SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934 (Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material under Rule 14a-12
PROGENICS PHARMACEUTICALS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
--------
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):
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4) Proposed maximum aggregate value of transaction:
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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:
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2) Form, Schedule or Registration Statement No.:
----------------
3) Filing Party:
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4) Date Filed:
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PROGENICS PHARMACEUTICALS, INC.
777 Old Saw Mill River Road
Tarrytown, New York 10591
April 30, 2002
Dear Stockholder:
You are cordially invited to attend the Company's Annual
Meeting of Stockholders to be held on Wednesday, June 18, 2002
at 11:00 a.m. local time at the Landmark at Eastview,
Westchester Room, 777 Old Saw Mill River Road, Tarrytown, New
York.
At this meeting, you will be asked to consider and vote upon
the election of directors of the Company, the approval of an
amendment the Company's Amended 1996 Stock Incentive Plan, the
approval of amendments to the Company's 1998 Employee Stock
Purchase Plan and the Company's 1998 Non-Qualified Employee Stock
Purchase Plan, the ratification of the Board of Directors'
selection of PricewaterhouseCoopers LLP to serve as the Company's
independent accountants for the fiscal year ending December 31,
2002.
The Board of Directors appreciates and encourages stockholder
participation in the Company's affairs and cordially invites you
to attend the meeting in person. It is in any event important
that your shares be represented and we ask that you sign, date
and mail the enclosed proxy in the envelope provided at your
earliest convenience.
Thank you for your cooperation.
Very truly yours,
PAUL J. MADDON, M.D., PH.D.
Chairman of the Board of Directors
PROGENICS PHARMACEUTICALS, INC.
777 Old Saw Mill River Road
Tarrytown, New York 10591
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 18, 2002
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of PROGENICS
PHARMACEUTICALS, INC. (the "Company"), a Delaware corporation, will be held at
the Landmark at Eastview, Westchester Room, 777 Old Saw Mill River Road,
Tarrytown, New York on Wednesday, June 18, 2002 at 11:00 a.m. local time, for
the purposes of considering and voting upon the following matters, each as
more fully described in the attached Proxy Statement:
1. The election of directors of the Company to serve until the 2003
Annual Meeting of Stockholders.
2. The approval of an amendment to the Company's Amended 1996 Stock
Incentive Plan to increase the number of shares available for issuance under
the Plan by an aggregate of 1,000,000 shares to 5,000,000 shares.
3. The approval of an amendment to the 1998 Employee Stock Purchase Plan
to increase the number of share of common stock reserved for issuance
thereunder by 250,000 to 400,000 and the amendment of the Company's 1998
Non-Qualified Employee Stock Purchase Plan to increase the number of shares
of common stock reserved for issuance thereunder by 25,000 to 75,000.
4. The ratification of the Board of Directors' selection of
PricewaterhouseCoopers LLP to serve as the Company's independent accountants
for the fiscal year ending December 31, 2002.
5. The transaction of such other business as may properly come before the
meeting and any adjournments thereof.
Only those stockholders of record at the close of business on May 3, 2002
will be entitled to receive notice of, and vote at, said meeting. A list of
stockholders entitled to vote at the meeting is open to examination by any
stockholder at the principal offices of the Company, 777 Old Saw Mill River
Road, Tarrytown, New York 10591.
All stockholders are cordially invited to attend the meeting in person. In
any event, please mark your votes, then date, sign and return the accompanying
form of proxy in the envelope enclosed for that purpose (to which no postage
need be affixed if mailed in the United States) whether or not you expect to
attend the meeting in person. Please note that the accompanying form of proxy
must be returned to record your vote. The proxy is revocable by you at any
time prior to its exercise. The prompt return of the proxy will be of
assistance in preparing for the meeting and your cooperation in this respect
will be appreciated.
By order of the Board of Directors
PHILIP K. YACHMETZ
Vice President, General Counsel and
Secretary
Tarrytown, New York
April 30, 2002
PROGENICS PHARMACEUTICALS, INC.
777 Old Saw Mill River Road
Tarrytown, New York 10591
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PROXY STATEMENT
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This Proxy Statement is furnished to holders of the Common Stock, par value
$.0013 per share (the "Common Stock"), of Progenics Pharmaceuticals, Inc. (the
"Company") in connection with the solicitation of proxies, in the accompanying
form, by the Board of Directors of the Company, for use at the Annual Meeting
of Stockholders to be held at the Landmark at Eastview, Westchester Room, 777
Old Saw Mill River Road, Tarrytown, New York on Wednesday, June 18, 2002, at
11:00 a.m. local time, and at any and all adjournments thereof. Stockholders
may revoke the authority granted by their execution of proxies at any time
prior to their use by filing with the Secretary of the Company a written
revocation or duly executed proxy bearing a later date or by attending the
meeting and voting in person. Solicitation of proxies will be made chiefly
through the mails, but additional solicitation may be made by telephone or
telegram by the officers or regular employees of the Company. The Company may
also enlist the aid of brokerage houses or the Company's transfer agent in
soliciting proxies. All solicitation expenses, including costs of preparing,
assembling and mailing proxy material, will be borne by the Company. This
proxy statement and accompanying form of proxy are being mailed to
stockholders on or about May 10, 2002.
