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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Pozen, Inc.
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(Name of Registrant as Specified In Its Charter)
Not Applicable
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Reg. (S) 240.14a-101.
SEC 1913 (3-99)
POZEN(R) Inc.
1414 Raleigh Road, Suite 400
Chapel Hill, North Carolina 25717
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of the holders of shares
of common stock, each having a par value of $0.001 per share, of POZEN Inc. (the
"Company") will be held at the Company's headquarters located at 1414 Raleigh
Road, Suite 400, Chapel Hill, North Carolina 27517, on May 21, 2002 at 11:00 am.
Eastern time, to consider and take action with respect to the following:
1. To elect two Class II directors, each of whom shall serve for a
term of three years.
2. To approve the POZEN Inc. 2001 Long Term Incentive Plan.
3. To ratify the appointment of Ernst & Young LLP as the Company's
independent public accountants to audit the Company's financial
statements for the fiscal year ending December 31, 2002.
4. To conduct such other business as may properly come before the
Annual Meeting or any adjournments thereof.
Holders of common stock of record at the close of business on April 12,
2002 are entitled to notice of and to vote at the Annual Meeting or any
adjournments thereof.
By Order of the Board of Directors,
/s/ Helga L. Leftwich
Helga L. Leftwich
Assistant Secretary
Chapel Hill, North Carolina
Dated: April 17, 2002
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE COMPLETE
AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE IN
ORDER TO ASSURE REPRESENTATION OF YOUR SHARES.
POZEN Inc.
1414 Raleigh Road, Suite 400
Chapel Hill, North Carolina 27517
_________________________________________
PROXY STATEMENT
Mailed on April 17, 2002
Annual Meeting of Stockholders to be held on May 21, 2002
_________________________________________
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of POZEN Inc. (the "Company") to be used at
the Annual Meeting of the holders of shares of common stock, par value $0.001
per share (the "Common Stock"), of the Company to be held on May 21, 2002 and at
any adjournment thereof. The time and place of the Annual Meeting are stated in
the Notice of Annual Meeting of Stockholders which accompanies this Proxy
Statement.
The expense of soliciting proxy cards ("proxies"), including the costs of
preparing, assembling and mailing the Notice, Proxy Statement and proxy, will be
borne by the Company. In addition to the use of the mail, proxies may be
solicited personally or by telephone, facsimile or telegraph. The Company may
arrange for the reimbursement of persons holding shares beneficially owned by
others for their expenses in sending proxy materials to such beneficial owners.
VOTING RIGHTS
Only stockholders of the Company as of the close of business on April 12,
2002, the record date ("Record Date") fixed by the Board of Directors of the
Company (the "Board"), are entitled to notice of and to vote at the Annual
Meeting. As of April 12, 2002, there were 28,077,945 shares of the Common Stock
issued and outstanding and no other outstanding classes of voting securities of
the Company. Each holder of the Common Stock is entitled to one vote per share
on each matter presented at the Annual Meeting.
The presence of the holders of a majority of the issued and outstanding
shares of the Common Stock in person or represented by duly executed proxies at
the Annual Meeting and entitled to vote is necessary to constitute a quorum for
the transaction of business at the Annual Meeting.
The affirmative vote of the holders of a plurality of the shares of the
Common Stock present in person or represented by duly executed proxies at the
Annual Meeting and entitled to vote is required for the election of directors.
Cumulative voting for the election of directors is not permitted. A majority of
the votes cast in person or by duly executed proxies is required for approval of
the proposals to approve the POZEN Inc. 2001 Long Term Incentive Plan and to
ratify the appointment of our independent public accountants.
Shares entitled to vote represented by proxies that are properly executed
and returned before the Annual Meeting will be voted at the Annual Meeting as
directed therein. In the election of directors, stockholders may either vote
"FOR" all nominees for election or "WITHOLD" their votes from one or both
nominees for election. If no vote is specified therein, the shares will be voted
"FOR" the election of the nominees for director named in this Proxy Statement,
"FOR" the approval of the POZEN Inc. 2001 Long Term Incentive Plan, "FOR" the
ratification of the appointment of the independent public accountants and, at
the discretion of the designated proxies, for any other matter that may properly
come before the meeting. Shares represented by proxies which are marked
"WITHHELD" with regard to the election of the nominees for director will be
excluded entirely from that vote and will have no effect.
Stockholders may vote "FOR", "AGAINST", or "ABSTAIN" with respect to the vote to
approve the adoption of the POZEN Inc. 2001 Long Term Incentive Plan and to
ratify the appointment of our independent public accountants. Votes that are
marked "ABSTAIN" in the vote for the approval of the POZEN Inc. 2001 Long Term
Incentive Plan will have the same effect as a vote against the proposal. Shares
held by a broker, as nominee, where the broker is prohibited from exercising
discretionary authority for beneficial owners who have not provided voting
instructions (so-called "broker non-votes") will have no effect on either
proposal.
The Board does not know of any other business to be presented for
consideration at the Annual Meeting. If any other business properly comes before
the Annual Meeting or any adjournment thereof, the proxies will be voted on such
matters in the discretion of the proxy holders. The Delaware General Corporation
Law provides that, unless otherwise provided in the proxy and unless the proxy
is coupled with an interest, a stockholder may revoke a proxy previously given
at any time prior to its exercise at the Annual Meeting. A stockholder who has
given a proxy may revoke it at any time before it is exercised by delivering to
any of the persons named as proxies, or to the Company addressed to the
Secretary, an instrument revoking the proxy, by appearing at the Annual Meeting
and voting in person or by executing a later dated proxy which is exercised at
the Annual Meeting.
PRINCIPAL STOCKHOLDERS
The stockholders named in the following table are those known to the
Company to be the beneficial owners of 5% or more of the Common Stock. Unless
otherwise indicated, the information is as of February 28, 2002. For purposes of
this table, and as used elsewhere in this Proxy Statement, the term "beneficial
owner" means any person who, directly or indirectly, has or shares the power to
vote, or to direct the voting of, a security or the power to dispose, or to
direct the disposition of, a security or has the right to acquire shares within
sixty (60) days. Except as otherwise indicated, the Company believes that each
owner listed below exercises sole voting and dispositive power over its shares.
Name and Address of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership the Common Stock
---------------- -------------------- ----------------
John R. Plachetka, Pharm.D.
POZEN Inc.
1414 Raleigh Road, Suite 400
Chapel Hill, NC 27517 4,138,121 (1) 14.6%
MEDGROWTH N.V.
c/o Bellevue Asset Management AG
Grafenauweg 4 2,731,685 (2) 9.7%
CH-6301 Zug
Switzerland
Vector Later-Stage Equity Fund II, L.P.
1751 Lake Cook Road, Suite 350 1,785,405 (3) 6.4%
Deerfield, IL 60015
Canaan Equity
105 Rowayton Avenue
Rowayton, CT 06853 1,706,327 (4) 6.1%
(1) This amount reflects ownership by Silver Hill Investments, LLC, John R.
Plachetka, and Clare A. Plachetka, and consists of (i) 3,476,508 shares
owned by Silver Hill Investments, LLC, which is 50% owned by the John R.
Plachetka Irrevocable Trust, 40% owned by John R. Plachetka through his
assignee, the Revocable Declaration of Trust, John R. Plachetka, Trustee
(the "JRP Revocable Trust"), and 10% owned by his wife, Clare A. Plachetka,
through her assignee, the Clare A. Plachetka Revocable Declaration of
Trust, Clare A. Plachetka, Trustee (the "CAP Revocable Trust"); (ii)
341,000 shares owned by the JRP Revocable Trust; (iii) 37,900 shares owned
by the CAP Revocable Trust; (iv) 20,000 shares owned by the John R.
Plachetka Irrevocable Trust and (v) 262,613 shares of Common Stock issuable
pursuant to options exercisable within 60 days. John R. Plachetka and Clare
A. Plachetka claim shared voting and dispositive power as to the shares set
forth in (i) through (iv) above.
2
(2) This amount is reflected in a report on Schedule 13G/A that was filed on
February 14, 2002 with respect to ownership as of December 31, 2001 by
MEDGROWTH N.V. and BB Medtech AG, a holding company located in Switzerland
of which MEDGROWTH N.V. is a wholly owned subsidiary. BB Medtech AG and
MEDGROWTH N.V. claim shared voting and dispositive power over the shares.
(3) This amount, which is reflected in a report on Schedule 13G/A that was
filed on February 13, 2002 with respect to ownership as of December 31,
2001 by Vector Later-Stage Equity Fund II, L.P. ("VLSEF"), Vector
Later-Stage Equity Fund II (QP), L.P. ("VLSEF QP") and Vector Fund
Management II, L.L.C. ("VFM"), consists of (i) 446,351 shares as to which
VLSEF claims shared voting and dispositive power and (ii) 1,339,054 shares
as to which VLSEF QP claims shared voting and dispositive power; VFM claims
shared voting and dispositive power as to all 1,785,405 shares. The general
partner of each of VLSEF and VLSEF QP is VFM, which is controlled by a
committee of limited partners of VLSEF and VLSEF QP.
