.
AGGREGATED OPTION EXERCISE AND FISCAL YEAR-END OPTION TABLE
The following table provides information relating to the exercise of stock
options during the year ended December 31, 1995 by the CEO and each of the Named
Executive Officers and the 1995 fiscal year-end value of unexercised options.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FY-END AT FY-END
(#) ($)(1)
SHARES ACQUIRED --------------------- --------------------
ON EXERCISE VALUE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
- ---------------------------------- --------------- -------------- --------------------- --------------------
Mr. John E. Urheim -0- $ -0- 133,333/73,975 $-0-/ 8,185
Dr. G. Lee Southard 7,500 $ 23,438 84,167/ 9,121 $460,000/ 6,483
Dr. Richard L. Dunn 5,000 $ 16,875 26,233/10,982 $20,831/14,335
Dr. Charles P. Cox -0- $ -0- 31,066/24,842 $35,294/25,523
Dr. J. Steven Garrett -0- $ -0- -0-/55,769 $-0-/56,461
- ---------------
(1) Market value of underlying Shares is (i) fair market value at December 29,
1995 ($7.75 per share) less the option exercise price, multiplied by (ii)
the number of Shares in the money.
7
11
EMPLOYMENT AGREEMENTS
On June 4, 1993, the Company entered into an employment agreement with Mr.
Urheim. Pursuant to the terms of the employment agreement, Mr. Urheim's duties
are to act as Vice Chairman of the Board and Chief Executive Officer. The
employment agreement provides that Mr. Urheim receive a starting annual base
salary of $175,000 (which at the discretion of the Board, upon recommendation by
the Compensation Committee, may be increased annually). Mr. Urheim's agreement
provides for severance pay at full salary and benefits until the earlier of one
year from the date of termination or re-employment; and, for the immediate
vesting of all unvested options, in the case of termination other than for
cause. Mr. Urheim's base salary was increased to $204,000 effective August 1,
1995.
On April 17, 1995, the Company entered into an employment agreement with
Dr. Garrett. Pursuant to the terms of the agreement, Dr. Garrett's duties are to
act as Vice President of Dental Clinical Research. The employment agreement
provides that Dr. Garrett will receive a starting annual base salary of $150,000
(which at the discretion of the Board, upon recommendation by the Compensation
Committee, may be increased annually). Dr. Garrett's agreement provides for
severance pay at full salary and benefits until the earlier of one year from the
date of termination or re-employment; and, for the immediate vesting of all
unvested options, in case of termination other than for cause. Dr. Garrett's
base salary was increased to $156,000 effective August 1, 1995.
On January 1, 1996, the Company entered into an employment agreement with
Mr. Orland. Pursuant to the terms of the agreement, Mr. Orland's duties are to
act as Vice President of Marketing and Sales. The employment agreement provides
that Mr. Orland will receive a starting annual base salary of $150,000 (which at
the discretion of the Board, upon recommendation by the Compensation Committee,
may be increased annually). Mr. Orland's agreement includes severance pay at
full salary and benefits until the earlier of nine months from the date of
termination or re-employment; and, for the immediate vesting of all unvested
options, in case of termination other than for cause.
COMPENSATION PURSUANT TO PLANS
Stock Option Plans. The Company has two stock option plans under which
options may currently be granted: the Amended and Restated Performance Stock
Option Plan ("Performance Stock Option Plan"); and the Non-Qualified Stock
Option Plan ("NQSOP"). All employees and directors are eligible to receive
options under the Performance Stock Option Plan. The Company granted 144,288
options under the Performance Stock Option Plan to directors or executive
officers and an aggregate of 10,360 options to two consultants under the NQSOP
during the year ended December 31, 1995.
401(k) Plan. The Company maintains a defined contribution savings plan (the
"401(k) Plan") to provide retirement income to employees of the Company,
including all executive officers. All employees who have completed one year of
service and are over 21 years of age are eligible to participate in the 401(k)
Plan. It is funded by voluntary pre-tax contributions from employees up to a
maximum amount equal to 17% of annual compensation and by 50% matching
contributions by the Company up to 6% of annual compensation. Participants are
fully vested in all pre-tax, after-tax and matching contributions as soon as
they are made.