Shares of the Common Stock represented by executed and unrevoked proxies
will be voted in accordance with the choice or instructions specified thereon.
It is the intention of the persons named in the proxy,
unless otherwise specifically instructed in the proxy, to vote all proxies
received by them FOR the election
of the eight nominees named herein, FOR the approval and adoption of the
amendment to the Company's Amended 1996 Stock Incentive Plan, FOR the approval
and adoption of the amendment to the Company's 1998 Employee Stock Purchase
Plan, FOR the approval and adoption of the amendment to the Company's 1998
Non-Qualified Employee Stock Option Plan and FOR ratification of the Board of
Directors' selection of PricewaterhouseCoopers LLP to serve as the Company's
independent accountants for the fiscal year ending December 31, 2002.
If a quorum is present at the meeting, those nominees receiving a plurality
of the votes cast will be elected as directors. A majority of the votes cast
(excluding abstentions and broker non-votes) will be required for the approval
and ratification of each other proposal set forth herein including the Board's
selection of PricewaterhouseCoopers LLP as the Company's independent
accountants.
VOTING
Only stockholders of record at the close of business on May 3, 2002 will be
entitled to vote at the meeting or any and all adjournments thereof. As of
April 29, 2001 the Company had outstanding 12,463,822 shares of the Common
Stock, the Company's only class of voting securities outstanding. Each
stockholder of the Company will be entitled to one vote for each share of the
Common Stock registered in his or her name on the record date. A majority of
all shares of the Common Stock outstanding constitutes a quorum and is
required to be present in person or by proxy to conduct business at the
meeting.
PROPOSAL I: ELECTION OF DIRECTORS
At the meeting, eight directors (constituting the entire Board of Directors)
are to be elected to serve until the next Annual Meeting of Stockholders and
until their respective successors are elected and qualified. The proxies given
pursuant to this solicitation will be voted in favor of the eight nominees
listed below unless authority is withheld. Should a nominee become unavailable
to serve for any reason, the proxies will be voted for an alternative nominee
to be determined by the persons named in the proxy. The Board of Directors has
no reason to believe that any nominee will be unavailable. Proxies cannot be
voted for a greater number of persons than the number of nominees named. The
election of directors requires a plurality vote of those shares voted at the
meeting with respect to the election of directors.
Information Concerning Nominees
The persons nominated as directors of the Company (all of whom are currently
directors of the Company), their respective ages, the year in which each first
became a director of the Company and their principal occupations or employment
during the past five years are as follows:
Year
First
Elected
Name Age Director Position with the Company
-------------------------------------------------------------------------- --- -------- -----------------------------------
Paul J. Maddon, M.D., Ph.D................................................ 42 1986 Chairman of the Board of Directors,
Chief Executive Officer and Chief
Science Officer
Ronald J. Prentki......................................................... 44 1998 Director and President
Charles A. Baker (1)(2)................................................... 69 1994 Director
Kurt W. Briner(2)......................................................... 57 1998 Director
Mark F. Dalton (1)........................................................ 51 1990 Director
Stephen P. Goff, Ph.D..................................................... 50 1993 Director
Paul F. Jacobson (1)(2)................................................... 47 1990 Director
David A. Scheinberg, M.D., Ph.D........................................... 46 1996 Director
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(1) Member of Compensation Committee
(2) Member of Audit Committee
Paul J. Maddon, M.D., Ph.D. is the founder of the Company and has served in
various capacities since its inception, including Chairman of the Board of
Directors, Chief Executive Officer, President and Chief Science Officer. From
1981 to 1988, Dr. Maddon performed research at the Howard Hughes Medical
Institute at Columbia University in the laboratory of Dr. Richard Axel. Dr.
Maddon serves on NIH scientific review committees and is a member of the
editorial board of the Journal of Virology. He received a B.A. in biochemistry
and mathematics and an M.D. and a Ph.D. in biochemistry and molecular
biophysics from Columbia University. Dr. Maddon has been an Adjunct Assistant
Professor of Medicine at Columbia University since 1989.
Ronald J. Prentki has been President of the Company since July of 1998.
Prior thereto, he was Vice President of Business Development and Strategic
Planning at Hoffmann-La Roche Inc. from 1996 to 1998, Vice President of
Business Development at Sterling Winthrop (subsequently acquired by Sanofi
Pharmaceuticals) from 1990 to 1996 and Director of Cardiovascular Products
with Bristol-Myers Squibb International Division prior to 1990. Mr. Prentki
received a B.S. in microbiology and Public Health from Michigan State
University and an M.B.A. from the University of Detroit.
