SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a party other than the Registrant /X/
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 Section 240.14a-11(c) or Section
240.14a-12
RIBI IMMUNOCHEM RESEARCH
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
MERRILL CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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[LOGO]
553 OLD CORVALLIS ROAD
HAMILTON, MONTANA
59840 USA
(406) 363-6214
FAX (406) 363-6129
- --------------------------------------------------------------------------------
March 20, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Ribi ImmunoChem Research, Inc., which will be held at 2:00 P.M. on April 24,
1998, at Hamilton City Hall/Community Center, 223 S. 2nd St., Hamilton, Montana.
Your Board of Directors looks forward to greeting personally those stockholders
able to attend.
At the meeting, you will be asked to elect seven directors. Whether or not
you plan to attend, it is important that your shares are represented at the
meeting. Accordingly, you are requested to promptly sign, date and mail the
enclosed proxy in the envelope provided.
Thank you for your consideration and continued support.
Sincerely,
/s/ ROBERT E. IVY
Robert E. Ivy
CHIEF EXECUTIVE OFFICER,
PRESIDENT AND CHAIRMAN
[LOGO]
553 OLD CORVALLIS ROAD
HAMILTON, MONTANA 59840
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 24, 1998
------------------------
The Annual Meeting of Stockholders of Ribi ImmunoChem Research, Inc., a
Delaware corporation, will be held on Friday, April 24, 1998, at 2:00 P.M.,
Mountain Daylight Time, at Hamilton City Hall/ Community Center, 223 S. 2nd St.,
Hamilton, Montana, for the following purposes:
1. To elect a board of seven directors to serve until the next Annual
Meeting of Stockholders or until their successors are duly elected and
qualified;
2. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Holders of common stock of record at the close of business on March 4, 1998,
will be entitled to notice of, and to vote at, the annual meeting or any
adjournment thereof.
All stockholders are invited to attend the annual meeting in person. Those
who do not expect to attend the annual meeting are urged to sign and date the
enclosed proxy and return it promptly in the enclosed stamped envelope. Your
proxy will not be used if you subsequently decide to attend the annual meeting
and to vote your shares in person.
BY ORDER OF THE BOARD OF DIRECTORS
Ronald H. Kullick
Secretary
Hamilton, Montana
March 20, 1998
RIBI IMMUNOCHEM RESEARCH, INC.
553 OLD CORVALLIS ROAD
HAMILTON, MONTANA 59840
------------------------
PROXY STATEMENT
---------------------
This proxy statement is furnished in connection with the solicitation by the
Board of Directors of Ribi ImmunoChem Research, Inc. (the "Company"), of proxies
in the accompanying form to be voted at the Annual Meeting of Stockholders to be
held in Hamilton, Montana, on April 24, 1998, or any adjournment thereof, for
the purposes set forth in the preceding notice. This proxy statement and the
enclosed proxy are being mailed to stockholders on or about March 20, 1998.
Proxies will be voted in accordance with the directions specified thereon
and otherwise in accordance with the judgment of the persons designated as
proxies. Any proxy returned on which no direction is specified will be voted FOR
all items. A stockholder may revoke his or her proxy at any time prior to the
voting thereof by filing with the Secretary of the Company a later proxy or
written notice of revocation, or by attending the meeting and voting in person.
VOTING RIGHTS
Stockholders of record as of the close of business on March 4, 1998, will be
entitled to vote at the meeting. As of that date, there were 20,312,273 shares
of common stock outstanding and entitled to vote. Each share of common stock
entitles the holder to one vote on all matters presented at the meeting.
Votes cast by proxy or in person at the annual meeting will be tabulated by
the Inspector of Elections (the "Inspector") with the assistance of the
Company's transfer agent. The Inspector will also determine whether or not a
quorum is present. A majority of the shares entitled to vote, present in person
or represented by proxy, shall constitute a quorum. Abstentions and broker
non-votes will be treated as present at the meeting for purposes of determining
a quorum. However, broker non-votes are not counted for purposes of determining
the number of votes cast with respect to a particular proposal. Directors shall
be elected by a plurality of the votes of the shares present in person or
represented by proxy at the meeting and entitled to vote thereon. In determining
whether any other proposal has been approved, abstentions are counted as votes
against the proposal and broker non-votes are not counted as votes for or
against the proposal.
