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SCHEDULE 14A INFORMATION
(Rule 14a-101)
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
AMYLIN PHARMACEUTICALS, INC.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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AMYLIN PHARMACEUTICALS, INC.
9373 TOWNE CENTRE DRIVE
SAN DIEGO, CA 92121
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 1, 2000
TO THE STOCKHOLDERS OF AMYLIN PHARMACEUTICALS, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Amylin
Pharmaceuticals, Inc., a Delaware corporation (the "Company"), will be held on
Thursday, June 1, 2000 at 10:00 a.m. local time at the Hyatt Regency La Jolla,
located at 3777 La Jolla Village Drive, San Diego, California 92122, for the
following purposes:
1. To elect directors to serve for the ensuing year and until their
successors are elected.
2. To approve the Company's Non-Employee Directors' Stock Option Plan, as
amended, to increase the aggregate number of shares of common stock
authorized for issuance under such plan by 100,000 shares.
3. To ratify the selection of Ernst & Young LLP as independent auditors of
the Company for its fiscal year ending December 31, 2000.
4. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on April 3, 2000, as
the record date for the determination of stockholders entitled to notice of and
to vote at this Annual Meeting and at any adjournment or postponement thereof.
By Order of the Board of Directors
/s/ JOSEPH C. COOK, JR.
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JOSEPH C. COOK, JR.
Chairman of the Board and
Chief Executive Officer
San Diego, California
April 24, 2000
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.
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AMYLIN PHARMACEUTICALS, INC.
9373 TOWNE CENTRE DRIVE
SAN DIEGO, CA 92121
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PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
JUNE 1, 2000
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INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors (the
"Board") of Amylin Pharmaceuticals, Inc., a Delaware corporation (the
"Company"), for use at the Annual Meeting of Stockholders to be held on
Thursday, June 1, 2000, at 10:00 a.m., local time (the "Annual Meeting"), or at
any adjournment or postponement thereof, for the purposes set forth herein and
in the accompanying Notice of Annual Meeting. The Annual Meeting will be held at
the Hyatt Regency La Jolla, located at 3777 La Jolla Village Drive, San Diego,
California 92122. The Company intends to mail this proxy statement and
accompanying proxy card on or about April 24, 2000, to all stockholders entitled
to vote at the Annual Meeting.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
and any additional information furnished to stockholders. Copies of solicitation
materials will be furnished to banks, brokerage houses, fiduciaries and
custodians holding in their names shares of Common Stock beneficially owned by
others to forward to such beneficial owners. The Company may reimburse persons
representing beneficial owners of Common Stock for their costs of forwarding
solicitation materials to such beneficial owners. Original solicitation of
proxies by mail may be supplemented by telephone, telegram or personal
solicitation by directors, officers or other regular employees of the Company
or, at the Company's request, Beacon Hill Partners, Inc., a professional proxy
soliciter. No additional compensation will be paid to directors, officers or
other regular employees for such services, but Beacon Hill Partners, Inc. will
be paid its customary fee, estimated to be approximately $5,000, if it renders
solicitation services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on April 3,
2000 will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on April 3, 2000, the Company had outstanding and entitled to
vote 62,713,248 shares of Common Stock.
Each holder of record of Common Stock on such date will be entitled to one
vote for each share held on all matters to be voted upon at the Annual Meeting.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a matter has
been approved.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 9373 Towne
Centre Drive, San Diego, California 92121, a written notice of revocation or a
duly
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executed proxy bearing a later date, or it may be revoked by attending the
meeting and voting in person. Attendance at the meeting will not, by itself,
revoke a proxy.
STOCKHOLDER PROPOSALS
The deadline for submitting a stockholder proposal for inclusion in the
Company's proxy statement and form of proxy for the Company's 2001 annual
meeting of stockholders pursuant to Rule 14a-8 promulgated under the Securities
Exchange Act is December 25, 2000. The deadline for submitting a stockholder
proposal or a nomination for director that is not to be included in such proxy
statement and proxy is also December 25, 2000. Stockholders are also advised to
review the Company's Bylaws, which contain additional requirements with respect
to advance notice of stockholder proposals and director nominations.
PROPOSAL 1
ELECTION OF DIRECTORS
There are eight nominees for the eight Board positions presently authorized
in the Company's Bylaws. Each director to be elected will hold office until the
next annual meeting of stockholders and until a successor is elected and has
qualified, or until such director's earlier death, resignation or removal. Each
nominee listed below is currently a director of the Company, five having been
elected by the stockholders and three, Vaughn D. Bryson, Donald H. Rumsfeld and
Jay S. Skyler, having been appointed by the Board.
Shares represented by executed proxies will be voted, if authority to do so
is not withheld, for the election of the eight nominees named below. In the
event that any nominee should be unavailable for election as a result of an
unexpected occurrence, such shares will be voted for the election of such
substitute nominee as management may propose. Each person nominated for election
has agreed to serve if elected and management has no reason to believe that any
nominee will be unable to serve. Directors are elected by a plurality of the
votes present in person or represented by proxy and entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE.
NOMINEES
The names of the nominees and certain information about them are set forth
below:
NAME AGE PRINCIPAL OCCUPATION/POSITION HELD WITH THE COMPANY
---- --- ---------------------------------------------------
Joseph C. Cook, Jr........................ 58 Chairman of the Board and Chief Executive Officer
James C. Blair, Ph.D.(1).................. 60 General Partner, Domain Associates, L.L.C.
Vaughn D. Bryson(1)....................... 62 President, Life Science Advisors
Ginger L. Graham(2)....................... 44 Group Chairman, Guidant Corporation
Howard E. Greene, Jr.(2).................. 57 Member, Board of Directors
Vaughn M. Kailian(2)...................... 55 President and Chief Executive Officer of COR
Therapeutics, Inc.
Donald H. Rumsfeld........................ 67 Chairman of the Board, Gilead Sciences, Inc.
Jay S. Skyler, M.D........................ 53 Professor of Medicine, Pediatrics and Psychology,
University of Miami
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(1) Member of the Compensation Committee
(2) Member of the Audit Committee
MR. COOK has been our Chairman of the Board and Chief Executive Officer
since March 1998. Mr. Cook previously served as a member of our Board, and a
consultant to us since 1994. Mr. Cook is a founder and serves as Chairman of the
Board of Microbia, Inc., a privately held biotechnology company. Mr. Cook is
also an officer of Mountain Ventures, Inc., a member, with Mr. Bryson, of Life
Science Advisors, LLC and Cambrian Associates, LLC and a founder of Clinical
Products, Inc. Mr. Cook retired as a Group Vice
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President of Eli Lilly & Company in 1993 after more than 28 years of service.
Mr. Cook is also a director of Dura Pharmaceuticals, Inc. Mr. Cook received a
B.S. in Engineering from the University of Tennessee.
DR. BLAIR has served as a director since December 1988 and serves on the
Compensation Committee. He has been a managing member of Domain Associates,
L.L.C., a venture capital investment firm, since 1985. Domain Associates manages
Domain Partners II, L.P., Domain Partners III, L.P. and Domain Partners IV, L.P.
and is an advisor to 3i Biosciences Trust Plc. From 1969 to 1985, Dr. Blair was
an officer of three investment banking and venture capital firms. Dr. Blair is a
director of Aurora Biosciences, Inc., Dura Pharmaceuticals, Inc., Trega
Biosciences, Inc. and Vista Medical Technologies, Inc. Dr. Blair received a
B.S.E. from Princeton University and the M.S.E. and Ph.D. degrees from the
University of Pennsylvania in electrical engineering.
MR. BRYSON has served as a director since July 1999. Mr. Bryson was a
thirty-two year employee of Eli Lilly & Company and served as its President and
Chief Executive Officer from 1991 to 1993. He was Executive Vice President from
1986 until 1991, and served as a member of Eli Lilly & Company's board of
directors from 1984 until his retirement in 1993. Mr. Bryson was Vice Chairman
of Vector Securities International from April 1994 to 1996. Mr. Bryson is
President and, with Mr. Cook, a member of Life Science Advisors, LLC. He also
serves as a director for the following publicly traded companies: Ariad
Pharmaceuticals, Chiron Corporation, Fusion Medical Technologies, Inc. and
Quintiles Transnational Corp. Mr. Bryson received a B.S. in Pharmacy from the
University of North Carolina and completed the Stanford Sloan Program at the
Stanford University Graduate School of Business.
MS. GRAHAM has served as a director since November 1995 and serves on the
Audit Committee. Since February 2000, Ms. Graham has served as Group Chairman,
Guidant Corporation, a medical device company which includes Advanced
Cardiovascular Systems ("ACS") and Devices for Vascular Intervention. From 1995
to 2000, Ms. Graham served as President of the Vascular Intervention Group of
Guidant Corporation. She has also served as President and Chief Executive
Officer of ACS since January 1993. Prior to joining ACS, she held various
positions with Eli Lilly & Company from 1979 to 1992, including sales, marketing
and strategic planning positions. She serves as Chairman of the Board and sits
on the Executive Committee for the California Healthcare Institute and on the
Advisory Board of the California Institute for Federal Policy Research. She is
also a member of the Committee 200. Ms. Graham received an M.B.A. from Harvard
University.
MR. GREENE is a co-founder of the Company and has served as a director
since the Company's inception in September 1987. Mr. Greene is on the Audit
Committee. Mr. Greene is an entrepreneur who has participated in the founding
and/or management of eleven medical technology companies over a 22 year period,
including three as CEO. From September 1987 to July 1996 Mr. Greene served as
Chief Executive Officer of the Company. He was a full time employee of the
Company from September 1989 until September 1996, and a half-time employee and
Chairman of the Executive Committee until March 1998. From October 1986 until
July 1993, Mr. Greene was a founding general partner of Biovest Partners, a seed
venture capital firm. He was Chief Executive Officer of Hybritech from March
1979 until its acquisition by Eli Lilly & Company in March 1986, and he was
co-inventor of Hybritech's patented monoclonal antibody assay technology. Prior
to joining Hybritech, he was an executive with the medical diagnostics division
of Baxter Healthcare Corporation from 1974 to 1979 and a consultant with
McKinsey & Company from 1967 to 1974. He is Chairman of the Board of Epimmune,
Inc., and a director of Biosite Diagnostics, Inc. and The International
Biotechnology Trust plc, a British Investment company. Mr. Greene received an
M.B.A. from Harvard University.
MR. KAILIAN has served as a director since November 1995 and serves on the
Audit Committee. Mr. Kailian has served as President and Chief Executive Officer
and as a director of COR Therapeutics, Inc. since March 1990. From 1967 to 1990,
Mr. Kailian was employed by Marion Merrell Dow, Inc., a pharmaceutical company,
and its predecessor companies, in various general management, product
development, marketing and sales positions. Among the positions held by Mr.