Charles A. Baker is a business advisor to biotechnology companies. He is the
former Chairman, President and Chief Executive Officer of The Liposome
Company, Inc., a biotechnology company located in Princeton, NJ, a position he
held from 1989 until 2000. Mr. Baker is currently a director of Regeneron
Pharmaceuticals, Inc., a biotechnology company, and Alcide Corporation, an
animal health and food safety company. Mr. Baker has 40 years of
pharmaceutical industry experience, and has held senior management positions
at Pfizer, Abbott Laboratories and Squibb Corporation. Mr. Baker received a
B.A. from Swarthmore College and a J.D. from Columbia University.
Kurt W. Briner is the retired President and Chief Executive Officer of
Sanofi Pharma S.A. in Geneva, Switzerland, a position he held from 1988, and
he has nearly 30 years' experience in the pharmaceutical industry. Mr. Briner
is currently also a director of Novo Nordisk Danmark, a pharmaceutical
company. He attended Humanistisches Gymnasium in Basel and Ecole de Commerce
in Basel and Lausanne.
Mark F. Dalton has been the President and a director of Tudor Investment
Corporation, an investment advisory company, and its affiliates since 1988.
From 1979 to 1988, he served in various senior management positions at Kidder,
Peabody & Co. Incorporated, including Chief Financial Officer. Mr. Dalton is
currently a director of several private companies as well as a closed-end
investment fund listed on the Dublin Stock Exchange. Mr. Dalton received a
B.A. from Denison University and a J.D. from Vanderbilt University Law School.
Stephen P. Goff, Ph.D. has been a member of the Company's Virology
Scientific Advisory Board since 1988 and has been its Chairman since April
1991. Dr. Goff has been the Higgins Professor in the Departments of
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Biochemistry and Microbiology at Columbia University since June 1990. He
received an A.B. in biophysics from Amherst College and a Ph.D. in
biochemistry from Stanford University. Dr. Goff performed post-doctoral
research at the Massachusetts Institute of Technology in the laboratory of Dr.
David Baltimore.
Paul F. Jacobson is a private investor and partner of Starting Point Venture
Partners. Previously Mr. Jacobson was Managing Director of fixed income
securities at Deutsche Bank from January 1996 to November 1997. He was
President of Jacobson Capital Partners from 1993 to 1996. From 1986 to 1993,
Mr. Jacobson was a partner at Goldman, Sachs, where he was responsible for
government securities trading activities. Mr. Jacobson received a B.A. from
Vanderbilt University and an M.B.A. from Washington University.
David A. Scheinberg, M.D., Ph.D. has been a member of the Company's Cancer
Scientific Advisory Board since 1994. Dr. Scheinberg has been associated with
Sloan-Kettering since 1986, where he is the Vincent Astor Chair and member;
Chief, Leukemia Service; Interim Chairman, Molecular Pharmacology and
Chemistry Program; Chairman, Experimental Therapeutics Center Member of the
Clinical Immunology Service and Head, Laboratory of Hematopoietic Cancer
Immunochemistry. He also holds the position of Professor of Medicine and
Molecular Pharmacology, Weill-Cornell Medical College. He received a B.A. from
Cornell University, and an M.D. and a Ph.D. in pharmacology and experimental
therapeutics from The Johns Hopkins University.
Meetings and Committees of the Board of Directors
During the fiscal year ended December 31, 2001, the Board of Directors of
the Company held four meetings. Each of the incumbent directors attended 75%
or more of the aggregate number of meetings held by the Board and the
Committees thereof on which he served.
The Audit Committee reviews the annual financial statements of the Company
prior to their submission to the Board of Directors, consults with the
Company's independent auditors, and examines and considers such other matters
in relation to the internal and external audit of the Company's account and in
relation to the financial affairs of the Company and its accounts, including
the selection and retention of independent auditors. The Audit Committee held
four meetings during the fiscal year ended December 31, 2001.
The Compensation Committee makes recommendations concerning salaries and
incentive compensation for employees of and consultants to the Company,
establishes and approves salaries and incentive compensation for certain
senior officers and employees and administers the Company's stock option
plans. The Compensation Committee met three times during the fiscal year ended
December 31, 2001.
The Company has no standing nominating committee and no committee performing
a similar function.
Compensation of Directors
Directors who are not employees of the Company are paid $2,000 for each
meeting of the Board of Directors attended in person, $1,000 for each meeting
attended by telephone and $500 for participation in each telephonic meeting.
For committee meetings held other than in conjunction with a meeting of the
whole Board, non-employee directors are paid $1,000 for attendance in person
and $500 for telephonic participation. For committee meetings held on the day
after a meeting of the whole Board, non-employee directors are paid $500 for
participation; for committee meetings held on the same day, no additional
compensation. In addition, non-employee directors are granted each calendar
quarter an option to purchase 2,500 shares of the Common Stock at a price
equal to the fair market value thereof as of the date of grant.