ITEM NO. 1
ELECTION OF DIRECTORS
A board of seven directors will be elected at the meeting, each director to
hold office until the next Annual Meeting of Stockholders or until his successor
is elected and qualified. Unless authority to vote is withheld, shares
represented by proxies will be voted in favor of the election as directors the
nominees named below (or, in the event, which is not anticipated, that any such
nominees should become unavailable, a substitute nominee). The nominees are all
present members of the Board of Directors.
1
Certain information concerning each nominee is set forth below:
DIRECTOR
SINCE AGE
-------- ---
John L. Cantrell, Ph.D. .......................... 1981 59
Executive Vice President of the Company since
1981.
Philipp Gerhardt, Ph.D. .......................... 1985 76
Professor (Emeritus since 1992), Department of
Microbiology and Public Health, Michigan State
University, since 1965; Adjunct Senior
Scientist, Michigan Biotechnology Institute,
since 1985.
Paul Goddard, Ph.D. .............................. 1996 48
Chief Executive Officer and Chairman of the
Board of Directors of Neurex Corporation and
member of the Board of Directors of Molecular
Devices Corp. and ONYX Pharmaceuticals, Inc.;
all are biotechnology companies which do not
compete with the Company.
Mark I. Greene, M.D., Ph.D., FRCP. ............... 1995 49
Director of the Division of Immunology,
Department of Pathology, and Professor of
Pathology, University of Pennsylvania School
of Medicine, since 1986; Associate Director of
the Division for Fundamental Research,
University of Pennsylvania Cancer Center,
since 1987; appointed the John Eckman
Professor of Medical Science, University of
Pennsylvania, in 1989.
Robert E. Ivy .................................... 1987 64
President and Chief Executive Officer of the
Company since 1987; Chairman of the Board of
Directors of the Company since 1989; member of
the Board of Directors of The International
Heart Institute of Montana Foundation since
1995.
Thomas N. McGowen, Jr., J.D. ..................... 1984 72
Retired for more than five years; director of
various public and private companies for more
than the past five years; currently a member
of the Board of Directors of Federal Signal
Corporation and Energy West Corporation.
Frederick B. Tossberg, M.B.A. .................... 1986 67
Retired for more than five years; formerly
involved in finance and investments in
industry and state government; director of
various private entities for more than the
past five years; currently Vice Chairman,
Marcus Daly Memorial Hospital Corporation,
Hamilton, Montana.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and any persons who own more than 10% of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission and The Nasdaq Stock Market reports of ownership and
changes in ownership of common stock of the Company. Officers, directors and
greater than 10% stockholders are required to furnish the Company with copies of
all Section 16(a) forms they file. Based solely on review of the copies of such
reports furnished to the Company or written representations that no other
reports were required, the Company believes that during 1997, all filing
requirements applicable to its officers, directors and greater than 10%
beneficial owners, if any, were complied with.
2
COMMITTEES AND MEETINGS
The standing committees of the Board of Directors include an Audit Committee
and a Committee of Outside Directors. During 1997, the Board of Directors held
five meetings. Each incumbent director serving during 1997 attended more than
75% of all such meetings of the board and all meetings of committees of which he
was a member. The Board of Directors does not have a nominating committee or any
committee performing similar functions.
The Audit Committee, which met twice in 1997, is comprised of Messrs.
McGowen and Tossberg, neither of whom is an employee of the Company. The
principal functions of the Audit Committee are to review the scope of the audit
conducted by the Company's independent auditors; to review recommendations
contained in any management letters from the Company's independent auditors and
the methods by which such recommendations are to be implemented; to review the
Company's internal accounting controls; to review any related-party transactions
on an ongoing basis to determine potential conflict-of-interest situations; and
to recommend to the Board of Directors the appointment of the Company's
independent auditors.
The Committee of Outside Directors was established to act upon all matters
concerning stock options for directors and officers pursuant to the Company's
1986 and 1996 Stock Option Plans (as amended and restated) as adopted by the
stockholders and to consider and make recommendations to the Board of Directors
regarding compensation of executive officers, as well as to matters in which
directors who are also Company employees may have a conflict of interest or be
otherwise involved personally. Members of the Committee of Outside Directors are
Messrs. Gerhardt, Goddard, Greene, McGowen and Tossberg. The Committee of
Outside Directors held one meeting during 1997. Mr. Goddard was appointed to the
committee subsequent to the meeting.