(4) This amount, which is reflected in a report on Schedule 13G/A that was
filed on February 12, 2002 with respect to ownership as of December 31,
2001 by: (i) Canaan Equity II L.P. ("CE II"), Canaan Equity II L.P. (QP)
("CE II QP"), Canaan Equity II Entrepreneurs LLC ("Entrepreneurs"), and
Canaan Equity Partners II LLC ("CEP II"); (ii) Charmers Lending LLC, Henry
Street Associates LLC, Stonhenge LLC and Waubeeka LLC (collectively, the
"LLCs"); and (iii) Messrs. Harry T. Rein, John V. Balen, James C.
Furnivall, Stephen L. Green, Deepak Kamra, Gregory Kopchinsky, Guy M. Russo
and Eric A. Young (collectively, the "Partners"), consists of 1,706,327
shares as to which the reporting persons have shared voting and dispositive
power. CEP II is the general partner of CE II and CE II QP and the manager
of Entrepreneurs. The Partners are the managers of CEP II. Mr. Green is the
sole manager of Charmers Landing LLC, Mr. Rein is the sole manager of Henry
Street Associates LLC, Mr. Kopchinsky is the sole manager of Stonehenge
LLC, and Mr. Russo is the sole manager of Waubeeka LLC. Seven of the
Partners and three of the LLCs also report sole voting and dispositive
power with respect to an aggregate of 15,130 shares of the Common Stock.
STOCK OWNERSHIP OF DIRECTORS,
NOMINEE FOR DIRECTOR AND EXECUTIVE OFFICERS
The following table and notes thereto set forth information, as of February
28, 2002 (except as specified below), with respect to the beneficial ownership
of shares of the Common Stock by each director, the nominee for director and
each executive officer named by the Company in the Summary Compensation Table
(the "Named Executive Officers") and, as a group, by the directors and executive
officers, based upon information furnished to the Company by such persons.
Except as otherwise indicated, we believe that each beneficial owner listed
below exercises sole voting and dispositive power.
Amount of Beneficial Ownership as of
February 28, 2002
-----------------
Name of Percentage of
Beneficial Owner (1) Number of Shares the Common Stock
- -------------------- ---------------- ----------------
John R. Plachetka, Pharm.D. 4,138,121 (2) 14.6%
Kristina M. Adomonis 72,138 (3) *
John E. Barnhardt 151,829 (4) *
Matthew E. Czajkowski 177,550 (5) *
Andrew L. Finn, Pharm.D. 113,601 (6) *
Jacques F. Rejeange 434,015 (7) 1.5%
Bruce A. Tomason 53,177 (8) *
Peter J. Wise, M.D. 502,864 (9) 1.8%
Ted G. Wood 15,493 (10) *
All Directors and Executive Officers as a Group (9 persons) 5,658,788 (11) 19.7%
______________________
* Less than 1%.
3
(1) Unless otherwise set forth herein, the street address of the named
beneficial owners is c/o POZEN Inc., Suite 400, 1414 Raleigh Road, Chapel
Hill, North Carolina 27517.
(2) Consists of (i) 3,476,508 shares of Common Stock owned by Silver Hill
Investments, LLC, which is 50% owned by the John R. Plachetka Irrevocable
Trust, 40% owned by JRP Revocable Trust, and 10% owned by the CAP Revocable
Trust, (ii) 341,100 shares owned by the JRP Revocable Trust, (iii) 37,900
shares owned by the CAP Revocable Trust, and (iv) 20,000 shares owned by
the John R. Plachetka Irrevocable Trust. John R. Plachetka and Clare A.
Plachetka have shared voting and dispositive power; also includes 262,613
shares of Common Stock issuable pursuant to options exercisable within 60
days.
(3) Consists of 50,000 shares of Common Stock and 22,138 shares of Common Stock
issuable pursuant to options exercisable within 60 days.
(4) Consists of 49,398 shares of Common Stock and 102,431 shares of Common
Stock issuable pursuant to options exercisable within 60 days.
(5) Consists of 109,336 shares of Common Stock, of which an aggregate of 15,760
shares are held of record by trusts for the benefit of Mr. Czajkowski's
minor children, and 68,214 shares issuable pursuant to options exercisable
within 60 days.
(6) Includes 113,601 shares of Common Stock issuable pursuant to options
exercisable within 60 days.
(7) Includes 384,048 shares of Common Stock owned by Florham Holdings Ltd., a
family trust of Mr. Rejeange. Mr. Rejeange may be deemed to be a beneficial
owner of these shares. Mr. Rejeange disclaims such beneficial ownership.
Also includes 49,967 shares issuable pursuant to options exercisable within
60 days.
(8) Includes 3,000 shares of Common Stock owned by Mr. Tomason and 210 shares
of the Common Stock owned by Mr. Tomason's daughter who shares his
household. Mr. Tomason disclaims beneficial ownership of the 210 shares of
Common Stock held by his daughter. Also includes 49,967 shares of Common
Stock issuable pursuant to options exercisable within 60 days.
(9) Includes 5,000 shares of Common Stock issuable pursuant to options
exercisable within 60 days.
(10) Includes 13,993 shares of Common Stock issuable pursuant to options
exercisable within 60 days.
(11) Includes 687,924 shares of Common Stock issuable pursuant to options
exercisable within 60 days.
PROPOSAL 1
NOMINATION AND ELECTION OF DIRECTORS
The Company's Amended and Restated Certificate of Incorporation provides
that the Board shall consist of not less than three nor more than fifteen
members divided into three Classes: Class I, Class II and Class III. The Board
is authorized to increase or decrease the total number of directors within the
three to fifteen range as well as the number of directors in each class provided
that no one class shall have more than one director more than any other class.
If the quotient derived by dividing the designated number of directors by three
is a fraction, the extra director shall be a member of Class I if such a
fraction is one-third, and, if such fraction is two-thirds, the other director
shall be a member of Class II, unless otherwise provided from time to time by
resolution adopted by the Board. The Board has fixed the number of directors at
five members.
The two directorships expiring this year are presently filled by Jacques F.
Rejeange and Bruce A. Tomason. The Board has nominated Messrs. Rejeange and
Tomason as nominees for election at this Annual Meeting to the class of
directors whose terms expire in 2005.
Messrs. Rejeange and Tomason have informed the Company that they are each
willing to serve for the term to which each of them is nominated if elected. If
one of the nominees for director should become unavailable for election or is
unable to serve as a director, the shares represented by proxies voted in favor
of that nominee will be voted for any substitute nominee that may be named by
the Board.
The information appearing in the following tables and the notes thereto has
been furnished to the Company, where appropriate, by the nominees for director
and the directors continuing in office with respect to: (i) the present
principal occupation or employment of the nominees and each continuing director
and, if such principal occupation or employment has not been carried on during
the past five years, the occupation or employment during such period, (ii) the
names and principal businesses of the corporations or other organizations in
which such occupation or employment is carried on and/or has been carried on
during the past five years, and (iii) the directorships held by each respective
nominee or continuing director on the boards of publicly-held and certain other
corporations and entities:
4
NOMINEES FOR ELECTION AS DIRECTOR
FOR A TERM OF THREE YEARS
If elected,
Term Expires At
Served as Annual Meeting Of
Name and Principal Occupation Director Since Stockholders in
----------------------------- -------------- ---------------
Jacques F. Rejeange, age 62 1997 2005
Chairman of the Board between December 1999 and December 2000. Since
1994, President of Florham Consulting S.A., a healthcare consulting
company based in Areuse, Switzerland.
Bruce A. Tomason, age 54 1997 2005
President of Apollo Capital Corporation, a healthcare investment
banking and venture capital company, since 1991. Between 1996 and 1998,
President and Chief Executive Officer of One Call Medical, Inc., a
medical management company specializing in workers' compensation.
Vote Required for Approval
The affirmative vote of the holders of a plurality of the shares of the
Common Stock present in person or represented by duly executed proxies at the
Annual Meeting and entitled to vote is required for the election of each of the
nominees as director of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THESE
NOMINEES FOR DIRECTOR.
DIRECTORS CONTINUING IN OFFICE
Term Expires
Served as At Annual Meeting
Name and Principal Occupation Director Since Of Stockholders in
----------------------------- -------------- ------------------
John R. Plachetka, age 48 1996 2003
Chairman of the Board since January 2001, co-founder of the Company and
President and Chief Executive Officer of the Company since 1996. Vice
President of Development at Texas Biotechnology Corporation from 1993
to 1995.