All of the directors are reimbursed for their expenses in connection with
their attendance at Board and committee meetings. In addition, during the
fiscal year ended December 31, 2001, Dr. Goff and Dr. Scheinberg received
annual compensation in the amounts of $30,000 and $24,000, respectively, for
their services as members of the Company's Virology Scientific Advisory Board
and Cancer Scientific Advisory Board, respectively.
Voting
Those nominees receiving a plurality of the votes cast will be elected
directors. Abstentions and broker non-votes will not affect the outcome of the
election.
The Board of Directors of the Company deems the election of the eight
nominees listed above as directors to be in the best interest of the Company
and its stockholders and recommends a vote "FOR" their election.
3
PROPOSAL II:
AMENDMENT OF THE COMPANY'S AMENDED 1996 STOCK INCENTIVE PLAN
The Company's Board of Directors believes it is in the best interests of the
Company to encourage stock ownership by employees of the Company. Accordingly,
the Progenics Stock Incentive Plan of 1996 was initially adopted in 1996 and
was subsequently amended in 1998 and again in 2000. These amendments among
other things increased the maximum number of shares of the Company's Common
Stock available under the Amended 1996 Stock Incentive Plan (the "Plan") for
issuance from 2,000,000 to 4,000,000. The Company's Board of Directors has
determined that additional shares of the Common Stock should be made available
for awards under the Plan to the Company's employees, directors, advisors and
consultants who will be responsible for the financial success and growth of
the business of the Company. In this connection, the Board has unanimously
approved, subject to stockholder approval, an amendment to the Plan to
increase the maximum number of shares of Common Stock available for issuance
thereunder from 4,000,000 shares to 5,000,000 shares.
The Company and the Board of Directors believe that this amendment to
increase the number of shares of Common Stock authorized for issuance under
the Plan is necessary to ensure that a sufficient reserve of Common Stock is
available under the Plan. The Company also believes that operation of the Plan
is important in attracting and retaining employees in a competitive labor
market, which is essential to the Company's long-term growth and success. If
the stockholders do not approve the amendment to the Plan, the Company will
reevaluate how it will provide incentives to the Company's existing and future
employees, directors, advisors and consultants.
Summary of the Plan
The following is a brief summary of the Plan as it is proposed to be
amended.
Purpose
The purpose of the Plan is to promote the interests of the Company and its
stockholders by strengthening the Company's ability to attract, motivate and
retain employees, directors, advisors and consultants and to provide a means
to encourage stock ownership and a proprietary interest in the Company by the
employees, directors, advisors and consultants upon whose judgment, initiative
and efforts the financial success and growth of the business of the Company
largely depend.
Eligible Participants
The eligible participants in the Plan are the Company's employees,
directors, advisors and consultants, as determined and designated from time to
time by the Company's Compensation Committee in its sole discretion. At March
31, 2002 there were 83 employees, six non-employee directors and approximately
25 other advisors and consultants eligible to participate in the Plan.
Grants Under the Plan
The Plan provides for the grant of options to purchase the Common Stock
(including both options intended to qualify as incentive stock options under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), and
nonqualified options) and the award of stock appreciation rights, restricted
stock, performance shares and phantom stock, as described more fully below. In
no event may a participant be granted an option under the Plan if such grant,
when taken together with all grants to the participant within the preceding
two-year period, would result in the grant of options with respect to more
than 750,000 shares of the Common Stock.
Administration
The Compensation Committee of the Board of Directors of the Company
administers the Plan. Subject to the provisions of the Plan, the Compensation
Committee has the authority and discretion to grant stock options and other
awards, to interpret the provisions of the Plan and the option and award
agreements made thereunder and to take such other action as may be necessary
or desirable in order to carry out the provisions of the Plan.
(a) Maximum Shares to be Issued. The maximum number of shares of the Common
Stock that may be issued pursuant to the grant of options and awards under the
Plan is 5,000,000 in the aggregate (subject to
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antidilution adjustments). Any shares subject to an option or award under the
Plan that ceases to be issuable thereunder will thereafter be available for
further option or award grants.
(b) Stock Option Grants. The Compensation Committee specifies the terms and
conditions of stock options granted under the Plan, including, without
limitation, the number of shares covered by each option, the exercise price,
the option period, any vesting restrictions with respect to the exercise of
the option and whether each option is intended to qualify as an incentive
stock option. No option under the Plan may have an option exercise period of
more than ten years. Options intending to qualify as incentive stock options
must have an exercise price per share of not less than the fair market value
of the Common Stock on the date of grant. Furthermore, options intending to
qualify as incentive stock options and granted to a person who at the time of
the grant holds more than 10% of the total combined voting power of all
classes of stock of the Company must have an exercise price per share of not
less than 110% of the fair market value of the Common Stock on the date of
grant and an option exercise period of not more than five years.