COMPENSATION OF DIRECTORS
Directors' fees are paid only to non-employee directors for meetings
attended at the rate of $1,500 per meeting ($2,000 per meeting attended for the
Chairman of the Board), plus reimbursement of the directors' travel expenses
relating to attendance at the meeting.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee (the "Compensation Committee") of the Board is
responsible for establishing compensation policy and administering the
compensation programs of the Company's executive officers. The Compensation
Committee is currently comprised of three independent outside directors. The
Compensation Committee meets at least once a year to review executive
compensation policies, design of
8
12
compensation programs, and individual salaries and awards for the executive
officers based on performance criteria.
Pursuant to the rules regarding disclosure of Company polices concerning
executive compensation, this report is submitted by Messrs. Bethune, O'Neil and
Campbell in their capacity as members of the Compensation Committee for the year
ended December 31, 1995 and addresses the Company's compensation policies as
they affected the CEO, and the Company's other executive officers, including the
Named Executive Officers.
EXECUTIVE COMPENSATION PHILOSOPHY
The Company applies a consistent philosophy to compensation for all
employees, including executive officers. This philosophy is based on the premise
that the achievements of the Company result from the coordinated efforts of all
individuals working toward common objectives.
The goals of the executive compensation program are to align compensation
with business objectives and performance, and to enable the Company to attract,
retain and reward executive officers who contribute to the long-term success of
the Company. The Company's compensation program for executive officers is based
on the same principles applicable to compensation decisions for all employees of
the Company and generally consists of two compensation elements: cash and
equity. The process used by the Compensation Committee in determining executive
officer compensation levels for each of these components takes into account both
qualitative and quantitative factors. Among the factors considered by the
Compensation Committee are the recommendations of the CEO with respect to the
compensation of the Company's other key executive officers. However, the
Compensation Committee makes the final compensation decisions concerning such
officers.
In making compensation decisions, the Compensation Committee considers
compensation practices and financial performance of the Peer Group (as defined
below). This information provides guidance to the Compensation Committee, but
the Compensation Committee does not target total executive compensation or any
component thereof to any particular point within, or outside, the range of Peer
Group results. However, the Compensation Committee believes that compensation at
or near the weighted average of the Peer Group for base salaries is generally
appropriate for the Compensation Committee to use as a guideline for
compensation decisions. The specified weighted averages are considered on both
an absolute basis and a size-adjusted basis (i.e., reflecting compensation
levels that are commensurate with the Company's size relative to the sizes of
the Peer Group companies). Specific compensation for individual executive
officers will vary from these levels as the result of other factors considered
by the Compensation Committee unrelated to compensation practices of the Peer
Group.
The Peer Group is comprised of biotech and pharmaceutical companies that
are among those entities who participate in an annual biotechnological survey
(the "Survey") conducted by Radford Associates in conjunction with Alexander &
Alexander Consulting Group. The 1994 Survey included information on 256 public
and private companies of varying size. Approximately 30% of these companies are
included in the performance Peer Group (i.e., the companies covered by the
Nasdaq Pharmaceutical Index) used for the shareholder return performance graph
set forth below.
The Compensation Committee does not believe that Internal Revenue Code
Section 162(m), which denies a deduction for compensation payments in excess of
$1,000,000 to the CEO or a Named Executive Officer, is likely to be applicable
to the Company in the near future but will reconsider the implication of Section
162(m) if and when it appears that the section may become applicable.
COMPENSATION ELEMENTS
For the year ended December 31, 1995 the Company's executive compensation
program included a base salary and grants of stock options.
Base Salary. Salaries for executive officers are determined by evaluating
subjectively the responsibilities of the position held and the experience and
performance of the individual and comparing base salaries for comparable
positions at Peer Group entities. Subject to an executive officer's individual
performance, the
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Compensation Committee sets salaries at or about the median as reflected by such
information. The Compensation Committee believes that such salaries were
competitive within a range that the Compensation Committee believes to be
reasonable and necessary to accomplish the Company's compensation objectives.