Peter J. Wise, M.D., age 67 1996 2003
Vice Chairman of the Board since January 2001; co-founder of the
Company. President and Chief Operating Officer of Pharmaceutical
Product Development, Inc. from 1993 to 1996.
Ted G. Wood, age 64 2000 2004
President of the operating subsidiaries within Bristol, Virginia based
The United Company, a holding company engaged in oil and gas
exploration & production, financial services, public golf courses,
since June 29, 1998; consultant to The United Company from January 1996
to June 28, 1998.
5
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board held seven meetings during the year ended December 31, 2001.
During the year, no incumbent director attended fewer than 75% of the aggregate
of (i) the total number of meetings of the Board held during the period he
served as a director and (ii) the total number of meetings held by any committee
of the Board on which he served.
The committees of the Board, their principal functions and their
respective memberships are described below.
Audit Committee
The members of the Audit Committee are as follows:
Bruce A. Tomason, Chairman
Jacques F. Rejeange
Ted G. Wood
The Audit Committee oversees the Company's financial reporting process
and systems of internal controls, and oversees the independence and performance
of the Company's independent public accountants. The Audit Committee provides an
open avenue of communication among the independent public accountants, financial
and senior management and the Board. The members of the Audit Committee are
independent as defined by The Nasdaq National Market's listing standards. The
Audit Committee held four meetings during the year ended December 31, 2001.
Compensation Committee
The members of the Compensation Committee are as follows:
Peter J. Wise, M.D., Chairman
Jacques F. Rejeange
Bruce A. Tomason
The Compensation Committee is responsible for the evaluation, approval
and administration of salary, incentive compensation, bonuses, benefit plans and
other forms of compensation for our officers, directors and other key employees
and for establishing the objectives and policies governing the compensation of
POZEN's employees generally. The Compensation Committee is also responsible for
granting, or delegating the authority for granting, stock options and other
awards under the Company's 1996 Stock Option Plan and our 2000 Equity
Compensation Plan and for granting awards under the Company's 2001 Long Term
Incentive Plan, if such plan is approved by the stockholders. The Compensation
Committee held eight meetings during the year ended December 31, 2001.
EXECUTIVE AND DIRECTOR COMPENSATION
Set forth below is the report of the Compensation Committee with
respect to executive compensation.
Notwithstanding anything to the contrary, the following report of the
Compensation Committee, the stock performance graph under the section entitled
"Stock Performance Graph" and the report of the Audit Committee under the
section entitled "Audit Committee Report" shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933, as amended (the
"Act"), or under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), except to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
6
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee is currently comprised of three directors.
As members of the Compensation Committee, it is our responsibility to determine
the most effective total executive compensation strategy based on the Company's
business and consistent with stockholders' interests. Our principal
responsibilities include reviewing the Company's overall compensation practices,
recommending compensation for executives and key employees, making
recommendations to the Board of Directors with respect to major compensation and
benefit programs and administering the Company's stock and other incentive
plans.
The Compensation Committee's compensation packages for our executive
officers are designed to retain and attract top quality management and to
encourage them to contribute to the achievement of the Company's business
objectives. In addition, the Committee attempts to establish compensation
packages that are comparable to the packages received by executives of similar
companies.
In compensating its executive officers, the Company relies on a
combination of salary and incentives designed to encourage efforts to achieve
both the Company's short-term and long-term goals. The compensation structure
attempts to reward both individual contributions as well as overall Company
performance. Traditional measures of corporate performance, such as earnings per
share or sales growth, are less applicable to the performance of development
stage pharmaceutical companies such as the Company, than to mature
pharmaceutical companies or companies in other industries. As a result, in
making executive compensation decisions, the Committee evaluates other
indications of performance, such as achieving milestones in the development and
commercialization of the Company's drug candidates and raising the capital
needed for its operations. The Compensation Committee also reviews and considers
input and recommendations from the Company's Chief Executive Officer concerning
executive compensation.
The basic components of the Company's compensation packages for
executive officers include the following:
. Base Salary
. Bonuses
. Stock Options and other Incentive Awards
. Benefits
Each executive officer's compensation package contains a mix of these
components and is intended to provide a level of compensation competitive in the
industry. As a result of an analysis of the compensation packages of its senior
executives commissioned by the Compensation Committee in 2001 to ensure that its
compensation levels and benefits were commensurate with those offered to senior
executives at companies of comparable size and development in similar
industries, we have entered into executive employment agreements with our
executive officers, which include severance payments in the event of termination
of the executive's employment without cause or termination by the executive of
his or her employment under certain circumstances. See "Employment and Change of
Control Arrangements."
Base salary and increases in base salary for 2001 were determined based
on both individual and Company performance. The Committee considered the
following factors, among others, in setting the base salaries for executive
officers during 2001: progress in the clinical development and commercialization
of the Company's product candidates and any special expertise or contributions
of a particular executive.
Bonuses are awarded by the Committee based upon its evaluation, in
conjunction with the recommendations of the Company's Chief Executive Officer,
of the performance of each executive officer and the achievement of the
Company's and the executive's goals during the year. In January 2002, bonuses
totaling $274,386 were awarded to the Named Executive Officers for achievements
in 2001, which included the continued clinical progress and efforts toward the
commercialization of MT 100 and the Company's other product candidates.
The granting of stock options and other equity-based awards aligns the
long-term interests of each officer with the interests of our stockholders and
provides long-term incentives for the individual officer to remain with us.
Grants are generally made to all employees on their date of hire based on salary
level and position. All employees, including executive officers, are eligible
for subsequent discretionary grants, which are generally based on either
individual or corporate performance.
Benefits offered to our executive officers serve as a safety net of
protection against the financial catastrophes that can result from illness,
disability or death. Benefits offered to our executive officers are
substantially the same as those offered to all of our regular employees.
7
2001 COMPENSATION TO CHIEF EXECUTIVE OFFICER
In reviewing and recommending Dr. John R. Plachetka's salary and bonus
and in awarding him stock options and other incentive awards during fiscal year
2001, the Compensation Committee followed its overall compensation philosophy.
During the year ended December 31, 2001, Dr. Plachetka received a salary of
$350,000. For his contributions during the 2001 fiscal year, Dr. Plachetka
earned a $122,500 bonus, which was paid in January 2002. In January and April
2001, Dr. Plachetka was granted options to purchase 50,000 shares of Common
Stock at an exercise price of $14.16 per share, and 137,500 shares of Common
Stock at an exercise price of $6.60 per share, respectively, under the terms of
the Company's 2000 Equity Compensation Plan. The options will become exercisable
in equal installments over four years on the anniversary date of the dates of
grant. The Compensation Committee recommended these option grants to secure the
long-term services of the Company's chief executive officer and to recognize his
efforts in 2001 in connection with the overall growth and development of the
Company. In July 2001, the Company amended and restated Dr. Plachetka's
employment agreement with the Company. See "Employment and Change of Control
Arrangements." In August 2001, Dr. Plachetka received an award, issued pursuant
to the POZEN Inc. 2001 Long Term Incentive Plan, entitling him to receive a cash
payment of up to $1,000,000 upon the achievement of certain performance goals
tied to the price of our stock. The Compensation Committee's purpose in
conditioning payment under the award to increases in stock price was to align
the long-term interests of the Chief Executive Officer with the interests of the
stockholders while providing an incentive to the Chief Executive Officer.
The Plan is subject to stockholder approval. If the Plan is not approved, Dr.
Plachetka's award will be canceled. See discussion herein - "Approval of the
POZEN Inc. 2001 Long Term Incentive Plan."
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Peter J. Wise, Chairman
Jacques F. Rejeange
Bruce A. Tomason
8
Executive Compensation
Summary of Compensation. The following table summarizes the compensation
paid to or earned during the last three fiscal years by our Chief Executive
Officer and all of our other executive officers whose salary and bonus exceeded
$100,000 in fiscal 2001. We refer to these persons as the Named Executive
Officers.
SUMMARY COMPENSATION TABLE/1/
Annual Compensation Long Term Compensation
------------------------------------ ----------------------
Securities
Name and Principal Position Other Annual Underlying LTIP All Other
During 2001 Year Salary Bonus/2/ Compensation/3/ Options Payouts Compensation/4/
----------- ---- ------ ------- ------------ ------- ------- ---------------
John R. Plachetka, Pharm. D., 2001 $350,000 $122,500 - 187,500 - $5,250
Chief Executive Officer 2000 $248,880 $102,220 - 47,215 - -
1999 $240,000 $ 60,000 - - - -
Kristina M. Adomonis, 2001 $189,332 $ 37,866 - 18,750 - $5,250
Senior Vice President, 2000 $178,615 $ 26,792 - - - -
Business Development/5/ 1999 $ 94,800 $ 18,960 - 101,175 - -
John E. Barnhardt, 2001 $132,500 $ 26,500 - 25,000 - $5,250
Vice President, Finance and 2000 $125,000 $ 25,000 - 6,745 - -
Administration 1999 $108,200 $ 21,640 - 33,725 - -
Matthew E. Czajkowski, 2001 $203,333 $ 43,000 - 75,000 - $5,250
Chief Financial Officer, 2000 $139,390 $ 47,708 - 148,390 - -
Senior Vice President,
Finance and Administration/6/
Andrew L. Finn, Pharm.D. 2001 $222,600 $ 44,520 $68,182 75,000 - $5,250
Executive Vice President, 2000 $210,000 $ 62,000 - 134,900 - -
Product and Development/7/
______________________
1 All share numbers and exercise prices reflect the 1.349-for-1 split of
the Common Stock effected on October 6, 2000.