(c) Stock Appreciation Rights. Stock appreciation rights, which may be
granted alone or in tandem with stock options under the Plan, entitle the
participant to receive in cash or in shares of the Common Stock the difference
between the fair market value of the Common Stock on the date of exercise and
a base price set at the time of grant. The Compensation Committee specifies
the terms and conditions of the stock appreciation rights granted under the
Plan, including, without limitation, the number of shares covered by each
grant, the base price, the exercise period (which may in no event exceed ten
years), any vesting restrictions with respect to exercise and whether payment
will be in cash or shares.
(d) Restricted Stock Awards. Restricted stock is issued under the Plan to
participants with restrictions on transfer and subject to risk of forfeiture
if certain conditions are not met, such as continuing employment with the
Company. The Compensation Committee specifies the terms and conditions of each
restricted stock award under the Plan, including, without limitation, the
number of shares issued, the price if any to be paid for the shares and the
vesting schedule with respect to the lapse of restrictions.
(e) Performance Awards. Performance awards entitle the participant to
receive cash or shares of the Common Stock upon the achievement of certain
performance goals. The Compensation Committee specifies the terms and
conditions of the performance awards under the Plan, including, without
limitation, the dollar amount and number of shares covered by each award and
the performance goals to be achieved and the period of time to achieve those
goals (which may in no event exceed ten years). The Compensation Committee may
also in its discretion make revisions to the awards subsequent to their
initial grant and will determine the extent to which performance goals have
been reached.
(f) Phantom Stock. Phantom stock awards entitle the participant to receive a
cash payment equal to a hypothetical number of shares of the Common Stock
times the difference between the fair market value of the Common Stock on the
date the award becomes vested and the fair market value of the Common Stock on
the date of grant. The Compensation Committee specifies the terms and
conditions of the phantom stock awards under the Plan including without
limitation the number of hypothetical shares covered by each grant, the
vesting period (which may in no event exceed ten years) and the maximum amount
if any to be paid under the award.
(g) Restrictions on Transfer. Stock options and awards under the Plan may
not be transferred by a participant other than by will or by the laws of
descent and distribution and may be exercised during the participant's
lifetime only by the participant. Notwithstanding the foregoing, the
Compensation Committee may in its discretion permit transfers of non-qualified
options to members of the participant's immediate family or to charitable
institutions.
Federal Income Tax Consequences
The grant of stock options and awards under the Plan will have no federal
income tax consequences to either the Company or the participant (unless, with
respect to the issuance of restricted stock granted, the participant files an
election to be taxed currently under section 83(b) of the Code). The exercise
of incentive stock options will generally have no federal income tax
consequences to either the Company or the participant, although the excess of
the value of the stock over the exercise price is potentially subject to the
alternative minimum tax under Section 55 of the Code. Upon exercise of non-
qualified options or stock appreciation rights, the vesting of restricted
stock (or the issuance thereof if the participant files a section 83(b)
election) and any payment to the participant with respect to performance
awards and phantom stock, the participant will be subject to federal
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income tax on the excess of the value of the stock over the amount paid
therefor and the Company will be entitled to take a corresponding federal
income tax deduction (subject to possible limitations on deductibility of
executive compensation).
The foregoing is a general description of the federal income tax
consequences relating to the grant and payment with respect to awards under
the Plan. It does not purport to cover the special rules under the Code,
administrative and judicial interpretations, possible changes in the law or
state and local income tax consequences.
Amendment
The Board of Directors of the Company may at any time amend or terminate the
Plan, provided that no such amendment may be made without the approval of the
stockholders of the Company to the extent approval is required by applicable
laws, rules or regulations and provided further that no amendment or
termination may adversely affect the rights of a participant with respect to
an outstanding award.
Grant Information
At March 31, 2002, there were outstanding options with respect to 2,992,883
shares of the Common Stock granted pursuant to the Plan. It is not possible to
determine the award grants that will be made pursuant to the Plan in the
future, except with respect to non-employee directors as described in note (1)
in the table below. The table below sets forth information regarding award
grants, all of which were in the form of stock option grants, made under the
Plan during the fiscal year ended December 31, 2001.
Number Weighted Average
Shares Underlying Exercise Price Per
Name and Position Options Granted Share ($/Sh)
----------------- ----------------- ------------------
Paul J. Maddon, M.D., Ph.D. .......... -- --
Chairman of the Board, Chief
Executive Officer and Chief Science
Officer
Ronald J. Prentki .................... 325,000 $14.06
President
Robert A. McKinney ................... 25,000 $17.19
Vice President, Finance and
Operations and Treasurer
Philip K. Yachmetz ................... 10,000 $19.15
Vice President, General Counsel and
Secretary
Robert J. Israel, M.D. ............... 25,000 $17.19
Vice President, Medical Affairs
All current executive officers as a
group............................... 385,000 $16.20
All current directors who are not
executive officers as a group (1)... 60,000 $16.20
All employees, including all current
officers who are not executive
officers, as a group................ 466,250 $16.20
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(1) Non-employee directors are automatically granted on the first day of each
quarter an option under the Plan to purchase 2,500 shares at a price equal
to the fair market value thereof on the date of grant.