Kailian were President and General Manager, Merrell Dow USA and Corporate Vice
President of Global Commercial Development, Marion Merrell Dow, Inc. Mr. Kailian
is also a director of the Biotechnology Industry Organization and the California
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Healthcare Institute and is a director and serves on the compensation committee
of Axys Pharmaceuticals, Inc. Mr. Kailian holds a B.A. from Tufts University.
MR. RUMSFELD has served as a director since September 1999. Mr. Rumsfeld
also previously served as a member of the Company's board of directors from 1991
to 1996. Mr. Rumsfeld is Chairman of the Board of Gilead Sciences, Inc. He also
is a member of the boards of directors of ABB (Asea Brown Boveri) Ltd.,
Forstmann Little & Co., Tribune Company and RAND Corporation. He is also
currently Chairman of the Salomon Smith Barney International Advisory Board. Mr.
Rumsfeld was Chairman and Chief Executive Officer of General Instrument
Corporation from October 1990 to August 1993 and served as a senior advisor to
William Blair & Co., an investment banking firm, from 1985 to 1990. He was Chief
Executive Officer of G.D. Searle & Co. from 1977 to 1985. Mr. Rumsfeld formerly
served as U.S. Secretary of Defense, White House Chief of Staff, U.S. Ambassador
to NATO, and as a U.S. Congressman. He has also served as the President's envoy
to the Middle East and recently completed service as Chairman of the U.S.
Government Commission to Assess the Ballistic Missile Threat to the United
States. He is a recipient of the Presidential Medal of Freedom, the United
States' highest civilian award.
DR. SKYLER has served as a director since August 1999. He is Professor of
Medicine, Pediatrics, and Psychology and Co-Director of the Medicine Research
Center at the University of Miami in Florida. He is also Director of the
Operations Coordinating Center for the National Institute of Diabetes &
Digestive & Kidney Diseases Diabetes Prevention Trial in Type 1 Diabetes. Dr.
Skyler has served as President of the American Diabetes Association, and is
currently Vice President of the International Diabetes Federation. Dr. Skyler is
a member of the Florida Governor's Diabetes Advisory Council, and serves on the
editorial board of diabetes and general medicine journals. He received his M.D.
from Jefferson Medical College, and completed postdoctoral studies at Duke
University Medical Center.
BACKGROUND OF EXECUTIVES NOT DESCRIBED ABOVE
The names of and certain information regarding the Company's executives as
of March 31, 2000 are set forth below:
NAME AGE POSITION HELD WITH THE COMPANY
---- --- ------------------------------
Daniel M. Bradbury..................... 38 Senior Vice President of Corporate Development
Martin R. Brown........................ 53 Senior Vice President of Operations
Joann L. Data, M.D., Ph.D. ............ 55 Senior Vice President of Regulatory Affairs and
Quality Assurance
Orville G. Kolterman, M.D. ............ 52 Senior Vice President of Clinical Affairs
Alain D. Baron, M.D., Ph.D. ........... 46 Vice President of Clinical Research
Nancy K. Dahl.......................... 43 Vice President, General Counsel and Secretary
Mark G. Foletta........................ 39 Vice President of Finance and Chief Financial Officer
Andrew A. Young, M.D., Ph.D. .......... 46 Vice President of Research
MR. BRADBURY, an executive officer of the Company, has served as Senior
Vice President of Corporate Development since April 1998. Mr. Bradbury
previously served as Vice President of Marketing from June 1995 to April 1998.
From July 1994 to May 1995, Mr. Bradbury held the position of Director of
Marketing, Amylin Europe Limited. Prior to joining the Company, Mr. Bradbury was
employed by SmithKline Beecham Pharmaceuticals from September 1984 to July 1994,
where he held a number of positions, most recently as Associate Director,
Anti-Infectives in the Worldwide Strategic Product Development Division. Mr.
Bradbury holds a B.Pharm. (Hons.) from Nottingham University and a Diploma in
Management Studies from Harrow and Ealing Colleges of Higher Education and is a
member of the Royal Pharmaceutical Society of Great Britain.
MR. BROWN, an executive officer of the Company, has served as Senior Vice
President of Operations since March 2000. Mr. Brown previously served as Vice
President of Operations from October 1998 to March 2000, and as Senior Director,
Information Technology from May 1994 to October 1998. Prior to joining the
Company, from 1989 to 1993, Mr. Brown was Director, Information Systems, Europe,
based in London,
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England for Eli Lilly & Company. From 1988 to 1989, Mr. Brown was Director,
Information Systems for the Medial Devices and Diagnostics Division of Eli Lilly
& Company; he served as Director, Information Systems of IVAC Corporation, one
of the seven companies in that division, from 1983 to 1988. Mr. Brown received a
B.S. in Commerce and Engineering and an M.B.A. in Operations Research from
Drexel University.
DR. DATA has served as Senior Vice President of Regulatory Affairs and
Quality Assurance since August 1999. Dr. Data previously served as Executive
Vice President, Product Development and Regulatory for CoCensys. Before that,
Dr. Data held several positions at The Upjohn Company, the most recent of which
was Corporate Vice President for Pharmaceutical Regulatory Affairs and Project
Management. Previously, she held a number of positions at Hoffman-La Roche,
including Vice President of Clinical Research and Development. Dr. Data has been
an adjunct assistant professor in medicine and pharmacology at Duke University
Medical Center since 1982 and at Cornell Medical Center since 1986. She earned
her M.D. from Washington University School of Medicine and her Ph.D. in
Pharmacology from Vanderbilt University.
DR. KOLTERMAN, an executive officer of the Company, has served as Senior
Vice President of Clinical Affairs since February 1997. Dr. Kolterman previously
served as Vice President, Medical Affairs from July 1993 to February 1997 and
Director, Medical Affairs from May 1992 to July 1993. From 1983 to May 1992, he
was Program Director of the General Clinical Research Center and Medical
Director of the Diabetes Center, at the University of California, San Diego
Medical Center. Since 1989 he has been Adjunct Professor of Medicine at UCSD.
From 1978 to 1983, he was Assistant Professor of Medicine in the Endocrinology
and Metabolism Division at the University of Colorado School of Medicine,
Denver. He was a member of the Diabetes Control and Complications Trial Study
Group at the time of its completion in 1993 and presently serves as a member of
the Epidemiology of Diabetes Intervention and Complications Study. He is also a
past-President of the California Affiliate of the American Diabetes Association.
Dr. Kolterman earned an M.D. from Stanford University School of Medicine.
DR. BARON has served as Vice President of Clinical Research since December
1999. Dr. Baron previously worked for the Indiana University School of Medicine
in Indianapolis, where he served as Professor of Medicine and Director, Division
of Endocrinology and Metabolism. Prior to this position at Indiana, Dr. Baron
held academic and clinical positions in the Division of Endocrinology and
Metabolism at University of California, San Diego, and the Veterans
Administration Medical Center in San Diego. He is the recipient of several
prestigious awards for his research in diabetes and vascular disease, including
the 1996 Outstanding Clinical Investigator Award from the American Federation
for Medical Research, several from the American Diabetes Association, and is a
current National Institutes of Health MERIT award recipient. Dr. Baron is
currently Principal Investigator for several diabetes studies, including the
Early Diabetes Intervention Program study sponsored by the NIH and Bayer
Pharmaceuticals. He earned his M.D. from the Medical College of Georgia,
Augusta, and completed postdoctoral studies at the University of California, San
Diego.
MS. DAHL, an executive officer of the Company, has served as Vice President
and General Counsel since January 1999. Ms. Dahl previously served as Vice
President and Associate General Counsel from November 1998 to December 1998.
From December 1996 to November 1998, Ms. Dahl held the position of Associate
General Counsel, and from May 1993 to December 1996, she served as Senior
Attorney. Prior to joining the Company, from 1989 to 1993, she was an attorney
in private practice with the law firm of Lyon & Lyon. From 1987 to 1989, Ms.
Dahl was in private practice with the law firm of Brobeck, Phleger & Harrison.
From 1986 to 1987, she served as a judicial clerk to the Honorable David R.
Thompson of the U.S. Court of Appeals for the Ninth Circuit. Ms. Dahl received a
J.D. degree from the University of Oregon and a B.S. degree in zoology from the
University of Wisconsin.
MR. FOLETTA, an executive officer, has served as Vice President of Finance
and Chief Financial Officer since March 31, 2000. Mr. Foletta previously served
as Principal, Triton Group Management, Inc. from 1997 to 2000. From 1986 to
1997, Mr. Foletta held a number of positions with Intermark, Inc. and Triton
Group Ltd., the most recent of which was Senior Vice President, Chief Financial
Officer and Corporate Secretary. From 1982 to 1986, Mr. Foletta was with Ernst &
Young, most recently serving as an Audit Manager. Mr. Foletta earned his B.A. in
Business Economics from the University of California, Santa Barbara in 1982 and
received his California CPA accreditation in 1985.
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DR. YOUNG has served as Vice President of Research since October 1998 and
as Vice President of Physiology since January 1994. From 1989 to 1993 he held a
number of positions in the Company's Physiology Department, most recently as
Principal Scientist and Senior Director of Physiology. Prior to joining the
Company in 1989, Dr. Young was a lecturer in the Department of Physiology at the
University of Auckland, New Zealand and a part-time general medical
practitioner. From 1984 to 1987, Dr. Young was a Clinical Research Scientist at
the National Institutes of Health in Phoenix, Arizona, where he studied insulin
resistance and diabetes. He received his M.B., Ch.B. (M.D.) and his Ph.D. in
Physiology from the University of Auckland, New Zealand.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended December 31, 1999 the Board of Directors held
nine meetings and acted by unanimous written consent three times. The Board has
an Audit Committee and a Compensation Committee.
The Audit Committee meets with the Company's independent auditors at least
annually to review the results of the annual audit and discuss the financial
statements; recommends to the Board the independent auditors to be retained; and
receives and considers the accountants' comments as to controls, adequacy of
staff and management performance and procedures in connection with audit and
financial controls. During 1999, the Audit Committee was composed of two
non-employee directors, Ms. Graham and Mr. Kailian. It met once during the
fiscal year ended December 31, 1999. The Audit Committee currently consists of
Ms. Graham, Mr. Greene and Mr. Kailian.
The Compensation Committee makes recommendations concerning salaries and
incentive compensation, administers and awards stock options to employees and
consultants under the Company's 1991 Stock Option Plan, as amended, administers
and approves stock offerings under the Company's Employee Stock Purchase Plan,
administers the Company's Non-Employee Directors' Stock Option Plan and
otherwise determines compensation levels and performs such other functions
regarding compensation as the Board may delegate. From January 1999 through
August 1999 the Compensation Committee was composed of two members: Dr. Blair
and Mr. James C. Gaither. In August 1999 Mr. Bryson was added as a third member
of the Committee. Mr. Gaither has elected not to stand for reelection as a
director of the Company for 2000. Therefore, effective as of the date of the
Annual Meeting, the size of the Compensation Committee will be reduced to two
members, with Dr. Blair and Mr. Bryson continuing to serve on the committee. The
Compensation Committee met two times and acted by unanimous written consent five
times during the fiscal year ended December 31, 1999.