In determining the base salaries for 1995, the Peer Group data was reviewed
with the CEO for each executive position. In addition, the responsibility level
of each position was reviewed, together with the executive officer's individual
performance for the prior year and objectives for the current year. In addition,
the Company's performance was compared to objectives for the prior year and
performance targets for the current year. Based on these criteria, the CEO
recommended to the Compensation Committee a percentage range increase to the
base salary for the current year for each executive level position.
In determining the CEO's base salary for 1995, the Compensation Committee
reviewed Peer Group data from the Survey concerning the salary of chief
executive officers at companies of similar size and in a similar industry. In
addition the Compensation Committee reviewed the CEO's performance during the
previous year.
Stock Options. The long-term incentive component of the CEO's and the
executive officers' compensation is stock options. The Company believes that
providing executive officers with opportunities to acquire significant equity
positions in the Company and thus, the opportunity to share in its growth and
prosperity, through the grant of stock options will enable the Company to
attract and retain qualified and experienced executive officers. Stock options
represent a valuable portion of the compensation program for the Company's
executive officers. The exercise price of stock options is the fair market value
of the Shares on the date of the grant based on the closing bid price of the
Shares on the date of grant, and will only provide a benefit if the value of the
Shares increases. Grants of stock options to executive officers are made by the
Compensation Committee upon the recommendation of the CEO and are based upon a
percentage of each executive officer's annualized salary, an evaluation of the
executive officer's past and expected future performance, the number of
outstanding and previously granted options, and discussions with the executive
officer.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In fiscal 1995, the members of the Compensation Committee were David R.
Bethune, William C. O'Neil, Jr. and H. Stuart Campbell. No member of the
Compensation Committee was previously an officer or an employee of the Company
or any of its subsidiaries.
COMPENSATION COMMITTEE
David R. Bethune, Chairman
William C. O'Neil, Jr.
H. Stuart Campbell
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PERFORMANCE GRAPH
The graph and table below compare the total shareholder returns (assuming
reinvestment of dividends) of the Shares, the Nasdaq Pharmaceutical Index and
the Nasdaq Index. The graph assumes $100 invested on September 30, 1990 in the
Shares and each of the indices. The stock price performance shown on the graph
below is not necessarily indicative of the future price performance.
[GRAPH]
NASDAQ
Measurement Period Atrix Labora- Pharmaceuti-
(Fiscal Year Covered) tories, Inc. cal NASDAQ Total
9/30/90 100.00 100.00 100.00
9/30/91 461.43 261.33 157.33
9/30/92 199.72 221.92 176.34
9/30/93 182.51 222.10 230.97
12/31/94 158.40 181.20 230.20
12/31/95 213.50 330.97 325.30
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE FUTURE FILINGS,
INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE PRECEDING REPORT OF THE
COMPENSATION COMMITTEE AND PERFORMANCE GRAPH SHALL NOT BE INCORPORATED BY
REFERENCE INTO ANY SUCH FILINGS.
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board, upon the recommendation of the Audit Committee, has selected
Deloitte & Touche LLP as independent auditors of the Company for the year ending
December 31, 1996. Representatives of Deloitte & Touche LLP will be present at
the Meeting and will have the opportunity to make a statement if they desire to
do so and will be available to respond to appropriate questions from
shareholders.
Although it is not required to do so, the Board is submitting its selection
of the Company's independent auditors for ratification by the shareholders at
the Meeting in order to ascertain the views of shareholders regarding such
selection. A majority of the votes cast at the Meeting, if a quorum is present,
will be sufficient to ratify the selection of Deloitte & Touche LLP as the
Company's independent auditors for the year ending December 31, 1995. Whether
the proposal is approved or defeated, the Board may reconsider its selection.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL NO. 2.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of outstanding Shares as of the Record Date, by (i) each person who is
known by the Company to own beneficially five percent or more of the outstanding
Shares, (ii) each director of the Company, (iii) the CEO and each Named
Executive Officer, and (iv) all directors and executive officers as a group.