Voting
Under applicable rules of the Nasdaq Stock Market, the amendment must be
approved by the affirmative vote of the holders of a majority of the shares of
the Common Stock present, or represented, and entitled to vote at the meeting.
Abstentions from voting on this proposal will have the effect of a "no" vote.
Broker non-votes are not considered shares present, are not entitled to vote
and therefore will not affect the outcome of the vote on this proposal.
The Board of Directors of the Company deems the adoption of the amendment to
the Company's Amended 1996 Stock Incentive Plan to be in the best interest of
the Company and its stockholders and recommends that holders of the Common
Stock vote FOR Proposal II.
6
PROPOSAL III:
AMENDMENT OF THE COMPANY'S 1998 EMPLOYEE STOCK PURCHASE PLAN AND
1998 NON-QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
The Company's Board of Directors believes that it is in the best interests
of the Company to encourage employees of the Company to acquire an equity
interest in the Company's success by making shares of the Common Stock
available for purchase by all employees on favorable terms. Accordingly, the
Progenics Employee Stock Purchase Plan (the "ESPP") and Non-Qualified Employee
Stock Purchase Plan (the "Non-Qualified ESPP") (collectively, the "Plans")
were initially adopted in 1998 and authorized the sale to employees of up to
an aggregate of 150,000 and 50,000 shares of Common Stock, respectively,
issued under the plans. Given the current level of participation in the Plans
and the exhaustion of the initial authorization of shares of Common Stock, the
Company's Board of Directors has determined that additional shares of the
Common Stock should be made available under the Plans. In this connection, the
Board has unanimously approved, subject to stockholder approval, an amendment
to the ESPP and Non-Qualified ESPP to increase the aggregate number of shares
of Common Stock available for sale to employees thereunder by 250,000 shares
to 400,000 shares and 25,000 shares to 75,000 shares, respectively.
If our stockholders approve these amendments, additional shares will be
available for purchase by eligible employees under the Plans. As of December
31, 2001, the Company had issued and employees had purchased 133,600 shares of
the original 150,000 shares authorized under the ESPP and 12,400 shares of the
original 50,000 shares authorized under the Non-Qualified ESPP. The Company
estimates that an additional 22,000 shares will be issued and purchased for
the three-month purchase period ending March 31, 2002. Accordingly, there does
presently exist a shortfall in the number of shares authorized under the ESPP.
The Company believes that the additional authorized shares will be sufficient
for purchases under the Plans for approximately three more years. If the
amendments to the Plans are not approved by the stockholders of the Company,
the Company will rescind the options granted thereunder and will reconsider
how it will encourage employees of the Company to acquire an equity interest
in the Company's success.
Summary of the Plans
A summary of the principal features of the Plans as they are proposed to be
amended is provided below.
Purpose
The purpose of the Plans is to aid the Company in attracting, compensating
and retaining well-qualified employees by providing them with an equity
interest in the Company's success.
Eligible Employees
Substantially all employees of the Company, including executive officers,
are eligible to participate in the Plans. Any employee holding a beneficial
interest in more than 5% of the Common Stock is not eligible to participate in
the ESPP and will participate solely in the Non-Qualified ESPP. At March 31,
2002 there were 83 employees of the Company eligible to participate in the
Plans.
Options Under the Plans
The Plans provide for the grant on a quarterly basis of options to purchase
the Common Stock with up to 25% of each employee's pay during such quarter, as
such percentage may be determined by the Board of Directors of the Company.
Each option will expire six months after the date of grant and must be
exercised on a date chosen by each employee during the three-month period
prior to the date of expiration. Payment for the shares upon exercise will be
in cash or, at the discretion of the Compensation Committee of the Board of
Directors, in shares of the Common Stock. The Company will not withhold any
amount from any employee's pay prior to exercise of an option.
The ESPP provides that the fair market value of the option shares subject to
a grant on the first day of the quarter may not exceed $6,250. In the event
any employee's pay is such that the applicable percentage thereof determined
by the Board of Directors of the Company results in option shares having
greater than a $6,250 fair market value, such excess will be granted from the
Non-Qualified ESPP.
7
Administration
The Compensation Committee of the Board of Directors of the Company
administers the Plans. To the extent not otherwise inconsistent with the
Plans, the Compensation Committee has the authority and discretion to amend
the terms of future grants under the Plans and to terminate further grants
under the Plans.