The Board of Directors has delegated to the Company's Chief Executive
Officer the authority to grant stock options under the Company's 1991 Stock
Option Plan, as amended, to employees of the Company that are not executive
officers, directors or 10% stockholders of the Company, provided such grants are
in accordance with guidelines that have been approved in advance by the Board of
Directors.
During the fiscal year ended December 31, 1999, each Board member except
Mr. Bryson attended 75% or more of the aggregate of the meetings of the Board
and of the committees on which he or she served, held during the period for
which he or she was a director or committee member, respectively. Mr. Bryson
missed one regular meeting of the Board and one meeting of the Compensation
Committee which were held on the same day.
PROPOSAL 2
APPROVAL OF NON-EMPLOYEE
DIRECTORS' STOCK OPTION PLAN, AS AMENDED
In February 1994, the Board of Directors of the Company adopted, and the
stockholders subsequently approved, the Company's Non-Employee Directors' Stock
Option Plan ("Directors' Plan"). As a result of a series of amendments, as of
December 8, 1999, there were 350,000 shares of Common Stock reserved for
issuance under the Directors' Plan. In April 2000, the Board amended the
Directors' Plan, subject to stockholder approval, to increase the number of
shares reserved for issuance thereunder to 450,000 shares.
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As of March 31, 2000 options (net of canceled or expired options) covering
an aggregate of 271,424 shares of the Company's Common Stock had been granted
under the Directors' Plan. Only 78,576 shares of Common Stock (plus any shares
that might in the future be returned to the Directors' Plan as a result of
cancellations or expiration of options or the reacquisition by the Company of
issued shares) remained available for future grant under the Directors' Plan, of
which 70,000 will be granted to non-employee directors immediately following the
Annual Meeting in accordance with the Directors' Plan.
Stockholders are requested in this Proposal 2 to approve the Directors'
Plan, as amended. The affirmative vote of the holders of a majority of the
shares present in person or represented by proxy and entitled to vote at the
meeting will be required to approve the Directors' Plan, as amended. Abstentions
will be counted toward the tabulation of votes cast on proposals presented to
the stockholders and will have the same effect as negative votes. Broker
non-votes are counted towards a quorum, but are not counted for any purpose in
determining whether this matter has been approved.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 2
The essential features of the Directors' Plan, as amended, are outlined
below:
GENERAL
The Directors' Plan provides for the automatic grant of nonstatutory stock
options. Options granted under the Directors' Plan are not intended to qualify
as "incentive stock options" within the meaning of Section 422 of the Code. See
"Federal Income Tax Information" for a discussion of the tax treatment of
nonstatutory stock options.
PURPOSE
The Board adopted the Directors' Plan to provide a means by which
non-employee directors of the Company may be given an opportunity to purchase
stock in the Company, to assist in retaining the services of such persons, to
secure and retain the services of persons capable of filling such positions and
to provide incentives for such persons to exert maximum efforts for the success
of the Company. Seven of the eight nominees for director of the Company are
eligible to participate in the Directors' Plan.
ADMINISTRATION
The Board administers the Directors' Plan. The Board has the power to
construe and interpret the Directors' Plan but not to determine the persons to
whom or the dates on which options will be granted, the number of shares to be
subject to each option, the time or times during the term of each option within
which all or a portion of such option may be exercised, the exercise price, the
type of consideration or the other terms of the option.
ELIGIBILITY
The Directors' Plan provides that options may be granted only to
non-employee directors of the Company. A "non-employee director" is defined in
the Directors' Plan as a director of the Company who is not otherwise an
employee of the Company or any affiliate.
STOCK SUBJECT TO THE DIRECTORS' PLAN
Subject to this Proposal, an aggregate of 450,000 shares of Common Stock is
reserved for issuance under the Directors' Plan. If options granted under the
Directors' Plan expire or otherwise terminate without being exercised, the
shares of Common Stock not acquired pursuant to such options again becomes
available for issuance under the Directors' Plan. If the Company reacquires
unvested stock issued under the Directors' Plan, the reacquired stock will again
become available for reissuance under the Directors' Plan.
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TERMS OF OPTIONS
The following is a description of the terms of options under the Directors'
Plan, as amended. Individual option grants may not be more restrictive as to the
terms described below.
Automatic Grants. Each person who was, immediately following the Company's
1994 Annual Meeting of Stockholders at which the Directors' Plan was originally
approved by the stockholders of the Company, a non-employee director of the
Company was granted, effective as of the date of such annual meeting, an option
to purchase ten thousand (10,000) shares of common stock of the Company on the
terms and conditions set forth in the Directors' Plan. These options become
exercisable in equal daily increments over a period of two years.
Each person who was, subsequent to November 1, 1995, and on or prior to May
29, 1997, elected for the first time by the Board or shareholders of the Company
to serve as a non-employee director of the Company and who had not previously
served as a member of the Board was granted, effective as of the date of such
election, an option to purchase thirty thousand (30,000) shares of common stock
of the Company on the terms and conditions set forth herein. Each person who
was, and is, subsequent to May 29, 1997, elected by the Board or shareholders of
the Company to serve as a non-employee director of the Company and who had not
served as a member of the Board at any time during the two-year period
immediately preceding such election, was, and shall be granted, effective as of
the later of December 8, 1999 and the date of such election, an option to
purchase twenty thousand (20,000) shares of common stock of the Company on the
terms and conditions set forth in the Directors' Plan. These options become
exercisable over a period of four years, with one-quarter of such options
becoming exercisable one year following the date of grant and remainder becoming
exercisable in equal daily increments over a three-year period.
Commencing with the 1996 Annual Meeting of Stockholders, each person who
was, and is, immediately following each annual meeting of stockholders of the
Company that occurs in an even year (i.e. 1996, 1998, 2000, 2002, etc.)
(hereinafter, an "Even Year Annual Meeting"), a non-employee director of the
Company was, and shall be granted, effective as of the date of such Even Year
Annual Meeting, an option to purchase ten thousand (10,000) shares of common
stock of the Company on the terms and conditions set forth in the Directors'
Plan. These options become exercisable in equal daily installments over a period
of two years.
Exercise Price; Payment. The exercise price of options may not be less than
100% of the fair market value of the stock subject to the option on the date of
the grant. As of April 18, 2000, the closing price of the Company's Common Stock
as reported on the Nasdaq National Market System was $10.94 per share.
The exercise price of options granted under the Directors' Plan must be
paid either in cash at the time the option is exercised or by delivery of other
Common Stock of the Company that has been held for the requisite holding period
necessary to avoid a charge to the Company's earnings and valued at the fair
market value on the date of exercise, or by a combination of such methods.
Option Exercise. Options granted under the Directors' Plan become
exercisable in cumulative increments as set out in the Directors' Plan during
the optionholder's service as a director of the Company. The Board has the power
to accelerate the time during which an option may vest or be exercised. Options
granted under the Directors' Plan do not permit exercise prior to vesting.
Term. The term of options under the Directors' Plan is 10 years. An
optionholder has no right to designate a beneficiary who may exercise the option
following the optionholder's death.
RESTRICTIONS ON TRANSFER
The optionholder may not transfer an option otherwise than by will or by
the laws of descent and distribution. During the lifetime of the optionholder,
an option may be exercised only by the optionholder or his guardian or legal
representative.
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ADJUSTMENT PROVISIONS
Transactions not involving receipt of consideration by the Company, such as
a merger, consolidation, reorganization, stock dividend, or stock split, may
change the class and number of shares of Common Stock subject to the Directors'
Plan and outstanding options. In that event, the Directors' Plan will be
appropriately adjusted as to the class and the maximum number of shares of
Common Stock subject to the Directors' Plan, and outstanding options will be
adjusted as to the class, number of shares and price per share of Common Stock
subject to such options.
EFFECT OF CERTAIN CORPORATE EVENTS
The Directors' Plan provides that, in the event of a dissolution,
liquidation, specified types of merger, or other corporate reorganization, to
the extent permitted by law, the time during which such options may be exercised
shall be accelerated and the options terminated if not exercised prior to such
event. The acceleration of an option in the event of an acquisition or similar
corporate event may be viewed as an anti-takeover provision, which may have the
effect of discouraging a proposal to acquire or otherwise obtain control of the
Company.
DURATION, AMENDMENT AND TERMINATION
The Board may suspend or terminate the Directors' Plan without stockholder
approval or ratification at any time or from time to time. Unless sooner
terminated, the Directors' Plan will terminate on February 8, 2004.
The Board may also amend the Directors' Plan at any time or from time to
time. However, no amendment will be effective unless approved by the
stockholders of the Company within 12 months before or after its adoption by the
Board if the amendment would (i) increase the number of shares reserved for
issuance upon exercise of options; or (ii) change any other provision of the
Directors' Plan in any other way if such modification requires stockholder
approval in order to comply with Rule 16b-3 of the Securities and Exchange Act
of 1934 or Section 162(m) of the Code. The Board may submit any other amendment
to the Directors' Plan for stockholder approval.
FEDERAL INCOME TAX INFORMATION
Long-term capital gains currently are generally subject to lower tax rates
than ordinary income or short-term capital gains. The maximum long-term capital
gains rate for federal income tax purposes is currently 20% while the maximum
ordinary income rate and short-term capital gains rate is effectively 39.6%.
Slightly different rules may apply to optionholders who acquire stock subject to
certain repurchase options or who are subject to Section 16(b) of the Exchange
Act.
Nonstatutory Stock Options. Nonstatutory stock options granted under the
Directors' Plan generally have the following federal income tax consequences:
There are no tax consequences to the optionholder or the Company by reason
of the grant of a nonstatutory stock option. Upon exercise of a nonstatutory
stock option, the optionholder normally will recognize taxable ordinary income
equal to the excess of the stock's fair market value on the date of exercise
over the option exercise price. If the optionholder becomes an employee, the
Company is required to withhold from regular wages or supplemental wage payments
an amount based on the ordinary income recognized. Subject to the requirement of
reasonableness, the provisions of Section 162(m) of the Code and the
satisfaction of a tax reporting obligation, the Company will generally be
entitled to a business expense deduction equal to the taxable ordinary income
realized by the optionholder. Slightly different rules may apply to
optionholders who acquire stock subject to certain repurchase options or who are
subject to Section 16(b) of the Exchange Act.