3
PRINCIPAL STOCKHOLDERS AND MANAGEMENT'S STOCKHOLDINGS
The following table sets forth the number of shares of the Company's
outstanding common stock which were owned beneficially, as of March 4, 1998, by
(i) each person known by the Company to own more than 5% of the Company's
outstanding common stock, (ii) each director of the Company, all of whom are
also the nominees for election as directors, (iii) the chief executive officer
of the Company, (iv) the four most highly compensated executive officers, other
than the chief executive officer, whose total annual salary and bonus exceeded
$100,000 in 1997, and (v) all directors and executive officers of the Company as
a group.
AMOUNT
BENEFICIALLY PERCENT OF
NAME OR GROUP OWNED(1) CLASS(1)
- ---------------------------------------------------------------------------------------- ------------ -------------
SmithKline Beecham plc.................................................................. 2,797,056(2) 13.1%
Amerindo Investment Advisors, Inc....................................................... 1,925,000(3) 9.5%
Weiss, Peck & Greer..................................................................... 1,290,500(4) 6.4%
Robert E. Ivy........................................................................... 301,185(5) 1.5%
Ronald H. Kullick, R.Ph., J.D........................................................... 80,000(6) *
Frederick B. Tossberg, M.B.A............................................................ 74,996(7) *
John L. Cantrell, Ph.D.................................................................. 60,000(8) *
Thomas N. McGowen, Jr., J.D............................................................. 58,969(9) *
Charles E. Richardson, Ph.D............................................................. 51,600(10) *
Philipp Gerhardt, Ph.D.................................................................. 50,432(11) *
Kenneth B. Von Eschen, Ph.D............................................................. 49,100(12) *
Paul Goddard, Ph.D...................................................................... 32,655(13) *
Mark I. Greene, M.D., Ph.D., FRCP....................................................... 24,750(14) *
All directors and executive officers as a group (13 persons)............................ 885,324(15) 4.2%
- ------------------------
* Less than 1% of the outstanding shares of the Company.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of Common Stock subject to warrants or options held by that person
that are currently exercisable or exercisable within 60 days of March 4,
1998, are deemed outstanding. Such shares, however, are not deemed
outstanding for purposes of computing the percentage ownership of each
other person. To the Company's knowledge, except as set forth in the
footnotes to this table and subject to applicable community property laws,
each person named in the table has sole voting and investment power with
respect to the shares set forth opposite such person's name.
(2) SmithKline Beecham Biologicals ("SBB"), Rue de l'Institut 89 B-1330,
Rixensart, Belgium, owns 1,103,448 shares and has warrants, which were
exercisable on March 4, 1998, to purchase 500,000 additional shares. SBB
also has the option to purchase additional shares of the Company's common
stock for up to $2,000,000 at market price. Based on the stock's market
price on March 4, 1998, SBB could purchase up to 500,000 additional shares,
which are included in the total above. S.R. One, Limited, Bay Colony
Executive Park, 565 E. Swedesford Road, Suite 315, Wayne, Pennsylvania
19087, owns 693,608 shares. Both companies are subsidiaries of SmithKline
Beecham plc.
(3) Based on a Schedule 13G dated January 11, 1996, Amerindo Investment
Advisors, Inc., a California corporation, whose principal executive offices
are located at One Embarcadero Center, Suite 2300,
4
San Francisco, CA 94111, ("Amerindo") and Amerindo Investment Advisors,
Inc., a Panama corporation, whose principal executive offices are located
at Edificio Sucre, Calle 48 Este, Bella Vista, Apartado 6277, Panama 5,
Panama, ("Amerindo-Panama") have shared voting and dispositive power with
respect to 1,925,000 shares. Amerindo is registered as an investment
adviser under Section 203 of the Investment Advisers Act of 1940, as
amended. Messrs. Alberto W. Vilar and Gary A. Tanaka are sole stockholders
and directors of each of the entities. Each person expressly disaffirms
membership in any group under Rule 13d-5 under the Securities Exchange Act
of 1934, as amended, or otherwise. The shares are held for the
discretionary accounts of certain clients. Amerindo, Amerindo-Panama and
Messrs. Vilar and Tanaka disclaim beneficial ownership of all such shares.
(4) Based on a Schedule 13G dated February 10, 1998, Weiss, Peck & Greer,
L.L.C. ("WPG"), a broker or dealer registered under Section 15 of the
Securities Exchange Act of 1934 and an investment adviser registered under
Section 203 of the Investment Advisers Act of 1940, as amended, One New
York Plaza, New York, NY 10004, has shared voting and dispositive power
with respect to 1,290,500 shares as of December 31, 1997. The shares are
held for the discretionary accounts of certain clients. WPG disclaims
beneficial ownership of all such shares.