Maximum Shares to be Awarded
The number of shares of the Common Stock with respect to which options may
be granted under the ESPP may not exceed 400,000 in the aggregate (subject to
antidilution adjustments). The number of shares of the Common Stock with
respect to which options may be granted under the Non-Qualified ESPP may not
exceed 75,000 in the aggregate (subject to antidilution adjustments). Any
shares subject to options granted under the Plans that are returned to the
Plans may thereafter be available for further grants.
Exercise Price of Options
The price at which employees may exercise options will be the lesser of (i)
100% of the fair market value of the Common Stock on the first day of each
fiscal quarter or (ii) 85% of the fair market value of the Common Stock on the
date of exercise.
Restrictions on Transfer
Options under the Plans may not be transferred by an employee other than by
will or by the laws of descent and distribution and may be exercised during
the employee's lifetime only by the employee.
Federal Income Tax Consequences
The ESPP is intended to comply with the requirements of Section 423 of the
Internal Revenue Code of 1986, as amended. As such, neither the grant of
options under the ESPP nor the exercise of the options by employees will have
any federal income tax consequences to either the Company or the employee.
Under the Non-Qualified ESPP, the grant of options will have no federal income
tax consequences to either the Company or the employee. The exercise of the
options granted under the Non-Qualified ESPP, however, will result in taxable
income to the employee in an amount equal to the difference between the
purchase price and the fair market value on the date of exercise and will
result in a corresponding deduction from taxable income for the Company
(subject to the limitation on deductibility of executive compensation).
Since there is no provision under the Plans for the payment of the exercise
price through payroll withholding, the Company expects that the majority of
employees who exercise options will immediately resell the underlying shares.
In such event, the resale will result in taxable income to the employee in an
amount equal to the difference between the net proceeds from the resale and
the purchase price upon exercise of the option and will result in a
corresponding deduction from taxable income for the Company (subject to the
limitation on deductibility of executive compensation).
Amendment
The Board of Directors of the Company may at any time amend the Plans,
provided that no such amendment shall be made without the approval of the
stockholders of the Company to the extent approval is required by applicable
laws, rules or regulations.
8
Grant Information
Under the Plans, employees are entitled to apply up to 25% of their gross
pay to the purchase of the Common Stock, with a limit of $25,000 per year
under the ESPP and any remainder under the Non-Qualified ESPP. The table below
sets forth certain information as to annual grants made under the ESPP and the
Non-Qualified ESPP during the fiscal year ended December 31, 2001. The table
below sets forth information regarding award grants, all of which were in the
form of stock option grants, made under the Plan:
Share Value of Annual
Grants
-----------------------
Non-Qualfied Number
Name and Position ESPP (1) ESPP (1) of Shares
----------------- -------- ------------ ---------
Paul J. Maddon, M.D., Ph.D................................................................. --(2) $140,664 9,874
Chairman of the Board, Chief Executive Officer and Chief Science Officer
Ronald J. Prentki.......................................................................... $ 22,989 102,017 8,673
President
Robert A. McKinney......................................................................... $ 22,989 23,105 3,255
Vice President, Finance and Operations and Treasurer
Philip K. Yachmetz......................................................................... $ 22,989 28,329 3,700
Vice President, General Counsel and Secretary
Robert J. Israel, M.D...................................................................... $ 22,989 49,745 5,108
Vice President, Medical Affairs
All current executive officers as a group.................................................. $ 91,958 343,859 30,610
All current directors who are not executive officers as a
group (3)................................................................................. -- -- --
All employees, including all current officers who are not executive officers, as a group... $886,672 68,581 73,979
---------------
(1) The price range for the ESPP was $9.46 to $18.25 and the price range for
the Non-Qualified ESPP was $9.46 to $16.24.
(2) As the holder of a beneficial interest in more than 5% of the Common Stock,
Dr. Maddon is not eligible for an option grant under the ESPP.
(3) Directors of the Company who are not also employees of the Company are not
eligible to participate in the Plans.
Voting
Under applicable rules of the Nasdaq Stock Market, the amendment of the
Plans must be approved by the affirmative vote of the holders of a majority of
the shares of the Common Stock present, or represented, and entitled to vote
at the meeting. Abstentions from voting on this proposal will have the effect
of a "no" vote. Broker non-votes are not considered shares present, are not
entitled to vote and therefore will not affect the outcome of the vote on this
proposal.
The Board of Directors of the Company deems the adoption of the amendment of
the Company's 1998 Employee Stock Purchase Plan and of the 1998 Non-Qualified
Employee Stock Purchase Plan to be in the best interest of the Company and its
stockholders and recommends that holders of the Common Stock vote FOR Proposal
III.
9
PROPOSAL IV:
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected PricewaterhouseCoopers LLP to serve as
independent accountants for the fiscal year ending December 31, 2002.
PricewaterhouseCoopers LLP has served as the Company's independent accountants
since 1994.