Upon disposition of the stock, the optionholder will recognize a capital
gain or loss equal to the difference between the selling price and the sum of
the amount paid for such stock plus any amount recognized as
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ordinary income upon exercise of the option (or vesting of the stock). Such gain
or loss will be long-term or short-term depending on whether the stock was held
for more than one year.
NEW PLAN BENEFITS
As of March 31, 2000, options to purchase 271,424 shares of the Company's
Common Stock have been granted under the Directors' Plan (net of canceled or
expired options). Each of the seven non-employee directors to be elected at this
year's Annual Meeting will, effective as of the date of the Annual Meeting,
automatically be granted an option to purchase 10,000 shares of Common Stock.
PROPOSAL 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending December 31, 2000 and has
further directed that management submit the selection of independent auditors
for ratification by the stockholders at the Annual Meeting. Ernst & Young LLP
has audited the Company's financial statements since the Company's inception in
September 1987. Representatives of Ernst & Young LLP are expected to be present
at the Annual Meeting, will have an opportunity to make a statement if they so
desire and will be available to respond to appropriate questions.
Stockholder ratification of the selection of Ernst & Young LLP as the
Company's independent auditors is not required by the Company's Bylaws or
otherwise. However, the Board is submitting the selection of Ernst & Young LLP
to the stockholders for ratification as a matter of good corporate practice. If
the stockholders fail to ratify the selection, the Audit Committee and the Board
will reconsider whether or not to retain that firm. Even if the selection is
ratified, the Audit Committee and the Board in their discretion may direct the
appointment of different independent auditors at any time during the year if
they determine that such a change would be in the best interests of the Company
and its stockholders.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the Annual Meeting will
be required to ratify the selection of Ernst & Young LLP. Abstentions will be
counted toward the tabulation of votes cast on proposals presented to the
stockholders and will have the same effect as negative votes. Broker non-votes
are counted towards a quorum, but are not counted for any purpose in determining
whether this matter has been approved.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 3.
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SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of March 1, 2000 by: (i) each nominee for
director; (ii) each of the executive officers named in the Summary of
Compensation Table (below); (iii) all executive officers and directors of the
Company as a group; and (iv) all those known by the Company to be beneficial
owners of more than five percent of its Common Stock.
Unless otherwise indicated in the footnotes to this table and subject to
community property laws where applicable, each of the stockholders named in this
table has sole voting and investment power with respect to the shares indicated
as beneficially owned. Applicable percentages are based on 62,504,058 shares
outstanding on March 1, 2000 adjusted as required by rules promulgated by the
Securities and Exchange Commission (the "Commission"). Except as shown otherwise
in the table, the address of each stockholder listed is in care of the Company
at 9373 Towne Centre Drive, San Diego, California 92121.
BENEFICIAL OWNERSHIP
---------------------------------------------
SHARES ISSUABLE
PURSUANT TO
OPTIONS AND WARRANTS
EXERCISABLE WITHIN 60
NUMBER OF DAYS OF MARCH 1, PERCENT
BENEFICIAL OWNER(1) SHARES 2000 OF TOTAL
------------------- ---------- --------------------- --------
Allen Andersson(2)...................................... 10,653,794 -- 17.0%
62 Sparhawk Lane
North Conway, NH 03860
Domain Partners IV, L.P(3).............................. 5,891,452 19,726 9.4%
One Palmer Square
Princeton, NJ 08542
Funds Managed by Capital Research & Management
Group(4).............................................. 4,845,833 -- 7.8%
333 South Hope Street
Los Angeles CA 90071
Johnson & Johnson Development Corporation............... 3,963,357 1,530,950 6.2%
One Johnson & Johnson Plaza
New Brunswick, NJ 08933
James C. Blair(3)....................................... 5,955,049 19,726 9.5%
Daniel M. Bradbury...................................... 356,364 308,391 *
Martin R. Brown......................................... 215,421 139,067 *
Vaughn D. Bryson(5)..................................... 52,013 -- *
Joseph C. Cook, Jr.(6).................................. 2,011,229 945,558 3.2%
Nancy K. Dahl........................................... 185,065 183,056 *
James C. Gaither........................................ 49,726 49,726 *
Ginger L. Graham........................................ 89,726 49,726 *
Howard E. Greene, Jr.(7)................................ 2,165,814 9,726 3.5%
Vaughn M. Kailian....................................... 49,726 49,726 *
Orville G. Kolterman(8)................................. 386,923 375,437 *
Donald H. Rumsfeld(9)................................... 130,444 10,000 *
Jay S. Skyler........................................... 10,036 10,036 *
All executive officers and directors as a group (13
persons).............................................. 11,657,536 2,150,175 18.0%
- ---------------
* Less than one percent.
(1) This table is based upon information supplied by officers, directors and
principal stockholders and Schedules 13D and 13G filed with the Securities
and Exchange Commission. Includes shares issuable pursuant to options and
other rights to purchase the Company's shares exercisable within 60 days of
March 1, 2000. As of March 1, Mr. Cook held 80,602 shares of unvested Common
Stock.
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(2) This amount includes 2,602,779 shares held by Susan Riecken, Mr. Andersson's
spouse.
(3) Includes 5,115,046 shares held by Domain Partners IV, L.P., 122,559 shares
held by DP IV Associates, L.P. and 653,847 shares held by Domain Partners
II, L.P. Dr. Blair is a general partner of One Palmer Square Associates II,
L.P., and the managing member of One Palmer Square Associates IV, LLC. One
Palmer Square Associates II, L.P. is the general partner of Domain Partners
II. One Palmer Square Associates IV, LLC is the general partner of Domain
Partners IV, L.P. and DP IV Associates, L.P. Dr. Blair disclaims beneficial
ownership of the 5,115,046 shares held by the Domain Partners' entities
except to the extent of his pecuniary interest in such shares.
(4) Includes 3,000,000 shares held of record by Rescueboat & Co., as Custodian
for The Growth Fund of America, Inc., and 1,845,833 shares held of record by
Clipperbay & Co., as Custodian for SMALLCAP World Fund, Inc.
(5) Includes 52,013 shares held by the Vaughn D. Bryson Irrevocable Trust, U-A
1/14/99.
(6) Includes 130,752 shares owned by Farview Management, L.P. to which Mr. Cook
shares voting and dispositive power with his wife.
(7) Includes 80,769 shares held by The Greene Children's Trust, of which Mr.
Greene is a trustee and with respect to which he shares voting and
dispositive power with his wife, Arlene Greene. Also includes 2,156,088
shares held in The Greene Family Trust, of which Mr. Greene is a trustee and
with respect to which he also shares voting and dispositive power with his
wife.
(8) Includes 1,350 shares owned by Dr. Kolterman's daughter and stepson.
(9) Includes 5,000 shares held by a partnership of which Mr. Rumsfeld is a
general partner. Mr. Rumsfeld disclaims beneficial ownership of those
shares.
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 ten percent of a registered
class of the Company's equity securities, to file with the SEC initial reports
of ownership and reports of changes in ownership of Common Stock and other
equity securities of the Company. Officers, directors and greater than ten
percent stockholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1999, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with, except that: all
non-employee directors failed to timely file Form 5s for phantom stock units
accrued under the Company's Non-Employee Directors' Deferred Compensation Plan;
and all officers failed to timely file notice of distributions in the form of
Common Stock from the Company's Phantom Stock Salary Deferral Plan.
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
Each non-employee director of the Company receives a $1,000 attendance fee
for each meeting of the Board such director attends, subject to the Non-Employee
Directors' Deferred Compensation Plan described below. In addition, in fiscal
year 1999, each non-employee director received a one time special contribution
under the Non-Employee Directors' Deferred Compensation Plan of $15,000 plus an
additional $300 for each month such director served as a director of the
Company, up to a maximum of an additional $15,000. No amounts were paid to
non-employee directors in 1999 and $231,400 was deferred into the Non-Employee
Directors' Deferred Compensation Plan. The members of the Board of Directors are
also eligible for reimbursement for their expenses incurred in connection with
attendance at Board meetings in accordance with Company policy.
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Each non-employee director of the Company also receives stock option grants
under the Directors' Plan, as described in Proposal 2, above. During the last
fiscal year, the Company granted options covering an aggregate of 60,000 shares
to three newly appointed non-employee directors of the Company, at an average
exercise price per share of $4.136. The average fair market value of such Common
Stock on the date of grant was $4.136 per share (based on the closing sales
prices reported on the Nasdaq SmallCap Market for each date on which the options
were granted). As of March 1, 2000, 21,424 options had been exercised under the
Directors' Plan.
In August 1997, the Company adopted a Non-Employee Directors' Deferred
Compensation Plan that permits participating non-employee directors to elect, on
an annual basis, to defer all or a portion of their cash compensation as
directors in a deferred stock account pursuant to which the deferred fees are
credited in the form of shares of the Company's Common Stock, based on the
market price of the stock at the time the deferred fees are earned. Deferred
amounts are, therefore, valued according to fluctuations in the fair market
value of the Company's Common Stock. When a participant ceases serving as a
director, the participant will be entitled to receive the value of his or her
account in cash and/or in the form of the Company's Common Stock, either in a
single lump sum payment or in equal annual installments, as determined by the
Company in its sole discretion. All non-employee directors chose to defer all of
their cash compensation for the period January 1, 1999 through December 31,
1999.
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COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY OF COMPENSATION
The following table shows for the fiscal years ended December 31, 1997,
1998 and 1999, compensation awarded or paid to, or earned by, each person who
served as the Company's Chief Executive Officer during the fiscal year ended
December 31, 1999, and the Company's other four most highly compensated
executive officers at December 31, 1999 (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION(1) COMPENSATION AWARDS
--------------------------------------------- ------------------- ALL OTHER
NAME AND OTHER ANNUAL SHARES UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS(#) ($)(2)
------------------ ---- --------- -------- --------------- ------------------- ------------
Joseph C. Cook, Jr.(3)......... 1999 375,000 -- 190,951(4) 206,800 17,405
CEO and Chairman of the 1998 234,053 -- 92,472(4) 765,000(5) 1,248
Board of Directors
Orville G. Kolterman........... 1999 233,300 -- -- 53,000 10,337
Senior Vice President of 1998 232,535 36,323 -- 150,700 4,294
Clinical Affairs 1997 213,517 -- -- 10,000 4,282
Daniel M. Bradbury(6).......... 1999 189,625 -- -- 77,000 8,466
Senior Vice President of 1998 174,863 26,648 -- 157,000 5,000
Corporate Development 1997 143,260 -- -- -- 4,703
Martin R. Brown(7)............. 1999 184,500 -- -- 66,800 8,280
Senior Vice President of 1998 150,969 15,300 -- 100,695 5,000
Operations 1997 137,888 -- -- -- 4,036
Nancy K. Dahl(8)............... 1999 167,075 -- -- 50,600 6,086
Vice President, General 1998 154,452 14,229 -- 104,650 4,640
Counsel and Secretary 1997 126,966 -- -- -- 4,235
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(1) As permitted by rules promulgated by the SEC, no amounts are shown for 1999,
or with respect to certain "perquisites," where such amounts do not exceed
the lesser of 10% of bonus plus salary or $50,000.