2 Bonuses are reported in the year earned, even if actually paid in a
subsequent year. Bonuses earned in 2001 were paid in January 2002.
3 Excludes perquisites and other personal benefits where the aggregate
annual amount received by each officer was below the lesser of $50,000
or 10% of the salary and bonus reported.
4 Represents the employer matching portion of a deferred contribution
401(k) pension plan.
5 Kristina M. Adomonis' employment began in June 1999, and the figures
in the table above reflect only compensation paid to her from her date
of hire until December 31, 2001.
6 Matthew E. Czajkowski's employment began in March 2000, and the
figures in the table above reflect only compensation paid to him from
his date of hire until December 31, 2001.
7 Dr. Finn's employment began in January 2000, and the figures in the
table above reflect only compensation paid to him from his date of
hire until December 31, 2001. Other Annual Compensation paid to Dr.
Finn reflect relocation-related expenses.
9
Stock Options. The following table provides information related to options
for shares of the Common Stock granted to the Named Executive Officers during
2001:
OPTION GRANTS IN LAST FISCAL YEAR
% of Total
Number of Options Potential Realizable
Securities Granted to Value at Assumed Annual
Underlying Employees Exercise Rates of Stock Price
Options In Fiscal Price Expiration Appreciation for
Name Granted Year ($/share) Date/1/ Option Term/2/
- ---- ------- ---- --------- ------- --------------
5% 10%
-- ---
John R. Plachetka, Pharm.D. 50,000 6.2% $14.16 1/16/2006 - -
137,500 17.0% $ 6.60 4/25/2011 $268,358 $ 964,858
Kristina M. Adomonis 18,750 2.3% $13.19 1/18/2011 - $ 8,047
John E. Barnhardt 25,000 3.1% $13.19 1/18/2011 - $ 10,729
Matthew E. Czajkowski 29,028 3.6% $13.19 1/18/2011 - $ 12,457
45,972 5.7% $ 6.60 4/25/2011 $ 89,723 $ 322,592
Andrew L. Finn, Pharm.D. 33,333 4.1% $13.19 1/18/2011 - $ 14,305
41,667 5.2% $ 6.60 4/25/2011 $ 81,321 $ 292,384
______________
1 Each of these options is exercisable in cumulative installments of one-fourth
each beginning on the first anniversary of the grant date and continuing on
the next three anniversary dates. Each option has a term of ten years except
for the option to purchase 50,000 shares granted to Dr. Plachetka in January
2001, which has a term of five years.
2 The dollar amounts under these columns are the results of calculations at
assumed annual rates of stock price appreciation of 5% and 10%. These assumed
rates of growth were selected by the Securities and Exchange Commission for
illustration purposes only. They are not intended to forecast possible future
appreciation, if any, of the Company's stock price.
The following table provides information related to any stock options for
shares of the Common Stock exercised by the Named Executive Officers during 2001
and certain information about unexercised options held by the Named Executive
Officers at December 31, 2001:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES/1/
Number of Securities
Underlying
Unexercised Options Value of Unexercised
Shares at FY-End In-the-Money
Acquired On Value Exercisable/ Options at FY-End
Name Exercise Realized Unexercisable Exercisable/Unexercisable/2/
- ---- -------- -------- ------------- ----------------------------
John R. Plachetka, Pharm.D. - - 15,738 / 218,977 $ 23,826 / $ 47,653
Kristina M. Adomonis - - 67,450 / 52,475 $294,113 / $ 147,056
John E. Barnhardt - - 84,939 / 40,739 $142,992 / $ 53,526
Matthew E. Czajkowski - - 49,463 / 173,927 $159,949 / $ 319,898
Andrew L. Finn, Pharm.D. 5,200 $35,828 49,885 / 164,933 $194,316 / $ 338,817
______________
1 All share numbers and exercise prices reflect the 1.349-for-1 split of the
Common Stock effected on October 6, 2000.
2 "In-the-money" options are options whose base (or exercise) price was less
than the market price of the Common Stock at December 31, 2001. The value of
such options is calculated based on a stock price of $5.25, which was the
closing price of the Common Stock on The Nasdaq National Market on December
31, 2001.
10
Compensation of Directors
We reimburse each non-employee member of our Board for out-of-pocket
expenses incurred in connection with attending our meetings. We also pay each of
our non-employee directors a fee for each meeting attended, which currently is
$1,500 for each meeting attended in person and $750 if attendance is by
telephone. Additionally, each of our non-employee Board members currently
receives annually options to purchase 20,000 shares of our Common Stock for
their services as directors, granted in each calendar year on or before the date
of the initial Board meeting in that calendar year.
Employment and Change of Control Arrangements
John R. Plachetka: Under an executive employment agreement dated July 25,
2001, which amended and restated an earlier agreement dated April 1, 1999, we
agreed to employ John R. Plachetka, Pharm.D., as our President and Chief
Executive Officer for three years from the date of the agreement at an initial
annual base salary of $350,000, which is subject to performance and merit-based
increases. Under the agreement, Dr. Plachetka is eligible to receive annual
bonuses and awards issued under the POZEN Inc. 2001 Long Term Incentive Plan.
The agreement provides for the payment by POZEN of certain life and disability
insurance premiums and certain estate, tax and related expenses incurred by Dr.
Plachetka. The agreement automatically renews for successive one-year terms
after the expiration of the initial three-year term, unless either party
terminates the agreement.
Upon Dr. Plachetka's involuntary resignation or termination of employment
without cause, if the office from which Dr. Plachetka performs his principal
duties is relocated more than 50 miles from its current location, if Dr.
Plachetka's duties and responsibilities are substantially reduced, if we
materially breach the agreement or if Dr. Plachetka elects within 60 days
following a change of control of the Company to terminate his employment as a
result of the change of control, the agreement provides for payment of a lump
sum severance benefit equivalent to one year of his annual base salary plus the
average of the annual bonus awarded to him over the prior two years and the
continuation for one year of his benefits, as described further in the executive
employment agreement. The agreement provides for the payment to Dr. Plachetka of
additional amounts to reimburse him for any taxes owed in the event any other
payments he receives are determined to constitute an excess parachute payment
under Section 280G of the Internal Revenue Code.
Under the award granted in August 2001 to Dr. Plachetka pursuant to the
POZEN Inc. 2001 Long Term Incentive Plan (provided that the plan receives
stockholder approval), in the event that, during the 12-month performance cycle
of the award, Dr. Plachetka is terminated without cause, or if Dr. Plachetka
terminates his employment for any of the reasons stated in his employment
agreement as described above, Dr. Plachetka will be entitled to receive 100% of
the maximum amount payable under the award ($1,000,000), less any amounts paid
under the award prior to termination.
Other Named Executive Officers: Under executive employment agreements dated
July 25, 2001, we agreed to employ each of Andrew L. Finn, Matthew E.
Czajkowski, Kristina M. Adomonis and John E. Barnhardt for two years from the
dates of the respective agreements at initial annual base salary amounts set
forth in the agreements, which are subject in each case to performance and
merit-based increases. Under the agreements, the executives are eligible to
receive annual bonuses. Each agreement automatically renews for successive
one-year terms after the expiration of the initial two-year term, unless either
party to the agreement terminates the agreement.
Upon the executive's involuntary resignation or termination of employment
without cause, if the office from which the executive performs his or her
principal duties is relocated more than 50 miles from its current location, if
the executive's duties and responsibilities are substantially reduced, if we
materially breach the agreement or if the executive elects within 60 days
following a change of control of the Company to terminate his or her employment
as a result of the change of control, the agreement provides for payment of a
lump sum severance benefit equivalent to one year's annual base salary plus the
average of the executive's annual bonus awarded over the prior two years and the
continuation for one year of the executive's benefits, as described further in
the executive employment agreements. The agreements provide for the payment to
each executive of additional amounts in the event that any other payments
received by the executive are determined to constitute an excess parachute
payment under Section 280G of the Internal Revenue Code.