(5) Includes 298,000 shares for which options were exercisable on March 4,
1998, or within 60 days thereafter. Also includes 3,185 shares owned of
record and beneficially by Mr. Ivy's wife. Mr. Ivy disclaims beneficial
ownership of such 3,185 shares.
(6) Represents 80,000 shares for which options were exercisable on March 4,
1998, or within 60 days thereafter.
(7) Includes 63,628 shares for which options were exercisable on March 4, 1998,
or within 60 days thereafter.
(8) Includes 50,000 shares for which options were exercisable on March 4, 1998,
or within 60 days thereafter.
(9) Includes 48,101 shares for which options were exercisable on March 4, 1998,
or within 60 days thereafter.
(10) Includes 51,000 shares for which options were exercisable on March 4,
1998, or within 60 days thereafter.
(11) Includes 22,750 shares for which options were exercisable on March 4,
1998, or within 60 days thereafter. Also includes 27,682 shares owned of
record by Dr. Gerhardt's wife. Dr. Gerhardt disclaims beneficial ownership
of such 27,682 shares.
(12) Includes 48,700 shares for which options were exercisable on March 4,
1998, or within 60 days thereafter. Also includes 400 shares owned
beneficially by Dr. Von Eschen's wife. Dr. Von Eschen disclaims beneficial
ownership of such 400 shares.
(13) Includes 30,655 shares for which options were exercisable on March 4,
1998, or within 60 days thereafter.
(14) Includes 22,750 shares for which options were exercisable on March 4,
1998, or within 60 days thereafter.
(15) Includes 816,984 shares for which options were exercisable on March 4,
1998, or within 60 days thereafter.
5
EXECUTIVE COMPENSATION
The following tables set forth information regarding executive compensation
for the Company's Chief Executive Officer, President and Chairman, its four most
highly compensated executive officers who earned more than $100,000 in salary
and bonus in 1997 and one highly compensated executive officer who resigned
during 1997. The compensation is for services performed in all capacities for
the Company ("the Named Executive Officers").
SUMMARY COMPENSATION TABLE
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
LONG-TERM
COMPENSATION-
AWARDS
--------------
ANNUAL COMPENSATION SECURITIES
----------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(#) COMPENSATION
- ------------------------------------------------- --------- ----------- ---------- -------------- -------------
Robert E. Ivy(1) ................................ 1997 $ 258,777 $ 25,000 (2) $ 9,341(2)
Chief Executive Officer, President and Chairman 1996 251,500 25,000 65,000 9,424
1995 237,500 25,000 65,000 9,034
Lonnie L. Bookbinder, Ph.D., M.B.A.(3) .......... 1997 118,641 -- -- 2,136(4)
Vice President--Director of Corporate 1996 140,269 -- -- 2,525
Development 1995 136,788 -- 25,000 1,247
Ronald H. Kullick, R.Ph., J.D. .................. 1997 118,718 -- 15,000 1,781(4)
Vice President--Legal Counsel and Secretary 1996 111,626 -- 15,000 1,674
1995 107,055 -- -- 1,606
Charles E. Richardson, Ph.D. .................... 1997 116,005 -- 15,000 2,088(4)
Vice President--Pharmaceutical Discovery 1996 111,049 -- -- 1,999
1995 105,404 -- -- 1,897
Kenneth B. Von Eschen, Ph.D. .................... 1997 107,773 -- 10,000 1,940(4)
Vice President--Clinical and Regulatory Affairs 1996 101,796 -- 20,000 1,832
1995 95,470 -- -- 1,718
John L. Cantrell, Ph.D. ......................... 1997 104,694 -- -- 1,884(4)
Executive Vice President 1996 105,156 -- 25,000 1,893
1995 97,250 -- -- 1,751
- ------------------------
(1) The Company has an employment contract with Mr. Ivy which currently provides
for an annual salary of $258,000 with associated executive benefits. The
agreement may be terminated by the Company by giving notice one year prior
to the expiration of the contract, which otherwise automatically extends for
one-year periods. If the agreement is terminated by the Company other than
for "cause," or by Mr. Ivy following his failure to be elected as a director
of the Company or his removal as Chief Executive Officer, President and
Chairman, Mr. Ivy will continue to receive his salary until the expiration
of the agreement. The Board of Directors reviews Mr. Ivy's salary annually
and may adjust it.