(2) Except as otherwise noted, consists of matching contributions made by the
Company in Common Stock under its 401(k) plan and represents the fair market
value of the Company's Common Stock on the calculation date multiplied by
the number of shares. Also includes distributions to employees from the
Phantom Stock Salary Deferral Plan, based on the fair market value of the
Company's Common Stock as of May 31, 1999 ($1.313 per share) multiplied by
the number of shares of Common Stock distributed and the cash refund
generated. For the year 1999, the All Other Compensation amounts are
apportioned as follows:
FAIR MARKET VALUE
COMMON STOCK OF SHARES DISTRIBUTED
DISTRIBUTED UNDER UNDER PHANTOM CASH DISTRIBUTION
VALUE OF 401K PHANTOM STOCK STOCK SALARY FROM PHANTOM
MATCHING SALARY DEFERRAL DEFERRAL PLAN, AS STOCK SALARY
NAME CONTRIBUTIONS($) PLAN(#) OF 5/31/99($) DEFERRAL PLAN($)
---- ---------------- ----------------- --------------------- -----------------
Joseph C. Cook, Jr...... 5,004 2,685 3,525 8,876
Orville G. Kolterman.... 4,781 1,203 1,580 3,976
Daniel M. Bradbury...... 4,795 795 1,044 2,627
Martin R. Brown......... 5,006 709 931 2,343
Nancy K. Dahl........... 5,004 234 307 775
(3) Mr. Cook became CEO and Chairman of the Board of Directors on March 25,
1998.
(4) Represents expenses paid by the Company or reimbursed to Mr. Cook for
certain living expenses, associated travel expenses and tax gross-ups
related thereto, in accordance with Mr. Cook's employment agreement with the
Company.
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(5) Includes 12,676 shares that were cancelled.
(6) Mr. Bradbury became an executive officer of the Company on October 19, 1998.
(7) Mr. Brown became an executive officer of the Company on March 9, 1999.
(8) Ms. Dahl became an executive officer of the Company on October 19, 1998.
STOCK OPTION GRANTS AND EXERCISES
The Company grants options to its executive officers under its 1991 Stock
Option Plan (the "Option Plan"). As of December 31, 1999, options to purchase a
total of 4,407,357 shares were outstanding under the Option Plan and options to
purchase 1,740,016 shares remained available for grant thereunder.
The following tables show for the fiscal year ended December 31, 1999,
certain information regarding options granted to, exercised by, and held at year
end by, the Named Executive Officers:
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED
INDIVIDUAL GRANTS ANNUAL RATES OF
------------------ STOCK PRICE
SHARES % OF TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED OPTION TERM($)(3)
OPTIONS TO EMPLOYEES IN EXERCISE EXPIRATION ---------------------
NAME GRANTED(#)(1) FISCAL YEAR(%)(2) PRICE($/SH) DATE 5% 10%
---- ------------- ------------------ ----------- ---------- --------- ---------
Joseph C. Cook, Jr........ 150,000 12.7% 1.03 02/07/09 97,164 246,233
6,800 1.0% 1.34 05/23/09 5,730 14,522
50,000 4.2% 8.34 12/30/09 262,249 664,591
Orville G. Kolterman...... 50,000 4.2% 0.78 03/01/09 24,527 62,156
3,000 * 1.34 05/23/09 2,528 6,407
Daniel M. Bradbury........ 75,000 6.4% 0.78 03/01/09 36,790 93,234
2,000 * 1.34 05/23/09 1,685 4,271
Martin R. Brown........... 65,000 6.0% 0.78 03/01/09 31,885 80,803
1,800 * 1.34 05/23/09 1,517 3,844
Nancy K. Dahl............. 50,000 4.2% 0.78 03/01/09 24,527 62,156
600 * 1.34 05/23/09 506 1,281
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* Less than 1%.
(1) Such options generally vest according to the following schedule: 25% vest
one year from the date of grant and the remainder vest daily over the
following three years.
(2) Based on options to purchase 1,180,800 shares of Common Stock granted to
employees, including Named Executive Officers, under the Option Plan during
the fiscal year ended December 31, 1999.
(3) Calculated on the assumption that the market value of the underlying stock
increases at the stated values, compounded annually. The total appreciation
of the options over their 10-year terms at 5% and 10% is 63% and 159%
respectively.
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AGGREGATED OPTION EXERCISES IN 1999 FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING OPTIONS IN-THE-MONEY OPTIONS
SHARES AS OF FY-END(#)(1) AS OF FY-END($)(2)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------ ----------- ------------- ----------- -------------
Joseph C. Cook, Jr.......... 256,800 107,550 777,024 100,300 3,535,595 570,486
Orville G. Kolterman........ 3,749 7,519 338,629 56,466 1,669,610 324,123
Daniel M. Bradbury.......... 40,251 85,967 221,212 56,783 1,069,137 406,994
Martin R. Brown............. 49,900 139,617 114,570 38,025 629,871 334,122
Nancy K. Dahl............... -- -- 152,501 38,498 949,582 276,544
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(1) Includes both in-the-money and out-of-the-money options. Certain options
granted under the Option Plan are immediately exercisable but are subject to
the Company's right to repurchase unvested shares on termination of
employment.
(2) The fair market value of the Company's Common Stock on December 31, 1999 was
$8.3438. Excludes out-of-the-money options.
EMPLOYMENT AGREEMENTS
From 1994 to 1998, Joseph C. Cook, Jr. served as a consultant to the
Company under various consulting agreements. In June 1995, the Company and Mr.
Cook entered into a consulting agreement (the "Consulting Agreement"), which
became effective in September 1995. Pursuant to the Consulting Agreement, Mr.
Cook agreed to provide certain consulting services, including assistance in
implementing the Company's business strategy. As part of Mr. Cook's compensation
as a consultant, to date Mr. Cook has been granted nonqualified stock options
under the Company's Option Plan to purchase an aggregate of 270,000 shares of
Common Stock. In connection with an earlier consulting agreement between the
Company and Mr. Cook, in January 1995, the Company also entered into a phantom
stock unit agreement with Farview Management Co., L.P. ("Farview"), a consulting
firm of which Mr. Cook is a general partner (the "Phantom Stock Agreement").
Pursuant to the agreement, Farview received 9,000 phantom stock units,
representing the right to receive cash or shares of the Company's Common Stock
("Phantom Stock Units"). The Phantom Stock Agreement provides that on the date
Mr. Cook ceases to be a consultant to or director of the Company (the
"Termination Date"), the Company will pay Farview the fair market value of the
Phantom Stock Units in cash or shares of the Company's Common Stock, at the
election of the Company. The fair market value of each Phantom Stock Unit is to
be determined based on the closing price of a share of the Company's Common
Stock as quoted on the Nasdaq National Market on the last trading day prior to
the Termination Date.
In addition, in February 1998, Mr. Cook was granted an option to purchase
15,000 shares of Common Stock, including options to purchase 12,676 shares that
have been cancelled. Pursuant to the Consulting Agreement, as amended, Mr.
Cook's consulting fees and the vesting of his options were determined based on
hours of service performed. Mr. Cook was also reimbursed for any reasonable
travel, living and business expenses incurred in connection with the performance
of his consulting services.
In March 1998, Mr. Cook accepted a position as Chairman of the Board and
Chief Executive Officer of the Company. In connection with his appointment, Mr.
Cook entered into an agreement with the Company pursuant to which his annual
salary was set at $375,000. Under the terms of his agreement, Mr. Cook is
eligible to receive an annual merit bonus of up to $250,000, payable upon the
achievement of goals and milestones to be set by the Compensation Committee. In
addition, Mr. Cook's agreement provides that the Company will reimburse Mr. Cook
or pay for certain living expenses, associated travel expenses and tax gross-up
payments related thereto. Mr. Cook was also granted an option to purchase an
aggregate of 500,000 shares of the Company's Common Stock under the Company's
Option Plan at an exercise price of $2.656 per share. The option vests as
follows: 200,000 of the option shares will vest in equal monthly installments
over the twelve months following Mr. Cook's employment start date; and the
remaining 300,000 option shares will vest
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in equal monthly installments over the following thirty-six months. In addition,
Mr. Cook's agreement provides that vesting of the option will be accelerated in
full upon a change in control of the Company in accordance with the Company's
standard vesting acceleration provisions.
In accordance with the provisions of Mr. Cook's employment agreement, his
Consulting Agreement with the Company was terminated as of the day prior to the
date he commenced employment with the Company. Mr. Cook's employment agreement
also provides that the portion of the outstanding options granted to Mr. Cook in
connection with the Consulting Agreement which were vested as of his employment
start date will remain outstanding and exercisable in accordance with their
terms for so long as Mr. Cook remains employed by the Company and for twelve
months thereafter, or for such longer period as is provided under the terms of
those options.
In December 1996, Daniel M. Bradbury entered into an agreement with the
Company pursuant to which the Company made an interest-free loan to Mr. Bradbury
in the principal amount of $36,000 to assist Mr. Bradbury with relocation
expenses. The loan was amended in April 2000, and under its terms the principal
amount will become due and repayable on the earlier of (a) the 45th day after
termination of Mr. Bradbury's employment with the Company, (b) the sale of the
property securing the loan or (c) December 10, 2000. The terms of the loan
agreement also restrict Mr. Bradbury's ability to sell common stock of the
Company and to make withdrawals of, or take loans against, his contributed funds
under the Company's 401(k) plan.
In May 1998, as part of its efforts to conserve cash resources, the Company
adopted an Employee Phantom Stock Salary Deferral Plan (the "Phantom Stock
Plan") that permitted participating eligible employees, including executive
officers, to elect to defer up to 25% of their cash compensation as employees
from May 1, 1998 to December 1, 1998 in a deferred stock account pursuant to
which the deferred amounts were credited in the form of shares of the Company's
Common Stock, based on the market price of the stock as of May 1, 1998, which
was $5.375. Deferred amounts were, therefore, valued according to fluctuations
in the fair market value of the Company's Common Stock. If a participant ceased
serving as an employee of the Company prior to May 31, 1999 (other than by such
employee's voluntary termination of employment or such employee's death or
permanent disability), the participant was entitled to receive the value of his
or her account in cash and/or in the form of the Company's Common Stock in a
single lump sum payment, in the form determined by the Company in its sole
discretion. In the event that a participant voluntarily terminated his or her
employment with the Company prior to May 31, 1999, then such participant's
deferred compensation account with the Company was of no value and such
participant had no right to receive any amounts from the Company, in any form,
based on his or her compensation reductions in connection with the Phantom Stock
Plan. Thirty-seven employees chose to defer a portion of their cash compensation
under the Phantom Stock Plan, which in the aggregate, totaled approximately
$387,857 of deferred compensation. Distributions under the Phantom Stock Plan
were made in January 1999 and May 1999. The value of this deferred compensation
was approximately $90,342.