11
Other Change of Control Arrangements: Under the POZEN Inc. 2000 Equity
Compensation Plan, unless the Compensation Committee determines otherwise, the
vesting of all stock options outstanding upon a change of control, as defined in
the plan, accelerates and the options become fully exercisable, and if, as a
result of the change of control, the Company is not the surviving corporation
(or survives only as a subsidiary of another corporation), all outstanding
options that are not exercised are to be assumed by, or replaced with comparable
options or rights by, the surviving corporation. Alternatively, the Compensation
Committee may elect either to require that optionees surrender their outstanding
options in exchange for a cash or stock payment in an amount equal to the amount
by which the fair market value of the Common Stock exceeds the exercise price of
the options, or to terminate any or all unexercised options after giving
optionees an opportunity to exercise their outstanding options. The stock
options held as of December 31, 2001 by our Named Executive Officers are
reflected in the table entitled "Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values" included in this Proxy Statement.
AUDIT COMMITTEE REPORT
The Audit Committee oversees the Company's financial reporting process on
behalf of the Board. In addition, the Committee recommends to the Board, subject
to stockholder ratification, the selection of the Company's independent public
accountants.
Management is responsible for the Company's internal controls and the
financial reporting process, including its system of internal controls, and for
preparing the Company's financial statements in accordance with accounting
principles generally accepted in the U.S. The Company's independent public
auditors are responsible for auditing those financial statements and issuing a
report thereon. The Committee's responsibility is to monitor and oversee these
processes.
In this context, the Committee has met and held discussions with management
and the independent public accountants. Management has represented to the
Committee that the Company's audited financial statements were prepared in
accordance with generally accepted accounting principles, and the Committee has
reviewed and discussed the financial statements with management and the
independent public accountants. The Committee discussed with the independent
public accountants the matters required to be discussed by Statement on Auditing
Standards No. 61 (Communication with Audit Committees).
In addition, the Committee has discussed with the independent public
accountants the auditor's independence from the Company and its management,
including the written disclosures required by the Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees).
The Committee has discussed with the Company's independent public
accountants the overall scope and plans for their audits. The Committee meets
with the independent public accountants, with and without management present, to
discuss the results of their examinations, the evaluations of the Company's
internal controls, and the overall quality of the Company's financial reporting.
In its oversight function, the Committee relies on the representations of
management and the independent public accountants and thus does not have an
independent basis to determine that management has maintained appropriate
accounting and financial reporting principles or policies or appropriate
internal controls and procedures, that the Company's financial statements are
presented in accordance with accounting principles generally accepted in the
U.S., that the audit of the Company's financial statements has been carried out
in accordance with auditing standards generally accepted in the U.S. or that the
independent public accountants are in fact "independent."
Based upon the Committee's discussions with management and the independent
public accountants and the Committee's review of the representations of
management and the report of the independent public accountants to the
Committee, the Committee recommended that the Board include the audited
financial statements in the Company's Annual Report on Form 10-K for the year
ended December 31, 2001 for filing with the SEC.
The Audit Committee:
Bruce A. Tomason, Chairman
Jacques F. Rejeange
Ted G. Wood
12
STOCK PERFORMANCE GRAPH
The following graph compares the yearly change in the total stockholder
return on the Company's Common Stock during the period from October 11, 2000
through December 31, 2001, with the total return on the Nasdaq Stock Market
(U.S.) Index, the Nasdaq Biotechnology Index and the Nasdaq Pharmaceutical
Index. The comparison assumes that $100 was invested on October 11, 2000 in our
Common Stock and in each of the foregoing indices and assumes reinvestment of
dividends, if any.
COMPARISON OF 14 MONTH CUMULATIVE TOTAL
OCTOBER 11, 2000 THROUGH DECEMBER 31,
AMONG POZEN INC., THE NASDAQ STOCK MARKET (U.S.) INDEX,
THE NASDAQ BIOTECHNOLOGY INDEX
AND THE NASDAQ PHARMACEUTICAL INDEX
[GRAPH]
* $100 Invested on 10/10/00 in stock or index-including reinvestment of
dividends. Fiscal year ending December 31.
13
PROPOSAL No. 2
APPROVAL OF THE POZEN INC. 2001 LONG TERM INCENTIVE PLAN
Description of the POZEN Inc. 2001 Long Term Incentive Plan
The Board has adopted the POZEN Inc. 2001 Long Term Incentive Plan (the
"Plan") and has directed that the Plan be submitted to the stockholders for
approval. The following description of the Plan is qualified in its entirety by
reference to the Plan attached as Appendix A to this Proxy Statement.
General
The purpose of the Plan is to provide long term incentive compensation to
the Company's employees who make substantial contributions to the Company, to
provide a means for these employees to participate in the Company's success, and
to assist in attracting and retaining the highest quality individuals in key
executive positions.
All compensation payable under this Plan is intended to be deductible by
the Company under Section 162(m) of the Internal Revenue Code.
Eligibility
Each employee who is approved by the Compensation Committee will be
eligible for participation in the Plan. No participant in the Plan or other
employee of the Company will at any time have a right to participate in the
Plan, despite having previously participated in the Plan. As of February 28,
2002, approximately 28 people (which includes all of the Company's executive
officers and other employees) are eligible to participate in the Plan, subject
to approval by the Compensation Committee.
Administration
The Compensation Committee of our Board administers the Plan. The
Compensation Committee has the authority to:
. determine participants;
. construe and interpret the Plan; and
. make any reasonable rules and regulations for the administration of
the Plan, as it deems advisable.
Award Determination
An "award" is the stated cash amount(s) to which a participant will be
entitled upon achievement of targets based on performance goals established at
the time the award is granted. The maximum amount payable under a single award
granted to a participant is $1,000,000.
The Compensation Committee will, in its sole discretion, approve or
establish in writing the objective compensation formula or standard for each
award. The Compensation Committee will establish in writing:
. the performance cycle during which the performance goals must be
met;
. the performance goals that must be met;
. the threshold, target and maximum amounts that may be paid if the
performance ratios for a performance goal are met; and
. any other conditions that the Compensation Committee deems
appropriate and consistent with the Plan and Section 162(m) of the
Internal Revenue Code.
Under the Plan, the performance cycle for an award means the period of time
over which the award's performance goals may be calculated and may consist of a
portion of a year, a single year, a stated number of years, or otherwise, as
determined by the Compensation Committee for each award at the time the award is
granted.
14
Performance goals for each award are objectively determinable and mean
specified levels of growth in or achievement of goals relating to one or more of
the following: stock price, execution of strategic initiatives, earnings per
share, net earnings, operating earnings, return on assets, stockholder return,
return on equity, growth in assets, unit volume, sales, market share, scientific
goals, pre-clinical or clinical goals, regulatory approvals, or strategic
business criteria consisting of one or more objectives based on meeting
specified revenue goals, market penetration goals, geographic business expansion
goals, cost targets, goals relating to acquisitions or divestitures or strategic
partnerships. The target levels of performance of certain performance goals
specified in an award are referred to as performance ratios. Performance goals
may include a threshold level of performance below which no payment will be made
under the award, levels of performance at which specified percentages of the
target amount under the award will be paid and a maximum level of performance
above which no additional amount will be paid under the award.
The performance goals set by the Compensation Committee may relate to the
participant's business unit or the performance of the Company and its
subsidiaries as a whole, or any combination of these factors. The Compensation
Committee establishes these performance goals in writing either before the
beginning of the performance cycle or during a period ending shortly but no
later than 90 days after the beginning of the performance cycle. In order to
comply with Section 162(m) of the Internal Revenue Code, as applicable, the
achievement of the performance goals must be substantially uncertain at the time
they are established and the performance goals must be established in such a way
that a third party with knowledge of the relevant facts could determine whether
and to what extent the performance goals have been met. The Compensation
Committee has the discretion, as to each participant, to reduce the amount of an
award that would otherwise be paid or to determine that no portion should be
paid, but does not have discretion to increase the amount that is payable under
an award.
If the Compensation Committee determines that a change in the business,
operations, corporate structure or capital structure of the Company, the manner
in which it conducts its business, or other events or circumstances render the
performance goals unsuitable, the Compensation Committee may modify the
performance goals or the related minimum performance ratio as the Compensation
Committee deems appropriate and equitable, except where the modification would
result in the failure of the award to qualify for an exemption under Section
162(m) of the Internal Revenue Code.
Payment
A participant in the Plan is entitled to receive payment under an award as
soon as practicable after the end of the performance cycle or the performance
goal(s) or performance ratios have been achieved.
Unless otherwise provided in the Plan, each award granted under the Plan
will be forfeited and canceled in all respects, and no cash will be delivered or
paid to the participant of the award, if the performance goal(s) for that award
are not attained or the performance ratio(s) attained for such award are not at
least equal to the minimum performance ratio(s) stated in the award.