6
(2) During 1997 the Company provided supplemental long-term disability insurance
for Mr. Ivy at a cost of $5,032 and a term life insurance policy on which
the Company is not a beneficiary at a cost of $1,459. The Company also
contributed $2,850 for Mr. Ivy's account in a 401(k) savings plan.
Additionally, the expiration date for options to purchase 50,000 shares of
common stock at $3.00 per share was extended from June 30, 1997, to June 30,
2000. All other terms of the options, which were granted in 1991, remained
unchanged.
(3) Mr. Bookbinder resigned his position with the Company on October 15, 1997.
(4) During 1997 the Company contributed $2,136, $1,781, $2,088, $1,940 and
$1,884 for the accounts of Messrs. Bookbinder, Kullick, Richardson, Von
Eschen and Cantrell, respectively, in a 401(k) savings plan.
STOCK OPTION GRANTS
YEAR ENDED DECEMBER 31, 1997
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS(1) VALUE AT ASSUMED
------------------------------------------------------ ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES STOCK OPTIONS APPRECIATION FOR 10
UNDERLYING GRANTED TO EXERCISE YEAR OPTION TERM(2)
OPTIONS EMPLOYEES IN PRICE EXPIRATION --------------------
NAME GRANTED FISCAL YEAR PER SHARE DATE 5% 10%
- ----------------------------------------- ----------- --------------- ----------- ----------- --------- ---------
Ronald H. Kullick........................ 15,000 11.9 $ 3.63 4-30-07 $ 34,196 $ 86,660
Charles E. Richardson.................... 15,000 11.9 3.63 4-30-07 34,196 86,660
Kenneth B. Von Eschen.................... 10,000 7.9 3.63 4-30-07 22,797 57,773
- ------------------------
(1) Of the stock options reported above, 20% are exercisable on the grant date
and an additional 20% are exercisable on each anniversary of the grant date
such that 100% are exercisable four years from the grant date. The exercise
price is equal to the market value of the stock on the grant date.
(2) The potential realizable value is calculated based on the term of the option
at its time of grant (ten years). It is calculated by assuming that the
stock price on the date of grant appreciates at the indicated annual rate,
compounded annually for the entire term of the option, and that the option
is exercised and the stock is sold on the last day of its term for the
appreciated stock price. Such values do not include consideration of income
tax consequences.
7
AGGREGATED STOCK OPTION EXERCISES
AND YEAR END STOCK OPTION VALUES
YEAR ENDED DECEMBER 31, 1997
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-
NUMBER OF UNEXERCISED OPTIONS MONEY OPTIONS(1)(2)
SHARES ACQUIRED VALUE -------------------------- ----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------- --------------- ----------- ----------- ------------- ----------- ---------------
Robert E. Ivy..................... -- -- 272,000 65,000 $ 34,375 $ --
Ronald H. Kullick................. -- -- 77,000 21,000 1,313 750
Charles E. Richardson............. -- -- 48,000 12,000 1,125 750
Kenneth B. Von Eschen............. -- -- 44,700 21,000 594 500
John L. Cantrell.................. -- -- 50,000 15,000 -- --
- ------------------------
(1) Value is based on the closing price of the Company's stock on December 31,
1997, which was $3.69, less the option exercise price.
(2) The values presented do not include income tax consequences.
REPORT BY THE COMMITTEE OF OUTSIDE DIRECTORS
ON EXECUTIVE COMPENSATION
The philosophy of the Company with respect to executive compensation is to
offer competitive compensation opportunities which are based upon an
individual's performance and contribution toward the attainment of Company
goals.
At the present time, the Company's executive officers receive compensation
in the form of base salary and long-term incentive compensation through the
grant of stock options. Occasionally, they may receive cash bonuses for unusual
or extraordinary accomplishments. They are also eligible to participate in an
employee savings plan under Section 401(k) of the Internal Revenue Code. This
plan covers substantially all full-time employees. The Company matches 30% of
employee contributions up to 6% of compensation. In addition, the Company
provides health, term life and disability insurance for employees who are
actively employed.