In February 1998, the Company adopted a Supplemental Incentive Bonus
Program (the "Supplemental Bonus Program") for certain employees. Under the
Supplemental Bonus Program, each of the employees specifically designated by the
Compensation Committee to participate in the program was eligible to receive a
cash bonus equal to 50% of his or her base salary on March 1, 2000, less
applicable payroll taxes and benefit contributions (the "Supplemental Bonus"),
if he or she met the following criteria: (i) the employee must be continuously
employed by the Company or an affiliate of the Company on a full-time basis
through March 1, 2000 (the "Bonus Date"); and (ii) the employee must retain a
performance rating of "good" or better from March 1, 1998 through the Bonus
Date. In addition, in the event of a change in control of the Company prior to
March 1, 2000, participating employees may also have been eligible to receive a
portion of such bonus under specified circumstances. The Named Executive
Officers designated by the Compensation Committee as eligible to participate in
the Supplemental Incentive Bonus Program were Messrs. Bradbury and Brown, Ms.
Dahl and Dr. Kolterman.
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EMPLOYEE BENEFIT PLANS
In addition to the Phantom Stock Plan and the Supplemental Bonus Program
described under the caption "Employment Agreements" and the 401(k) Plan
described under the caption "Report of the Compensation Committee of the Board
of Directors on Executive Compensation -- 401(k) Matching Contribution", the
Company maintains the following employee benefit plans.
1991 STOCK OPTION PLAN
In October 1991, the Company adopted the Option Plan and it was
subsequently amended by the Company in May 1998. The purpose of the Option Plan
is to assist the Company in attracting the services of new officers, employees
and consultants and retaining the services of current officers, employees and
consultants. The Option Plan provides a means by which selected officers,
employees and consultants of the Company and its affiliates are given an
opportunity to purchase stock in the Company. The Option Plan provides for the
grant of both incentive and nonqualified stock options. Incentive stock options
are intended to qualify as "incentive stock options" within the meaning of
Section 422 of the Code. Nonqualified stock options granted under the Option
Plan are intended not to qualify as incentive stock options under the Code. The
maximum number of shares of Common Stock that may be issued under the Option
Plan is 7,800,000. As of March 1, 2000, approximately 56 of the Company's
employees were eligible to participate in the Option Plan.
Under the Option Plan, the Board or Compensation Committee may provide for
the grant of stock options to eligible employees. The Board or Compensation
Committee determines certain provisions of each option granted, including the
number of shares to be granted to each person and the time such option may be
exercised. The exercise price of incentive stock options may not be less than
the fair market value of the Common Stock on the date of the option grant. The
exercise price of nonqualified stock options may not be less than 50% of the
fair market value of the Common Stock on the date of grant. Such options
generally vest according to the following schedule: 25% vest one year from the
date of grant and the remainder vest daily over the following three years.
However, in October 1998 the Company granted certain options that vest according
to the following alternative schedule: 25% vest six months from the date of
grant and the remainder vest daily over the following 18 months. Certain options
granted under the Option Plan also are immediately exercisable but are subject
to the Company's right to repurchase unvested shares on termination of
employment. As of March 1, 2000, options to purchase a total of 4,901,563 shares
of Common Stock were outstanding under the Option Plan.
1991 EMPLOYEE STOCK PURCHASE PLAN
In November 1991, the Company adopted the Employee Stock Purchase Plan (the
"Purchase Plan") which has been amended from time to time. The purpose of the
Purchase Plan is to provide a means by which employees of the Company may be
given an opportunity to purchase Common Stock of the Company through payroll
deductions, to assist the Company in retaining the services of its employees and
to secure and retain the services of new employees. As of March 31, 2000,
approximately 71 of the Company's approximately 75 employees are eligible to
participate in the Purchase Plan. The rights to purchase Common Stock granted
under the Purchase Plan are intended to qualify as options issued under an
"employee stock purchase plan" as that term is defined in Section 423(b) of the
Internal Code of 1986, as amended.
The Purchase Plan is implemented by the Board by offering rights to
purchase Common Stock to employees from time to time. Each offering is no more
than 27 months long. Under the Purchase Plan, any employee who is customarily
employed at least 20 hours per week and five months per calendar year may
participate in the Purchase Plan by authorizing payroll deductions of up to 15%
of such employees total compensation during the purchase period. The purchase
price per share is the lower of 85% of the fair market value on the first day of
the offering or on the exercise date. A participating employee may withdraw at
any time. Upon withdrawal, the Company will distribute to the employee his or
her accumulated payroll deductions without interest, less accumulated deductions
previously applied to the purchase of shares of Common Stock on employees
behalf. In addition, rights granted pursuant to an offering terminate
immediately upon cessation of an employees employment for any reason, and the
Company will distribute to such employee all of his or her accumulated payroll
deductions, without interest.
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21
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION(1)
The Compensation Committee of the Board of Directors (the "Committee") is
composed of directors who are not employees of the Company. The Committee is
responsible for establishing and administering the Company's executive
compensation arrangements.
COMPENSATION OBJECTIVES AND IMPLEMENTATION
The objectives of the Company's executive compensation arrangements are to
attract and retain the services of key management and to align the interests of
its executives with those of the Company's stockholders. The Committee endeavors
to accomplish these by:
- Establishing compensation arrangements that are adequate to attract and
retain the services of key management personnel and that deliver
compensation commensurate with the Company's performance, as measured
against the achievement of operating, financial and strategic objectives
and taking into account competitive compensation practices in the
industry.
- Providing significant equity-based incentives for executives to ensure
that they are motivated over the long term to respond to the Company's
business challenges and opportunities as owners rather than solely as
employees.
- Rewarding executives if stockholders receive an above-average return on
their investment over the long term.
COMPENSATION MIX AND MEASUREMENT
A significant portion of the Company's annual executive compensation
program is determined on the basis of corporate performance. The Company's
executive compensation mix generally consists of a salary which in the
Committee's opinion is adequate under the circumstances to retain the services
of the executive, a cash bonus based on Company and individual performance and
stock options that are intended to provide long-term incentives tied to
increases in the value of the Company's Common Stock.
SALARY. Salary is targeted at competitive levels within the biotechnology
industry. For the purpose of establishing these levels, the Company compares
itself to a self selected group of biotechnology companies in stages of
development similar to that of the Company. The companies included in the survey
are not necessarily the same as the companies included in the market indices
included in the performance graph in this Proxy Statement.
Although the compensation (salary and bonus) surveys referred to above and
the market indices included in the performance graph are broad and include
companies in related industries, the surveys and indices were created for
different purposes and accordingly are not comparable.
For fiscal 1999, the Committee established target total compensation levels
applicable to each executive officer based on data generated in the surveys. The
Committee made its target salary determinations subjectively after considering
the competitive nature of the biotechnology industry and the Company's need to
attract and retain talented executive officers.
The Committee then considers the level of responsibility, experience and
contributions of each executive officer and sets each officer's salary taking
into account the target compensation, recent corporate performance (based on the
factors discussed above) and the Committee's evaluation of individual
performance. For fiscal 1999, the salary of each executive officer was generally
at or near the median target total compensation levels determined through the
surveys.
- ---------------
1 The material in this report is not "soliciting material," is not deemed
filed with the SEC and is not to be incorporated by reference in any filing of
the Company under the Securities Act of 1933, as amended (the "1933 Act") or the
Exchange Act, whether made before or after the date hereof and irrespective of
any general incorporation language in any such filing.
19
22
ANNUAL CASH BONUS. The Committee, as frequently as circumstances warrant,
evaluates the Company's corporate performance based on achievement of
established strategic, scientific and financial goals. In 1997, the Company
implemented a cash bonus program for officers and full-time non-officer
employees based on corporate and individual performance. A bonus was not paid in
1997. A bonus was paid in early 1998 based on corporate and individual
performance against the Company's key objectives during 1997. The Company did
not pay a bonus for corporate and individual performance for 1998 or 1999.
LONG-TERM INCENTIVES. Long-term incentives are provided to executives
through the Company's Phantom Stock Plan and Supplemental Bonus Program as
described under the caption "Employment Agreements" and its equity incentive
program, which consists primarily of its Option Plan and Purchase Plan. The
Phantom Stock Plan expired in 1999 and the Supplemental Bonus Program expired in
March 2000. Grants under the Option Plan have a term of 10 years and are
generally tied to the market valuation of the Company's Common Stock, thereby
providing an additional incentive for executives to build stockholder value. In
addition, grants are generally subject to vesting over four years, with vesting
tied to continued employment. Executives receive value from this plan only if
strategic goals are achieved and the Company's Common Stock appreciates
accordingly. This component is intended to retain and motivate executives to
improve long-term stock market performance. Additional long-term incentives are
provided through the Company's Purchase Plan in which all eligible employees may
participate up to 15% of their annual compensation.
Option grant levels to executive officers are subjectively determined by
the Committee after considering stock option grant data taken from the
compensation surveys referred to above, as well as the level of responsibility,
experience and contributions of each executive officer. Generally, the Committee
expects to grant options to executive officers annually as part of the
performance review process for each officer. In determining the size of
individual grants, the Committee also considers the number of shares subject to
options previously granted to each executive officer, including the number of
such shares that have vested and that remain unvested.
401(K) MATCHING CONTRIBUTION. In 1997, the Board of Directors approved a
401(k) matching contribution for all 401(k) plan participants. The match is
equal to 50% of a participant's contributions to the plan each year up to a
maximum of 3% of a participant's salary. The match is made in the form of Common
Stock of the Company. Matching contributions are subject to a vesting schedule
based on years of service with the Company.
CHIEF EXECUTIVE OFFICER COMPENSATION
Joseph C. Cook, Jr. has been the Company's Chairman and Chief Executive
Officer since March 1998. Under the terms of his employment agreement, Mr. Cook
is eligible to receive an annual merit bonus of up to $250,000, payable upon
achievement of goals and milestones set by the Committee. In addition, under the
terms of his employment agreement, the Company agreed to reimburse Mr. Cook or
pay for certain living expenses, associated travel expenses and tax gross-up
payments related thereto. Mr. Cook's salary for 1999 was $375,000 and he did not
receive a cash bonus. In February 1999, he was granted an option to purchase an
aggregate of 150,000 shares of the Company's Common Stock under the Company's
Option Plan. He also received options in May and December 1999 to purchase 6,800
and 50,000 shares, respectively. Based on Mr. Cook's performance in 1999,
including the completion of planned Phase 3 clinical trials for SYMLIN, the
closing of two rounds of financing and the recruitment of additional management
and scientific personnel, effective March 1, 2000, Mr. Cook's salary was
increased to $475,000 and he was granted options to purchase 150,000 shares of
Common Stock with a vesting commencement date of February 22, 2000.