If a participant ceases to be employed by, or provide service to, the
Company during a performance cycle, or if other conditions established by the
Compensation Committee are not met, the participant's award may be forfeited.
The Compensation Committee may provide that an award will be payable, in whole
or in part, in the event of a participant's death or disability during the
performance cycle, or under other circumstances.
In the event that a participant's employment or engagement with the Company
is terminated for cause, as determined by the Compensation Committee, or if the
participant breaches the terms of any confidentiality, inventions and/or
non-competition agreement between the participant and the Company, the
participant will immediately forfeit all awards granted to him or her and will
forfeit all rights whatsoever he or she may have to receive any payments under
awards granted under the Plan. However, the participant will not be required to
repay any amounts previously received pursuant to awards granted under the Plan.
15
Change in Control of the Company
Unless the Compensation Committee determines otherwise or unless otherwise
provided in a particular award, upon the occurrence of a change of control (as
defined in the Plan) during any performance cycle, all awards will be paid at
their target value, or in such other amounts as the Compensation Committee may
determine. Payment will be made within 60 days following the consummation of the
transaction constituting the change of control.
Adjustments to Common Stock
The terms of any awards that are based on the Company's Common Stock may be
adjusted by the Compensation Committee to reflect any stock split, stock
dividend, recapitalization, reorganization, merger, consolidation, combination,
exchange of shares, liquidation, spin-off or other similar change in
capitalization or event, or any distribution to holders of shares of the Common
Stock other than a normal cash dividend.
Amendment, Suspension or Termination of Plan
The Plan will terminate on December 31, 2006, unless the Plan is terminated
earlier or extended by the Board with the approval of the stockholders. However,
the Board may amend, suspend or terminate the Plan in whole or in part at any
time, so long as (except as expressly provided in the Plan) no such amendment,
suspension or termination will materially and adversely affect the rights of the
holder of any award then outstanding unless the holder consents. No awards will
be made pursuant to the Plan after its termination date, but awards granted
prior to the termination date may extend and be paid beyond that date.
Awards Subject to Approval of the Plan
On August 1, 2001, an award was granted under the Plan to John R.
Plachetka, Pharm.D., our President and Chief Executive Officer, pursuant to
which Dr. Plachetka will be entitled to receive in cash up to $1,000,000 based
on the price of the Common Stock as reported on the Nasdaq Stock Market during
the 12-month period beginning on August 1, 2001. If the Common Stock closing
price equals or exceeds $19.96 for 20 consecutive trading days during the
performance period, Dr. Plachetka will be entitled to receive in cash 100% of
the Target Amount. Dr. Plachetka will be entitled to partial one-time payments
of (a) 33% of the Target Amount when the closing price of the Common Stock first
equals or exceeds $16.50 for 20 consecutive trading days during the performance
period and (b) 66% of the Target Amount when the closing price of the Common
Stock first equals or exceeds $18.50 for 20 consecutive trading days during the
performance period. Any payments made under the award are reduced by the amount
of any previous payment(s) received under the award. In no event will Dr.
Plachetka be entitled to receive more than $1,000,000 in the aggregate under
this award. The grant of this award is subject to stockholder approval of the
Plan, and if such approval is not obtained, this award will be cancelled. As of
February 28, 2002, the closing price of the Common Stock as reported on the
Nasdaq Stock Market was $5.51.
The number of individuals who will receive awards under the Plan may vary
from year to year, will depend on various factors and will be determined in the
sole discretion of the Compensation Committee. Therefore, except as set forth
above, it is not possible to determine the benefits or amounts that may be
received by or allocated to any person or class of persons under the Plan in the
future or that would have been received by or allocated to any person or class
of persons for the last completed fiscal year if the Plan had been in effect.
Federal Income Tax Consequences
The following is a brief description of the federal income tax
consequences generally arising with respect to the grant and payment of awards
under the Plan. The tax effect of exercising awards may vary depending upon the
particular circumstances of each payment, and the income tax laws and
regulations change frequently. This description is intended for the information
of stockholders considering how to vote at the Annual Meeting and not as tax
guidance to individuals who participate in the Plan.
16
At the time an award is granted, the participant will not recognize income and
the Company will not be allowed a tax deduction. Generally, at the time an award
is paid, a participant will realize compensation taxable as ordinary income, and
the Company will generally be entitled to a deduction, in an amount equal to any
cash received by the participant (before applicable withholding). As mentioned
above, all compensation payable under this Plan is intended to be deductible by
the Company under Section 162(m) of the Internal Revenue Code.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO APPROVE THE POZEN
INC. 2001 LONG TERM INCENTIVE PLAN.
PROPOSAL 3
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Upon the recommendation of the Audit Committee of the Board, and
subject to the ratification by the stockholders, the Board has appointed Ernst &
Young LLP as the Company's independent public accountants to examine the
Company's financial statements for the fiscal year ending December 31, 2002.
Ernst & Young LLP has served as the Company's independent public accountants
since 1997. Representatives from Ernst & Young LLP are expected to be present at
the Annual Meeting and will have an opportunity to make a statement if they so
desire and to respond to appropriate questions from those attending the meeting.
Ernst & Young LLP Fees Related to Fiscal 2001
Audit Fees:
The aggregate fees billed, or to be billed, by our independent auditors
for professional services in connection with the audit of the Company's annual
financial statements for the fiscal year ended December 31, 2001 and the reviews
conducted by the independent auditors of the financial statements included in
the Company's quarterly reports on Form 10-Q required to be filed by the Company
during fiscal 2001 totaled $103,750.
Financial Information Systems Design and Implementation Fees:
The Company did not engage Ernst & Young LLP to provide advice to the
Company regarding financial information systems design and implementation during
the fiscal year ended December 31, 2001.
All Other Fees:
The aggregate of all other fees billed to the Company by Ernst & Young
LLP during the Company's 2001 fiscal year for all other non-audit services
rendered to the Company, including tax related services ($9,380) and other
professional services during fiscal 2001 totaled $18,160.
The Audit Committee has considered whether the provision of non-audit
services by Ernst & Young LLP is compatible with maintaining the independence of
Ernst & Young LLP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE SELECTION
OF THE INDEPENDENT PUBLIC ACCOUNTANTS.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers and persons who own more than 10% of the Company's
outstanding shares of the Common Stock to file with the SEC initial reports of
ownership and reports of changes in ownership in the Company's Common Stock and
other equity securities. Specific due dates for these records have been
established and the Company is required to report in this proxy statement any
failure to file by these dates in 2001. To our knowledge, based solely on a
review of the copies of such reports furnished to us and written representations
that no other reports were required, there was one report required under Section
16(a) of the Exchange Act which was not timely filed during the fiscal year
ended December 31, 2001, as follows: a Form 4 was filed by BB Medtech AG and
MEDGROWTH N.V. on December 21, 2001 to reflect a sale of shares of Common Stock
that occurred on November 6, 2001.
17
CERTAIN DEADLINES FOR THE 2003 ANNUAL MEETING
Any stockholder proposal submitted to the Company pursuant to SEC Rule
14a-8 under the Exchange Act for inclusion in the Company's proxy statement and
proxy relating to the Company's 2003 Annual Meeting must be received by the
Company no later than the close of business on December 10, 2002. If the Company
does not receive notice of any non-Rule 14a-8 matter that a stockholder wishes
to raise at the Annual Meeting in 2003 by March 5, 2003, the proxy holders will
retain discretionary authority to vote proxies on any such matter if it is
raised at the 2003 Annual Meeting.
OTHER MATTERS
The Board does not know of any matters to be presented at the Annual
Meeting other than those listed in the Notice of Annual Meeting of Stockholders.
However, if other matters properly come before the Annual Meeting, it is the
intention of the persons named in the accompanying proxy to vote in accordance
with their best judgment on such matters insofar as the proxies are not limited
to the contrary.
To the extent that information contained in this Proxy Statement is
within the knowledge of persons other than the management of the Company, the
Company has relied on such persons for the accuracy and completeness thereof.
Upon the receipt of a written request from any stockholder entitled to
vote at the forthcoming Annual Meeting, the Company will mail, at no charge to
the stockholder, a copy of the Company's annual report on Form 10-K, including
the financial statements and schedules required to be filed with the SEC
pursuant to Rule 13a-1 under the Exchange Act, for the Company's most recent
fiscal year. Requests from beneficial owners of the Company's voting securities
must set forth a good faith representation that, as of the Record Date for the
Annual Meeting, the person making the request was the beneficial owner of
securities entitled to vote at such meeting. Written requests for such report
should be directed to:
Investor Relations
POZEN Inc.
1414 Raleigh Road, Suite 400
Chapel Hill, North Carolina 27517
You are asked to advise us if you intend to attend the Annual Meeting.
For directions to the Annual Meeting, please call James Watson at (919)
913-1030.