SHARES PERCENT
BENEFICIALLY OF
NAME OWNED(1) CLASS
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Mr. David R. Bethune.................................................... 4,000 *
Mr. H. Stuart Campbell.................................................. 114 *
Dr. D. Walter Cohen..................................................... 20,018 *
Dr. Charles P. Cox...................................................... 31,066 *
Dr. Richard L. Dunn..................................................... 98,349 1.12%
Dr. J. Steven Garrett................................................... 18,667 *
Dr. Jere E. Goyan....................................................... 67,583 *
Dr. R. Bruce Merrifield................................................. 64,000 *
Mr. C. Rodney O'Connor.................................................. 73,000 *
Mr. William C. O'Neil, Jr............................................... 86,088 *
Dr. G. Lee Southard..................................................... 333,230 3.78%
Mr. John E. Urheim...................................................... 148,333 1.68%
All executive officers and directors as a group (15 persons)............ 958,895 10.87%
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* less than 1%
(1) Shares are considered beneficially owned, for purposes of this table, only
if held by the person indicated, or if such person, directly or indirectly,
through any contract, arrangement, understanding, relationship or otherwise
has or shares the power to vote, to direct the voting of and/or to dispose
of or to direct the disposition of such security, or if the person has the
right to acquire beneficial ownership within 60 days, unless otherwise
indicated. The foregoing share amounts include the following number of
Shares of the Company's common stock which may be acquired pursuant to stock
options exercisable within 60 days of the Record Date: Mr. Urheim, 133,333
Shares; Dr. Southard, 87,500 Shares; Mr. O'Neil, Jr., 10,000 Shares; Mr.
Bethune, 4,000 Shares; Dr. Cohen, 12,000 Shares; Dr. Dunn, 26,233 Shares;
Dr. Cox, 31,066 Shares; Dr. Garrett, 16,667 Shares; and all executive
officers and directors as a group, 334,746 Shares.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, and the
rules thereunder require 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, to file reports of ownership and changes in ownership with
(i) the Securities and Exchange Commission, (ii) the NASD, and (iii) the
Company.
Based solely on its review of Section 16(a) forms received by it and
written representations that no other reports were required, the Company
believes that, during the last fiscal year, all Section 16(a) filing
requirements applicable to its executive officers, directors and ten-percent
beneficial owners, were complied with, except that Mr. Urheim inadvertently
reported three transactions late on Form 4 and Form 5; Dr. Southard
inadvertently failed to report two transactions which were reported on Form 5;
Ms. Marks inadvertently failed to report one transaction which was reported on
Form 5; and Dr. Garrett, Mr. Duncan, and Mr. Campbell each inadvertently filed a
late Form 3.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1995, the Company paid a total of approximately $65,000 for investor
communication services to Cameron and Associates, Inc., a financial and investor
communications firm of which Mr. O'Connor, a director of the Company, is the
Chairman and Chief Executive Officer.
SOLICITATION OF PROXIES
This solicitation is being made by mail on behalf of the Board, but may
also be made without additional remuneration by officers or employees of the
Company by telephone, telegraph, facsimile transmission or personal interview.
The expense of the preparation, printing and mailing of the enclosed form of
Proxy, Notice of Annual Meeting and this Proxy Statement and any additional
material relating to the Meeting which may be furnished to shareholders by the
Board subsequent to the furnishing of this Proxy Statement has been or will be
borne by the Company. The Company will reimburse banks and brokers who hold
Shares in their name or custody, or in the name of nominees for others, for
their out-of-pocket expenses incurred in forwarding copies of the Proxy
materials to those persons for whom they hold such Shares. To obtain the
necessary representation of shareholders at the Meeting, supplementary
solicitations may be made by mail, telephone or interview by officers of the
Company or selected securities dealers. It is anticipated that the cost of such
supplementary solicitations, if any, will not be material.
ANNUAL REPORT
The Annual Report of the Company for 1995 has been mailed to shareholders
along with this Proxy Statement. THE COMPANY WILL, UPON WRITTEN REQUEST AND
WITHOUT CHARGE, PROVIDE TO ANY PERSON SOLICITED HEREUNDER A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1995,
INCLUDING FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES, AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. Requests should be addressed to Investor
Relations, 2579 Midpoint Drive, Fort Collins, Colorado 80525.
OTHER MATTERS
The Company is not aware of any business to be presented for consideration
at the Meeting, other than those specified in the Notice of Annual Meeting. If
any other matters are properly presented at the Meeting, it is the intention of
the persons named in the enclosed Proxy to vote in accordance with their best
judgment.