The Committee of Outside Directors (the "Committee") of the Board of
Directors is responsible for administering executive officer compensation. The
Committee is comprised of non-employee directors who are not eligible to
participate in any of the compensation plans it administers. The Committee
reviews compensation annually, usually during the first quarter of the fiscal
year for executives other than the Chief Executive Officer. The Committee
reviews with the Chief Executive Officer a compensation proposal prepared by the
Chief Executive Officer with the assistance of the Company's Human Resources
staff. The compensation proposal is based upon an objective performance
evaluation measuring past performance as well as defined expected future
contributions. Other factors taken into account include compensation information
of peer group companies, national surveys and the financial condition of the
Company. The proposal is then submitted to the full Board of Directors for
ratification. Stock option grants, if any, are administered solely by the
Committee.
The Committee also assesses the performance of the Chief Executive Officer,
usually in the second quarter of the fiscal year, against previously set goals
and objectives and reviews with the Chief Executive
8
Officer future goals and objectives. Based upon this evaluation, and further
considering peer group and national survey compensation data, as well as the
financial status of the Company, the Committee determines what it believes to be
appropriate compensation and submits its proposal for ratification by the Board
of Directors. Stock option grants, if any, are administered solely by the
Committee.
Mr. Ivy's annual base salary was set at $258,000 effective July 1, 1996.
Effective April 30, 1997, Mr. Ivy was awarded a cash bonus of $25,000 and the
expiration date of options to purchase 50,000 shares was extended from June 30,
1997 to June 30, 2000 in recognition of his substantial progress toward
accomplishing Company goals set for the period, including advancing the Company
toward potential profitability. Special achievements were noted in achieving
research and drug development goals such as filing a commercial license
application to market MELACINE melanoma theraccine in Canada in 1997 and
completion of a substantial amount of work toward filing applications to market
MELACINE in Europe and the United States, as well as signing additional product
license and supply agreements. He also succeeded in raising additional capital
for the Company. In addition to his salary, pursuant to the Company's employment
agreement with Mr. Ivy, he received an automobile allowance of $5,400, a term
life insurance policy at a cost of $1,459 and a supplemental long-term
disability insurance policy at a cost of $5,032. The Company is not a
beneficiary on either insurance policy.
The Company is required to disclose its policy regarding qualifying
executive compensation for deductibility under Section 162(m) of the Internal
Revenue Code of 1986, as amended, which provides that, for purposes of the
regular income tax and the alternative minimum tax, the otherwise allowable
deduction for compensation paid or accrued with respect to a covered employee of
a publicly owned corporation is limited to no more than $1 million per year. It
is not expected that the compensation to be paid to the Company's executive
officers for fiscal year 1998 will exceed the $1 million limit per officer. The
Company's 1996 Stock Option Plan (the "Plan") is structured so that any
compensation deemed paid to an executive officer when he exercises an
outstanding option under the Plan, with an exercise price equal to the fair
market value of the option shares on the grant date, will qualify as
performance-based compensation which will not be subject to the $1 million
limitation.
The Committee of Outside Directors
April 1997
Frederick B. Tossberg, Chairman and
Secretary
Philipp Gerhardt
Mark I. Greene
Thomas N. McGowen, Jr.
9
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a five-year line graph comparing the yearly percentage
change in the cumulative total stockholder return on the Company's common stock
with the cumulative total return for The Nasdaq Stock Market (U.S. Companies)
and the Nasdaq Pharmaceutical Stocks. The graph assumes that the value of the
investment in the Company's common stock and each index was $100 on December 31,
1992, and all dividends, if any, were reinvested.
COMPARISON OF FIVE-YEAR TOTAL RETURN
FIVE YEARS ENDED DECEMBER 31, 1997
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
DOLLARS
YEAR Ribi Nasdaq Total Nasdaq Pharma
1992 $100.00 $100.00 $100.00
1993 100.00 114.79 89.13
1994 45.33 112.21 67.08
1995 64.67 158.68 122.73
1996 41.33 195.19 122.86
1997 39.33 239.63 127.19
DIRECTORS' COMPENSATION
In 1997 each director who was not an employee of the Company was paid $6,000
per year plus $500 for each day on which the director attended meetings and was
reimbursed for travel expenses. Additionally, directors who perform
extraordinary services are entitled to compensation at the rate of $125 per
hour. None of the directors were paid for extraordinary services in 1997.