You are urged to sign and return your proxy promptly to make certain
your shares will be voted at the Annual Meeting. For your convenience, a return
envelope is enclosed requiring no additional postage if mailed in the United
States.
By Order of the Board of Directors,
/s/ Helga L. Leftwich
Helga L. Leftwich
Assistant Secretary
Dated: April 17, 2002
18
APPENDIX A
THE BOARD OF DIRECTORS HAS ADOPTED THIS PLAN
SUBJECT TO APPROVAL OF THE PLAN BY THE STOCKHOLDERS OF POZEN INC.
POZEN INC.
2001 LONG TERM INCENTIVE PLAN
ARTICLE I
Purpose
1.1 The purpose of the POZEN Inc. Long Term Incentive Plan (the "Plan") is
to provide long-term incentive compensation to Eligible Executives (as defined
below) of POZEN Inc. and/or its subsidiaries (the "Company") who make
substantial contributions to the success of the Company, to provide a means for
such Eligible Executives to participate in such success, and to assist in
attracting and retaining the highest quality individuals in key executive
positions.
1.2 Subject to approval by the stockholders of the Company, the Plan shall
become effective as of July 25, 2001 and shall continue until December 31, 2006,
unless extended by reapproval of the stockholders obtained no later than the
first stockholders' meeting that occurs in the fifth year following the year in
which the stockholders previously approved the Plan or unless earlier terminated
by the Company pursuant to the terms of the Plan. No Awards (as defined below)
shall be made pursuant to the Plan after its termination date, provided that
Awards granted prior to the termination date may extend and be paid beyond that
date.
1.3 The Plan is intended to secure the full deductibility of incentive
awards payable to the Senior Officers (as defined below) pursuant to the Plan.
All compensation payable under this Plan to Senior Officers is intended to be
deductible by the Company under Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code").
ARTICLE II
Definitions
The following words and phrases shall have the respective meanings set forth
below (unless the context indicates otherwise).
2.1 "Award" shall mean the stated cash amount(s) to which a Participant
will be entitled upon achievement of targets based on Performance Goals
established at the time the Award is granted.
2.2 "Change of Control" shall mean the occurrence of any of the following:
(i) Any "person" (as such term is used in sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
(other than the Company or any trustee or fiduciary holding securities
under an employee benefit plan of the Company) becomes a "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing 50% or more of the voting power
of the then outstanding securities of the Company; provided that a Change
of Control shall not be deemed to occur as a result of a transaction in
which the Company becomes a subsidiary of another corporation and in which
the stockholders of the Company, immediately prior to the transaction, will
beneficially own, immediately after the transaction, shares entitling such
stockholders to more than 50% of all votes to which all stockholders of the
parent corporation would be entitled in the election of directors (without
consideration of the rights of any class of stock to elect directors by a
separate class vote); or
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(ii) The consummation of (a) a merger or consolidation of the
Company with another corporation where the stockholders of the Company,
immediately prior to the merger or consolidation, will not beneficially
own, immediately after the merger or consolidation, shares entitling such
stockholders to more than 50% of all votes to which all stockholders of the
surviving corporation would be entitled in the election of directors
(without consideration of the rights of any class of stock to elect
directors by a separate class vote), (b) a sale or other disposition of all
or substantially all of the assets of the Company, or (c) a liquidation or
dissolution of the Company.
2.3 "Committee" shall mean the Compensation Committee of the Company's
Board of Directors, as the same from time to time may be constituted, provided
that the committee shall consist solely of two (2) or more individuals,
appointed by the Board to administer the Plan, who are "outside directors" to
the extent required by and within the meaning of Section 162(m) of the Code, as
amended from time to time.
2.4 "Disability" shall mean, with respect to an Eligible Executive who is a
Participant in the Plan, that a qualified medical doctor mutually acceptable to
the Company and the Eligible Executive or the Eligible Executive's personal
representative shall have certified in writing that: (i) the Eligible Executive
is unable because of medically determinable physical or mental disability to
perform substantially all of the duties of the Eligible Executive's employment
with the Company for more than one hundred eighty (180) calendar days measured
from the last full day of work; or (ii) by reason of mental or physical
disability, it is unlikely that the Eligible Executive will be able, within one
hundred eighty (180) calendar days, to resume substantially all business duties
and responsibilities in which the Eligible Executive was previously engaged and
otherwise discharge the Eligible Executive's duties as an employee of the
Company.
2.5 "Eligible Executive" shall mean an employee of the Company who is
approved by the Committee, from time to time, for participation in the Plan.
2.6 "Employer" shall mean the Company or a subsidiary of the Company by
whom the Participant is employed at the time in question.
2.7 "Senior Officer" shall mean an officer within the meaning of Section
162(m) of the Code or any other officer designated by the Committee for purposes
of exempting distributions under the Plan from Section 162(m)(3) of the Code.
2.8 "Participant" means any Eligible Executive to whom an Award has been
granted pursuant to this Plan.
2.9 "Performance Cycle" shall mean the period of time over which
Performance Goals for an Award may be calculated and may consist of a portion of
a year, a single year, a stated number of years, or otherwise, as determined by
the Committee for each Award at the time such Award is granted.
2.10 "Performance Goals" shall be objectively determinable and shall mean
specified levels of, growth in, or achievement of one or more of the following:
stock price, execution of strategic initiatives, earnings per share, net
earnings, operating earnings, return on assets, stockholder return, return on
equity, growth in assets, unit volume, sales, market share, scientific goals,
pre-clinical or clinical goals, regulatory approvals, or strategic business
criteria consisting of one or more objectives based on meeting specified revenue
goals, market penetration goals, geographic business expansion goals, cost
targets, goals relating to acquisitions or divestitures, or strategic
partnerships.
2.11 "Performance Ratios" shall mean target levels of performance of
certain Performance Goals specified in an Award. Performance Goals may include a
threshold level of performance below which no payment will be made under the
Award, levels of performance at which specified percentages of the target amount
under the Award will be paid, and a maximum level of performance above which no
additional amount will be paid under the Award.
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ARTICLE III
Eligibility
3.1 Each Eligible Executive who is approved by the Committee, from time to
time, shall be eligible for participation in the Plan.
3.2 No Participant or other employee of the Company shall at any time have
a right to participate in the Plan, despite having previously participated in
the Plan.
ARTICLE IV
Selection of Participants, Grant of Awards and Administration of Plan
4.1 The Committee shall determine, from time to time, those Eligible
Executives who are to be granted Awards pursuant to the Plan.
4.2 The Plan shall be administered by the Committee, and the Committee
shall (1) construe and interpret the Plan, and (2) make such reasonable rules
and regulations for the administration of the Plan as it deems advisable. Any
determination by the Committee in administering, interpreting or construing the
Plan in accordance with this Article shall be final, binding and conclusive for
all purposes and upon all interested persons.
ARTICLE V
Award Determination; Payment
5.1 Subject to the provisions below, the maximum amount payable under a
single Award granted to a Participant shall not exceed $1,000,000.
5.2 The Committee shall, in its sole discretion, approve or establish in
writing the objective compensation formula or standard for each Award. The
Committee shall establish in writing (i) the Performance Goals that must be met,
(ii) the Performance Cycle during which the Performance Goals must be met, (iii)
the threshold, target and maximum amounts that may be paid if the Performance
Ratios for a Performance Goal are met, and (iv) any other conditions that the
Committee deems appropriate and consistent with the Plan and Section 162(m) of
the Code. The Performance Goals may relate to the Participant's business unit or
the performance of the Company and its subsidiaries as a whole, or any
combination of the foregoing. The Committee shall establish the Performance
Goals in writing either before the beginning of the Performance Cycle or during
a period ending no later than the earlier of (i) 90 days after the beginning of
the Performance Cycle or (ii) the date on which 25% of the Performance Cycle has
been completed, or such other date as may be required or permitted under
applicable regulations under Section 162(m) of the Code. The Performance Goals
shall satisfy the requirements for "qualified performance-based compensation,"
including the requirement that the achievement of the Performance Goals be
substantially uncertain at the time they are established and that the
Performance Goals be established in such a way that a third party with knowledge
of the relevant facts could determine whether and to what extent the Performance
Goals have been met. The Committee shall have the discretion, as to each
Participant, to reduce the amount of an Award that would otherwise be paid or to
determine that no portion should be paid, but shall not have discretion to
increase the amount that is payable under an Award.
5.3 If the Committee determines that a change in the business, operations,
corporate structure or capital structure of the Company, or the manner in which
it conducts its business, or other events or circumstances render the
Performance Goals unsuitable, the Committee may in its discretion modify such
Performance Goals or the related minimum Performance Ratio, in whole or in part,
as the Committee deems appropriate and equitable, except where such action would
result in the loss of the otherwise available exemption of the Award under
Section 162(m) of the Code. In the case of an Award to a Senior Officer, in
determining financial results, items whose exclusion from consideration will
increase the Award shall only have their effects excluded if they constitute
"extraordinary" or "unusual" events or items under generally accepted accounting
principles and all such events and items shall be excluded. The Committee shall
also adjust performance calculations to exclude the unanticipated effect on
financial results of changes in the Code, or other tax laws, and the regulations
thereunder.