COMPENSATION COMMITTEE
James C. Blair
Vaughn D. Bryson
James C. Gaither
April 24, 2000
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PERFORMANCE MEASUREMENT COMPARISON(1)
The following graph compares total stockholder returns of the Company for
the past 5 years to two indices: the Nasdaq CRSP Total Return Index for the
Nasdaq Stock Market (U.S. companies) (the "Nasdaq US") and the Nasdaq
Pharmaceutical Index (the "Nasdaq-Pharmaceutical"). The total return for the
Company's stock and for each index assumes the reinvestment of dividends,
although dividends have never been declared on the Company's stock, and is based
on the returns of the component companies weighted according to their
capitalizations as of the end of each monthly period. The Nasdaq-US tracks the
aggregate price performance of equity securities of U.S. companies traded on the
Nasdaq National Market System (the "NMS"). The Nasdaq-Pharmaceutical tracks the
aggregate price performance of equity securities of pharmaceutical companies
traded on the NMS. During the period indicated, the Company's Common Stock was
traded on the NMS and was a component of both the Nasdaq-US and the
Nasdaq-Pharmaceutical, except that from February 1, 1999 through February 9,
2000, the Company's Common Stock was traded on the Nasdaq SmallCap Market. The
Company's Common Stock was relisted on the NMS on February 10, 2000.
COMPARISON OF CUMULATIVE TOTAL RETURN ON INVESTMENT FOR PREVIOUS 5 YEARS,
1995-1999(2)
AMLN NASDAQ US NASDAQ PHARMACEUTICAL
---- --------- ---------------------
12/31/94 100.00 100.00 100.00
03/31/95 77.08 108.95 108.27
06/30/95 131.25 124.62 125.92
09/30/95 120.83 139.63 157.33
12/31/95 158.33 141.34 183.41
03/31/96 164.58 147.95 190.84
06/30/96 179.17 160.00 185.39
09/30/96 189.58 165.73 189.64
12/31/96 216.67 173.90 183.98
03/31/97 202.08 164.47 174.73
06/30/97 229.17 194.60 188.63
09/30/97 140.63 227.52 211.59
12/31/97 90.63 213.07 190.02
03/31/98 45.83 249.37 208.78
06/30/98 63.02 256.21 193.21
09/30/98 53.13 231.20 182.16
12/31/98 8.33 300.43 241.74
03/31/99 17.71 336.72 265.24
06/30/99 18.75 368.44 270.20
09/30/99 79.17 377.38 308.61
12/31/99 139.07 555.09 449.78
(1) The material in this report is not "soliciting material," is not deemed
filed with the SEC and is not to be incorporated by reference in any filing
of the Company under the Securities Act of 1933, as amended, or the Exchange
Act, whether made before or after the date hereof and irrespective of any
general incorporation language in any such filing.
(2) Shows the cumulative total return on investment, including reinvestment of
dividends, assuming an investment of $100 in each of the Company, the
Nasdaq-US and the Nasdaq-Pharmaceutical on December 31, 1994.
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CERTAIN TRANSACTIONS
The Company has entered into certain transactions with its directors, as
described under the caption "Executive Compensation -- Compensation of
Directors." The Company has also entered into certain agreements with its
current Chief Executive Officer and Chairman of the Board, as described under
the caption "Executive Compensation -- Employment Agreements."
The Company's Bylaws provide that the Company will indemnify its directors
and executive officers and may indemnify its other officers, employees and other
agents to the fullest extent permitted by Delaware law. The Company is also
empowered under its Bylaws to enter into indemnification contracts with its
directors and officers and to purchase insurance on behalf of any person whom it
is required or permitted to indemnify. Pursuant to this provision, the Company
has entered into indemnity agreements with each of its directors and officers.
In addition, the Company's Certificate of Incorporation provides that to
the fullest extent permitted by Delaware law, the Company's directors will not
be liable for monetary damages for breach of the directors' fiduciary duty of
care to the Company and its stockholders. This provision in the Certificate of
Incorporation does not eliminate the duty of care, and in appropriate
circumstances equitable remedies such as an injunction or other forms of
non-monetary relief would remain available under Delaware law. Each director
will continue to be subject to liability for breach of the director's duty of
loyalty to the Company, for acts or omissions not in good faith or involving
intentional misconduct or knowing violations of law, for acts or omissions that
the director believes to be contrary to the best interests of the Company or its
stockholders, for any transaction from which the director derived an improper
personal benefit, for acts or omissions involving a reckless disregard for the
director's duty to the Company or its stockholders when the director was aware
or should have been aware of a risk of serious injury to the Company or its
stockholders, for acts or omissions that constitute an unexcused pattern of
inattention that amounts to an abdication of the director's duty to the Company
or its stockholders, for improper transactions between the director and the
Company, and for improper distributions to stockholders and loans to directors
and officers. This provision also does not affect a director's responsibilities
under any other laws, such as the federal securities laws or state or federal
environmental laws.
There is no pending litigation or proceeding involving a director, officer,
employee or other agent of the Company as to which indemnification is being
sought, nor is the Company aware of any pending or threatened litigation that
may result in claims for indemnification by any director, officer, employee or
other agent.
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OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the accompanying
proxy to vote on such matters in accordance with their best judgment.
By Order of the Board of Directors
/s/ JOSEPH C. COOK, JR.
----------------------------
Joseph C. Cook, Jr.
Chairman of the Board
and Chief Executive Officer
April 24, 2000
A COPY OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 IS AVAILABLE
WITHOUT CHARGE UPON WRITTEN REQUEST TO: INVESTOR RELATIONS, AMYLIN
PHARMACEUTICALS, INC., 9373 TOWNE CENTRE DRIVE, SAN DIEGO, CALIFORNIA 92121.
23
26
AMYLIN PHARMACEUTICALS, INC.
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
ADOPTED ON FEBRUARY 9, 1994
AS AMENDED BY THE BOARD OF DIRECTORS ON NOVEMBER 14, 1995, FEBRUARY 8,
1996, MAY 29, 1997, MAY 20, 1998, OCTOBER 12, 1999, DECEMBER 8,
1999 AND APRIL 17, 2000
1. PURPOSE.
(a) The purpose of this Non-Employee Directors' Stock Option Plan (the
"Plan") is to provide a means by which each director of Amylin Pharmaceuticals,
Inc., a Delaware corporation (the "Company"), who is not otherwise an employee
of the Company or any Affiliate of the Company (each such person being hereafter
referred to as a "Non-Employee Director") will be given an opportunity to
purchase stock of the Company.
(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company as those terms are defined
in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986,
as amended (the "Code").
(c) The Company, by means of the Plan, seeks to retain the services of
persons now serving as Non-Employee Directors of the Company, to secure and
retain the services of persons capable of serving in such capacity, and to
provide incentives for such persons to exert maximum efforts for the success of
the Company.
(d) The Company intends that the options issued under the Plan not be
incentive stock options as that term is used in Section 422 of the Code.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board of Directors of
the Company (the "Board") unless and until the Board delegates administration to
a committee, as provided in subparagraph 2(c).
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(i) To construe and interpret the Plan and options
granted under it, and to establish, amend and revoke rules and regulations for
its administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any option agreement, in a
manner and to the extent it shall deem necessary or expedient to make the Plan
fully effective.
(ii) To amend the Plan as provided in paragraph 11.
1.
27
(iii) Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the best interests of
the Company.
(c) The Board may delegate administration of the Plan to a committee
composed of not fewer than two (2) members of the Board (the "Committee"). If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 10 relating to adjustments
upon changes in stock, the stock that may be sold pursuant to options granted
under the Plan shall not exceed in the aggregate 450,000 shares of the Company's
common stock. If any option granted under the Plan shall for any reason expire
or otherwise terminate without having been exercised in full, the stock not
purchased under such option shall revert to and again become available for
issuance pursuant to exercises of options granted under the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
4. ELIGIBILITY.
Options shall be granted only to Non-Employee Directors of the Company.
5. NON-DISCRETIONARY GRANTS.
(a) Each person who is, immediately following the Company's 1994 Annual
Meeting of Stockholders (the "1994 Annual Meeting") at which the Plan is
approved by the stockholders of the Company, a Non-Employee Director of the
Company shall be granted, effective as of the date of such Annual Meeting, an
option to purchase ten thousand (10,000) shares of common stock of the Company
on the terms and conditions set forth herein.
(b) Each person who is, subsequent to November 1, 1995, and on or prior
to May 29, 1997, elected for the first time by the Board or shareholders of the
Company to serve as a Non-Employee Director of the Company and who has not
previously served as a member of the Board shall be granted, effective as of the
date of such election, an option to purchase thirty thousand (30,000) shares of
common stock of the Company on the terms and conditions set forth herein. Each
person who is, subsequent to May 29, 1997, elected by the Board or shareholders
of the Company to serve as a Non-Employee Director of the Company and who has
not served as a member of the Board at any time during the two-year period
immediately preceding such election, shall be granted, effective as of the later
of December 8, 1999 and the date of such election, an option to purchase twenty
thousand (20,000) shares of common stock of the Company on the terms and
conditions set forth herein.
2.
28
(c) Commencing with the 1996 Annual Meeting of Stockholders, each person
who is, immediately following each Annual Meeting of Stockholders of the Company
that occurs in an even year (i.e. 1996, 1998, 2000, 2002, etc.) (hereinafter, an
"Even Year Annual Meeting"), a Non-Employee Director of the Company shall be
granted, effective as of the date of such Even Year Annual Meeting (and in
addition to any option granted pursuant to Section 5(b)), an option to purchase
ten thousand (10,000) shares of common stock of the Company on the terms and
conditions set forth herein.
6. OPTION PROVISIONS.
Each option shall contain the following terms and conditions:
(a) No option shall be exercisable after the expiration of ten (10)
years from the date it was granted.