The Company's 1996 Stock Option Plan provides for the issuance of discounted
stock options to certain directors. This plan allows for the issuance of
nonqualified stock options with an exercise price which is 20% below the market
price of the Company's common stock on the grant date. The discounted stock
options may be awarded to directors who are not employees of the Company who
elect to receive the
10
discounted stock options rather than cash for all or a portion of their director
fees. The directors are required to make the voluntary election at least six
months prior to the beginning of each calendar year. The number of options to be
granted is determined by dividing the amount of the foregone cash compensation
by the amount of the per share price discount on the grant date. Such options
are granted at the end of each calendar quarter and are fully vested on the
grant date. The options, which expire if not exercised within ten years from the
grant date, are exercisable after a six-month period following the grant date.
For the year 1997 in lieu of cash compensation, Messrs. Goddard and Tossberg
were granted options to purchase 7,905 and 5,959 shares, respectively, at an
average price of $3.32 per share.
Additionally, the Company has a 1996 Directors' Stock Option Plan, which was
approved by stockholders in 1997, for directors who are not employees of the
Company. The Plan provides for the grant of nonqualified options to purchase a
maximum of 210,000 shares of common stock. Each director who is not an employee
was granted options to purchase 30,000 shares on the later of the date the Plan
was adopted or on the date he first became a director. In addition, immediately
following each annual meeting of the Company's stockholders, each director who
is not an employee who continues as an outside director after the meeting is
granted options to purchase 500 common shares. The exercise price of the options
is the market price on the date of grant. The options vest and can be exercised
at the rate of 50% on the date of grant and 25% on each anniversary of the grant
date. The options expire if not exercised within ten years of the grant date.
During 1997, options to purchase 2,500 shares were granted under the Plan with
an average exercise price of $3.63 per share.
The Company has a consulting agreement with Dr. Mark Greene, one of its
directors. The agreement may be renewed annually and currently expires on
February 28, 1999. Pursuant the agreement, Dr. Greene consults with Company
personnel, when requested by the Company, regarding a variety of scientific
matters relating to the development of the Company's products. During 1997, Dr.
Greene received $24,000 for such services.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
KPMG Peat Marwick LLP, the Company's independent auditors since October
1981, have not yet been selected by the Board of Directors to serve in that
capacity in 1998, pending recommendation from the Company's Audit Committee. No
change is anticipated in the Company's independent auditors. The report of KPMG
Peat Marwick LLP with respect to the Company's financial statements appears in
the Company's annual report for the year ended December 31, 1997.
Representatives of KPMG Peat Marwick LLP will be present at the annual meeting
and will have the opportunity to make a statement if they so desire. They will
also be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Appropriate proposals by stockholders intended to be presented at the 1999
annual meeting must be received by the Company on or before November 19, 1998,
in order for such proposals to be included in the proxy statement and form of
proxy of the Company for the 1999 annual meeting.
11
OTHER MATTERS
The Company's annual report for the fiscal year ended December 31, 1997, is
enclosed with this proxy statement.
The Company knows of no other business which will come before the annual
meeting. If any other business is properly presented to the annual meeting, the
persons named in the proxy will vote thereon in accordance with their best
judgment.
COST OF PROXY SOLICITATION
The cost of solicitation of the enclosed proxy will be borne by the Company.
In addition to solicitation by mail, solicitations may be made by directors,
officers, employees and consultants of the Company personally or by telephone or
other means of communication. The Company will reimburse brokers, custodians,
nominees and fiduciaries for their reasonable out-of-pocket expenses in sending
proxy material to beneficial owners.
BY ORDER OF THE BOARD OF DIRECTORS
Ronald H. Kullick
Secretary
March 20, 1998
12
APPENDIX A
PROXY
RIBI IMMUNOCHEM RESEARCH, INC.
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 24, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert E. Ivy and Ronald H. Kullick as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated on the reverse side, all the shares
of common stock of Ribi ImmunoChem Research, Inc., held of record by the
undersigned on March 4, 1998, at the Annual Meeting of Stockholders to be held
on April 24, 1998, or any adjournment thereof.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted FOR Proposal 1.
1. ELECTION OF DIRECTORS / / FOR all nominees listed / / WITHHOLD
below AUTHORITY
(except as marked to the to vote for all
contrary) nominees listed
Nominees: J. Cantrell, P. Gerhardt, P. Goddard, M. Greene, R. Ivy, T.
McGowen, F. Tossberg
(INSTRUCTIONS: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.)
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2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE)
Please sign exactly as name appears on this proxy. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such.
Dated --------------------------------------------- , 1998
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Signature
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Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.