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5.4 Subject to the provisions of Sections 5.5 and 5.6, a Participant shall
be entitled to receive payment under an Award as soon as practicable after the
end of the Performance Cycle, or if such Performance Cycle extends over a stated
number of years and the Award so provides, as soon as practicable after the
Performance Goal(s) or Performance Ratios (as applicable), as specified in the
Award, have been achieved. The Committee shall certify and announce the results
for each Performance Cycle, or portion thereof (as applicable), to any affected
Participant promptly following the end of such Performance Cycle or achievement
of any Performance Ratio thereunder, as applicable.
5.5 Unless otherwise provided herein, each Award granted under the Plan
shall be forfeited and canceled in all respects, and no cash shall be delivered
or paid to the Participant thereof, in the event that the Performance Goal(s)
for such Award are not attained or the Performance Ratio(s) attained for such
Award are not at least equal to the minimum Performance Ratio(s) stated in the
Award.
5.6 If a Participant ceases to be employed by, or provide service to, the
Company during a Performance Cycle, or if other conditions established by the
Committee are not met, the Participant's Award, to the extent not earned as of
the date of such cessation of employment or service, shall be forfeited. The
Committee may, however, provide for complete or partial exceptions to this
requirement as it deems appropriate. The Committee may provide that an Award
shall be payable, in whole or in part, in the event of the Participant's death
or Disability during the Performance Cycle, or under other circumstances
consistent with the regulations and rulings under Section 162(m) of the Code.
5.7 Notwithstanding any other provisions of this Plan to the contrary, in
the event that a Participant's employment or engagement with the Company is
terminated for cause, as determined by the Committee, or if the Participant
breaches the terms of any confidentiality, inventions and/or non-competition
agreement between the Participant and the Company, such Participant shall
immediately forfeit all Awards granted to Participant and shall forfeit all
rights whatsoever the Participant may have to receive any payments under Awards
granted under this Plan; provided, however, that such Participant shall not be
required to repay any amounts previously received pursuant to Awards granted
under this Plan.
5.8 Nothing contained in this Article V or elsewhere in this Plan shall
eliminate, impair or otherwise affect the right of the Employer to terminate or
change the employment of any Eligible Executive at any time, and the grant of an
Award to any such Eligible Executive shall not be deemed to, and shall not,
result in any agreement, expressed or implied, by the Employer to retain such
person in any specific position or in its employ for the duration of the
Performance Cycle with respect to such Award or for any other period.
ARTICLE VI
Change in Control of the Company
Unless the Committee determines otherwise or unless otherwise provided in a
particular Award, upon the occurrence of a Change of Control during any
Performance Cycle, notwithstanding any other provision of this Plan to the
contrary, all Awards (to the extent not previously paid) shall be paid at their
target value, or in such other amounts as the Committee may determine. Such
payment shall be made within sixty (60) days following the consummation of the
transaction constituting the Change of Control.
ARTICLE VII
Adjustments to Common Stock
To the extent that any Awards issued under the Plan are based, in whole or
in part, on the common stock, par value $0.001 per share, of the Company (the
"Common Stock"), the terms of such Awards shall be adjusted by the Committee, to
the extent the Committee determines such adjustments are necessary or
appropriate, to reflect any stock split, stock dividend, recapitalization,
reorganization, merger, consolidation, combination, exchange of shares,
liquidation, spin-off or other similar change in capitalization or event, or any
distribution to holders of shares of the Common Stock other than a normal cash
dividend. Any such adjustments determined by the Committee shall be final,
binding and conclusive.
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ARTICLE VIII
Nonalienation of Benefits
Neither the Award nor any other right or benefit under this Plan shall be
subject to anticipation, alienation, sale, assignment, transfer, pledge,
encumbrance or charge, and any attempt to anticipate, alienate, sell, assign,
pledge, encumber or charge the same shall be void and shall not be recognized or
given effect by the Company.
ARTICLE IX
Certificates of Award
The Company shall execute and deliver to each Participant to whom an Award
is granted a certificate, in the form prescribed by the Committee, evidencing
such Award and stating the date thereof and cash amount that is the subject of
the Award.
ARTICLE IX
Amendment, Suspension or Termination of Plan
The Plan shall terminate on December 31, 2006, unless the Plan is
terminated earlier by the Board of Directors of the Company or is extended by
the Board with the approval of the stockholders. Subject to the foregoing, the
Board of Directors of the Company may amend, suspend or terminate this Plan in
whole or in part at any time, provided that, except as expressly provided in
this Plan, no such amendment, suspension or termination shall materially and
adversely affect the rights of the holder of any Award then outstanding unless
such holder consents.
ARTICLE X
Miscellaneous
10.1 The Plan, and all agreements hereunder, shall be governed by and
construed in accordance with the laws of the State of Delaware.
10.2 The Company shall have the right to deduct from all payments under the
Plan any Federal, state or local income and employment taxes required by law to
be withheld with respect to such payments.
10.3 Except where otherwise indicated by the context, any masculine term
used herein also shall include the feminine, the plural shall include the
singular, and the singular shall include the plural.
10.4 In the event any provision of the Plan shall be held illegal or
invalid for any reason, the illegality or invalidity shall not affect the
remaining parts of the Plan and the Plan shall be construed and enforced as if
the illegal or invalid provision had not been included.
10.5 All costs of implementing and administering the Plan shall be borne by
the Company.
10.6 All obligations of the Company under the Plan shall be binding upon
and inure to the benefit of any successor to the Company, whether the existence
of such successor is the result of a direct or indirect purchase, merger,
consolidation, or otherwise, of all or substantially all of the business and/or
assets of the Company.
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POZEN Inc.
COMMON STOCK
POZEN(R) INC. PROXY CARD
------------
The Pharmaceutical Development Company
This Proxy is Solicited on Behalf of the Board of Directors for the Annual
Meeting of Stockholders on May 21, 2002.
YOUR VOTE IS IMPORTANT! PLEASE SIGN AND DATE ON THE REVERSE SIDE OF THIS CARD.
PROXY
The undersigned hereby appoints John R. Plachetka and Matthew E. Czajkowski, and
each of them, proxies, with full power of substitution to appear on behalf of
the undersigned and to vote all shares of Common Stock of the undersigned at the
Annual Meeting of Stockholders to be held at the Company's headquarters at 1414
Raleigh Road, Suite 400, Chapel Hill North Carolina 27517, on Tuesday, May 21,
2002 at 11:00 a.m. Eastern time, and at any adjournment thereof, upon all
subjects that may properly come before the meeting, including the matters
described in the proxy statement furnished herewith, subject to any directions
indicated on the reverse side of this card, hereby revoking any and all proxies
heretofore given.
If this Proxy is properly executed and returned, and not revoked, the shares it
represents will be voted at the meeting in accordance with the choices specified
on this proxy card. If no choice is specified, the shares will be voted by the
proxies FOR the election of both nominees for the Board of Directors listed in
Proposal 1 and FOR Proposals 2 and 3, and at their discretion on any other
matter that may properly come before the meeting.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE SIDE SEE REVERSE SIDE
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSALS:
1. Election of Nominees as Director.
Jacques F. Rejeange Bruce A. Tomason
[_] FOR ALL [_] WITHHOLD ALL [_] FOR ALL EXCEPT
TO WITHHOLD AUTHORITY TO VOTE,
MARK "FOR ALL EXCEPT" AND WRITE
THE NOMINEE'S NAME ON THE LINE BELOW:
_______________________________________
2. To approve the POZEN Inc. 2001 Long Term Incentive Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
3. To ratify the Board of Directors' selection of Ernst & Young LLP as
independent public accountants of the Company for the Company's fiscal
year ended December 31, 2002.
[_] FOR [_] AGAINST [_] ABSTAIN
Date: ________________________, 2002
_____________________________________________
Signature
_____________________________________________
Signature (if jointly held)
Please sign and return this Proxy Card so
that your shares can be represented at the
meeting. If signing for a corporation or
partnership or as agent, attorney or
fiduciary, indicate the capacity in which you
are signing. If you vote by ballot, such vote
will supersede this proxy.
[_] MARK HERE IF YOU PLAN TO ATTEND THE MEETING
[_] MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT
PLEASE RETURN THIS CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE OR
OTHERWISE TO STOCKTRANS, INC., 44 WEST LANCASTER AVE, ARDMORE, PA 19003, SO
THAT YOUR SHARES CAN BE REPRESENTED AT THE MEETING.