(b) The exercise price of each option shall be equal to the Fair Market
Value (defined below) of the stock subject to such option on the date such
option is granted. For purposes of this Plan, "Fair Market Value" means, as of
any date, the value of the common stock of the Company determined as follows:
(i) If the common stock is listed on any established stock
exchange or a national market system, including without limitation the National
Market System or the SmallCap Market System of the National Association of
Securities Dealers, Inc. Automated Quotation ("NASDAQ") System, the fair market
value of a share of common stock shall be the closing sales price for such stock
(or the closing bid if no sales are reported) on such exchange or national
market system on the trading day on which the determination is to be made, as
reported in the Wall Street Journal or such other source as the Board deems
reliable;
(ii) If the common stock is quoted on the NASDAQ System (but not
on the National Market System or the SmallCap Market System thereof) or is
regularly quoted by a recognized securities dealer but selling prices are not
reported, the fair market value of a share of common stock shall be the closing
sales price for such stock (or the closing bid if no sales are reported) on the
trading day on which the determination is to be made, as reported in the Wall
Street Journal or such other source as the Board deems reliable;
(iii) In the absence of an established market for the common
stock, the fair market value shall be determined in good faith by the Board.
(c) The purchase price of stock acquired pursuant to an option shall be
paid, to the extent permitted by applicable statutes and regulations, either (1)
in cash at the time the option is exercised, or (2) by delivery to the Company
of shares of common stock of the Company that have been held for the requisite
period necessary to avoid a charge to the Company's reported earnings and valued
at the Fair Market Value on the date of exercise, or (3) by a combination of
such methods of payment.
(d) An option shall not be transferable except by will or by the laws of
descent and distribution, and shall be exercisable during the lifetime of the
person to whom the option is granted only by such person or by his guardian or
legal representative.
3.
29
(e) Options granted pursuant to the Plan shall vest as follows:
(i) An option granted pursuant to Section 5(a) or 5(c) shall
vest with respect to each optionee over a period of two (2) years with
0.1369863% of the total number of shares subject to such option vesting on each
day following the date of grant of such option (provided that the grantee has,
during the entire period prior to any such vesting date, continuously served as
a Non-Employee Director), whereupon such option shall become fully exercisable
in accordance with its terms with respect to the shares vesting as of such date.
(ii) An option granted pursuant to Section 5(b) shall vest
according to the following schedule:
If the optionee continues as a Non-Employee Director of the Company or
any Affiliate of the Company through the date that is one (1) year from the date
of grant thereof ("Anniversary Date"), such option shall become exercisable as
of the Anniversary Date with respect to one-fourth (1/4th) of the total number
of shares subject to such option.
Thereafter, for so long as such optionee continues as a Non-Employee
Director of the Company or an Affiliate of the Company, such option will become
exercisable with respect to an additional .0684932% of the total number of
shares subject to such option for each day subsequent to the Anniversary Date
until such option has become fully exercisable.
Notwithstanding the foregoing, in no event shall fractional shares be
issuable upon any such exercise, and in lieu of any such fractional share, the
Company shall pay cash to the holder of such option equal to the Fair Market
Value thereof.
(f) The Company may require any optionee, or any person to whom an
option is transferred under subparagraph 6(d), as a condition of exercising any
such option: (1) to give written assurances satisfactory to the Company as to
the optionee's knowledge and experience in financial and business matters; and
(2) to give written assurances satisfactory to the Company stating that such
person is acquiring the stock subject to the option for such person's own
account and not with any present intention of selling or otherwise distributing
the stock. These requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (i) the issuance of the shares upon the
exercise of the option has been registered under a then-currently-effective
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), or (ii), as to any particular requirement, a determination is
made by counsel for the Company that such requirement need not be met in the
circumstances under the then-applicable securities laws.
(g) Notwithstanding anything to the contrary contained herein, an option
may not be exercised unless the shares issuable upon exercise of such option are
then registered under the Securities Act or, if such shares are not then so
registered, the Company has determined that such exercise and issuance would be
exempt from the registration requirements of the Securities Act.
7. COVENANTS OF THE COMPANY.
(a) During the terms of the options granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such options.
4.
30
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the options granted under the
Plan; provided, however, that this undertaking shall not require the Company to
register under the Securities Act either the Plan, any option granted under the
Plan, or any stock issued or issuable pursuant to any such option. If the
Company is unable to obtain from any such regulatory commission or agency the
authority which counsel for the Company deems necessary for the lawful issuance
and sale of stock under the Plan, the Company shall be relieved from any
liability for failure to issue and sell stock upon exercise of such options.
(c) Effective as of June 1, 1998, the Company shall not implement
without prior stockholder approval any stock option exchange program or
repricing program intended to reduce the exercise price applicable to Options
granted pursuant to the Plan. This subsection 7(c) may not be amended or
modified by the Company without prior stockholder approval.
8. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to options granted under the
Plan shall constitute general funds of the Company.
9. MISCELLANEOUS.
(a) Neither an optionee nor any person to whom an option is transferred
under subparagraph 6(d) shall be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to such option unless
and until such person has satisfied all requirements for exercise of the option
pursuant to its terms.
(b) Nothing in the Plan or in any instrument executed pursuant thereto
shall confer upon any Non-Employee Director any right to continue in the service
of the Company or any Affiliate or shall affect any right of the Company, its
Board or stockholders or any Affiliate to terminate the service of any
Non-Employee Director with or without cause.
(c) No Non-Employee Director, individually or as a member of a group,
and no beneficiary or other person claiming under or through him, shall have any
right, title or interest in or to any option reserved for the purposes of the
Plan except as to such shares of common stock, if any, as shall have been
reserved for him pursuant to an option granted to him.
(d) In connection with each option made pursuant to the Plan, it shall
be a condition precedent to the Company's obligation to issue or transfer shares
to a Non-Employee Director, or an affiliate of such Non-Employee Director, or to
evidence the removal of any restrictions on transfer, that such Non-Employee
Director make arrangements satisfactory to the Company to insure that the amount
of any federal or other withholding tax required to be withheld with respect to
such sale or transfer, or such removal or lapse, is made available to the
Company for timely payment of such tax.
5.
31
10. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject
to any option granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or otherwise), the Plan and outstanding
options will be appropriately adjusted in the class(es) and maximum number of
shares subject to the Plan and the class(es) and number of shares and price per
share of stock subject to outstanding options.
(b) In the event of: (1) a dissolution or liquidation of the Company;
(2) a merger or consolidation in which the Company is not the surviving
corporation; (3) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's common stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise; or (4) any other capital
reorganization in which more than fifty percent (50%) of the shares of the
Company entitled to vote are exchanged, then to the extent permitted by
applicable law, the time during which such options may be exercised shall be
accelerated and the options terminated if not exercised prior to such event.
11. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the Plan.
Except as provided in paragraph 10 relating to adjustments upon changes in
stock, no amendment shall be effective unless approved by the stockholders of
the Company within twelve (12) months before or after the adoption of the
amendment, where the amendment will:
(i) Increase the number of shares reserved for options under the
Plan; or
(ii) Modify the Plan in any other way if such modification
requires stockholder approval in order for the Plan to comply with the
requirements of Rule 16b-3 promulgated under the Exchange Act or Section 162(m)
of the Code.
(b) Rights and obligations under any option granted before any amendment
of the Plan shall not be altered or impaired by such amendment of the Plan
unless (i) the Company requests the consent of the person to whom the option was
granted and (ii) such person consents in writing.
12. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate on February 8, 2004. No options may
be granted under the Plan while the Plan is suspended or after it is terminated.
(b) Rights and obligations under any option granted while the Plan is in
effect shall not be altered or impaired by suspension or termination of the
Plan, except with the consent of the person to whom the option was granted.
6.
32
13. EFFECTIVE DATE OF PLAN; CONDITIONS OF EXERCISE.
(a) The Plan shall become effective upon adoption by the Board of
Directors, subject to the condition subsequent that the Plan is approved by the
stockholders of the Company in accordance with Rule 16-b(3)(1) of the
Regulations under the Securities Exchange Act prior to June 30, 1994.
(b) No option granted under the Plan shall be exercised or exercisable
unless and until the condition of subparagraph 13(a) above has been met.
7.
33
PROXY
AMYLIN PHARMACEUTICALS,INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 1, 2000
The undersigned hereby appoints Joseph C. Cook, Jr. and Nancy K. Dahl, and each
of them, as attorneys and proxies of the undersigned, with full power of
substitution, to vote all of the shares of stock of Amylin Pharmaceuticals,
Inc.(the "Company") which the undersigned may be entitled to vote at the Annual
Meeting of Stockholders of the Company to be held at the Hyatt Regency La Jolla,
located at 3777 La Jolla Village Drive, San Diego, California, 92122, on
Thursday, June 1, 2000, at 10:00 a.m., local time, and at any and all
continuations, adjournments or postponements thereof, with all powers that the
undersigned would possess if personally present, upon and in respect of the
following matters and in accordance with the following instructions, with
discretionary authority as to any and all other matters that may properly come
before the meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED,THIS PROXY WILL BE VOTED FOR ALL
NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3, AS MORE SPECIFICALLY
DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS
PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
(Continued on other side)
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* FOLD AND DETACH HERE *
34
Please mark
(Continued from other side) your votes as [X]
indicated in
this example.
MANAGEMENT RECOMMENDS A VOTE FOR THE FOR WITHHOLD
NOMINEES FOR DIRECTOR LISTED BELOW. all nominees listed below AUTHORITY
(except as marked to the to vote for all
PROPOSAL 1: To elect directors to hold office until the contrary below). nominees listed below.
next Annual Meeting of Stockholders and until their [ ] [ ]
successors are elected.
NOMINEES: James C. Blair, Vaughn D. Bryson, Ginger L. Graham,
Joseph C. Cook, Jr., Howard E. Greene, Jr., Vaughn M. Kailian,
Donald H. Rumsfeld and Jay S. Skyler
TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S), WRITE SUCH NOMINEE(S)' NAME(S)
BELOW:
- --------------------------------------------------------------------------------
MANAGEMENT RECOMMENDS A VOTE FOR PROPOSAL 2. FOR AGAINST ABSTAIN
[ ] [ ] [ ]
PROPOSAL 2: To approve the Company's Non-Employee Directors' Stock Option Plan,
as amended,to increase the aggregate number of shares of Common Stock authorized
for issuance under such plan by 100,000 shares.
MANAGEMENT RECOMMENDS A VOTE FOR PROPOSAL 3. FOR AGAINST ABSTAIN
[ ] [ ] [ ]
PROPOSAL 3: To ratify the selection of Ernst & Young LLP as
independent auditors of the Company for its fiscal year
ending December 31, 2000.
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY
IN THE ENCLOSED RETURN ENVELOPE WHICH IS POSTAGE
PREPAID IF MAILED IN THE UNITED STATES.
Signature(s) DATED , 2000
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Please sign exactly as your name appears hereon. If the stock is registered in
the names of two or more persons, each should sign. Executors, administrators,
trustees, guardians and attorneys-in-fact should add their titles. If signer is
a corporation, please give full corporate name and have a duly authorized
officer sign, stating title. If signer is a partnership, please sign in
partnership name by authorized person.
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* FOLD AND DETACH HERE *