SHAREHOLDER PROPOSALS
Any shareholder who intends to submit a proposal at the Annual Meeting of
Shareholders for the year ended 1996 and who wishes to have the proposal
considered for inclusion in the proxy statement and form of proxy for that
meeting must, in addition to complying with the applicable laws and regulations
governing submission of such proposals, deliver the proposal to the Company for
consideration no later than November 24, 1996. Such proposal should be sent to
the Corporate Secretary of the Company at 2579 Midpoint Drive, Fort Collins,
Colorado 80525.
NOTICE TO BANKS, BROKER-DEALERS AND
VOTING TRUSTEES AND THEIR NOMINEES
Please advise the Company whether other persons are the beneficial owners
of the Shares for which proxies are being solicited from you, and, if so, the
number of copies of this Proxy Statement and other soliciting materials you wish
to receive in order to supply copies to the beneficial owners of the Shares.
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IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, SHAREHOLDERS,
WHETHER OR NOT THEY EXPECT TO ATTEND THE MEETING IN PERSON, ARE REQUESTED TO
COMPLETE, DATE AND SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT PROMPTLY IN THE
ENVELOPE PROVIDED FOR THAT PURPOSE. BY RETURNING YOUR PROXY PROMPTLY YOU CAN
HELP THE COMPANY AVOID THE EXPENSE OF FOLLOW-UP MAILINGS TO ENSURE A QUORUM SO
THAT THE MEETING CAN BE HELD. SHAREHOLDERS WHO ATTEND THE MEETING MAY REVOKE A
PRIOR PROXY AND VOTE THEIR PROXY IN PERSON AS SET FORTH IN THIS PROXY STATEMENT.
By Order of the Board of Directors
/s/ Mr. John E. Urheim
Mr. John E. Urheim
Vice Chairman and
Chief Executive Officer
Fort Collins, Colorado
April 3, 1996
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PROXY ATRIX LABORATORIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 28, 1996
The undersigned shareholder of Atrix Laboratories, Inc., a Delaware
corporation (the "Company"), hereby constitutes and appoints Kimberly A. Marks
and Brian G. Richmond, and each of them, proxies, with full power of
substitution, for and on behalf of the undersigned to vote, as designated below,
according to the number of shares of the Company's $.001 par value common stock
held of record by the undersigned on April 1, 1996, and as fully as the
undersigned would be entitled to vote if personally present, at the Annual
Meeting of Shareholders of the Company to be held at The Fort Collins Marriott,
350 East Horsetooth Road, Fort Collins, Colorado on April 28, 1996 at 6:00 p.m.
local time, and at any and all postponements, continuations and adjournments
thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED. IF PROPERLY EXECUTED AND NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR THE ELECTION OF ALL LISTED NOMINEES TO THE BOARD OF
DIRECTORS OF THE COMPANY AND FOR THE PROPOSAL TO RATIFY THE SELECTION OF
DELOITTE & TOUCHE LLP TO SERVE AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE
YEAR ENDING DECEMBER 31, 1996.
1. Proposal to elect the following nominees
to the Board of Directors:
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote all nominees listed below
Dr. G. Lee Southard Mr. C. Rodney O'Connor Mr. H. Stuart Campbell
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below:)
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2. Proposal for ratification of selection of Deloitte & Touche LLP as the
Company's independent auditors for the year ending December 31, 1996.
/ / FOR / / AGAINST / / ABSTAIN
3. In the discretion of such proxies, upon such other business as may properly
come before the Meeting or any and all postponements, continuations or
adjournments thereof.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders, dated April 3, 1996 and the Proxy Statement furnished therewith.
Please sign exactly as your name appears hereon. When shares are held by joint
tenants, both should sign. Executors, administrators, trustees and other
fiduciaries, and persons signing on behalf of corporations or partnerships,
should so indicate.
Dated , 1996
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Authorized Signature
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Title
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Authorized Signature
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Title
Please mark boxes /X/ in ink.
Sign, date and return this
Proxy Card promptly using the
enclosed envelope.
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