A representative of PricewaterhouseCoopers LLP is expected to be present at
the meeting with the opportunity to make a statement if he desires to do so
and is expected to be available to respond to appropriate questions. Although
it is not required to do so, the Board of Directors is submitting the
selection of independent accountants for ratification at the meeting. If this
selection is not ratified, the Board of Directors will reconsider its choice.
A majority of the votes cast (excluding abstentions and broker non-votes) at
the meeting in person or by proxy is necessary for ratification of the
selection of PricewaterhouseCoopers LLP as independent accountants of the
Company.
The Board of Directors of the Company deems the ratification of the
selection of PricewaterhouseCoopers LLP as independent accountants of the
Company to be in the best interest of the Company and its stockholders and
recommends that holders of the Common Stock vote FOR Proposal IV.
10
INFORMATION REGARDING BENEFICIAL OWNERSHIP OF
COMMON STOCK BY CERTAIN STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information, as of April 29, 2002,
except as noted, regarding the beneficial ownership of the Common Stock by (i)
each person or group known to the Company to be the beneficial owner of more
than 5% of the Common Stock outstanding, (ii) each director and nominee for
director of the Company, (iii) each executive officer of the Company named
below and (iv) all directors and executive officers of the Company as a group.
Except as otherwise specified, the named beneficial owner has sole voting and
investment power over the shares listed.
Number of Shares Percent
Name and Address of Beneficial Owner (1) Beneficially Owned (2) of Class (2)
---------------------------------------- ---------------------- ------------
Entities affiliated with Tudor
Investment Corporation (3) ............ 2,342,388 18.8%
1275 King Street
Greenwich, CT 06831
Paul Tudor Jones, II (4) .............. 2,888,513 23.2%
1275 King Street
Greenwich, CT 06831
Entities affiliated with Arnold H.
Snider (5) ............................ 744,800 6.0%
and Deerfield Capital, L.P.
450 Lexington Avenue
New York, NY 10017
Paul J. Maddon, M.D., Ph.D. (6) ....... 1,630,628 12.1%
Ronald J. Prentki (7) ................. 240,182 1.9%
Charles A. Baker (8) .................. 80,981 *
Kurt W. Briner (9) .................... 65,000 *
Mark F. Dalton (10) ................... 2,461,888 19.7%
Stephen P. Goff, Ph.D. (11) ........... 101,000 *
Paul F. Jacobson (12) ................. 223,100 1.8%
David A. Scheinberg, M.D., Ph.D. (13) . 231,688 1.8%
Robert J. Israel, M.D. (14) ........... 157,639 1.2%
Robert A. McKinney (15) ............... 99,516 *
Philip K. Yachmetz (16) ............... 14,240 *
All directors and executive officers
as a group (17) ...................... 5,305,862 36.7%
---------------
* Less than 1%
(1) Unless otherwise specified, the address of each beneficial owner is c/o
the Company, 777 Old Saw Mill River Road, Tarrytown, New York 10591.
(2) Except as indicated and pursuant to applicable community property laws,
each stockholder possesses sole voting and investment power with respect
to the shares of Common Stock listed. The number of shares of Common Stock
beneficially owned includes the shares issuable pursuant to stock options
and warrants that may be exercised within 60 days after April 30, 2001.
Shares pursuant to such options and warrants are deemed outstanding for
computing the percentage of beneficial ownership of the person holding
such options and warrants but are not deemed outstanding for computing the
percentage of beneficial ownership of any other person.
(3) Based on a Form 4 dated April 8, 2002, the number of shares owned by
entities affiliated with Tudor Investment Corporation ("TIC") consists of
1,820,068 shares held of record by The Tudor BVI Portfolio Ltd., a company
organized under the law of the Cayman Islands ("Tudor BVI"), 287,813
shares held of record by TIC, 193,126 shares held of record by Tudor
Arbitrage Partners L.P. ("TAP"), 25,981 shares held of record by Tudor
Proprietary Trading, L.L.C. ("TPT"), and 15,400 shares held of record by
Tudor Global Trading LLC ("TGT"). In addition, because TIC provides
investment advisory services to Tudor BVI, it may be deemed to
beneficially own the shares held by such entity. TIC disclaims beneficial
ownership of such shares. TGT is the general partner of TAP. Tudor Group
Holdings LLC ("TGH") holds a majority of the equity interests of TGT and
indirectly holds a majority of the membership interests of TPT. TGH is
(footnotes continued on next page)
11
(footnotes continued from previous page)
also the sole limited partner of TAP. TGH expressly disclaims beneficial
ownership of the shares beneficially owned by each of such entities. TGT
disclaims beneficial ownership of shares held by TAP. The number set forth
does not include shares owned of record by Mr. Jones and Mr. Dalton. See
Notes 4 and 9.
(4) Includes 2,342,388 shares beneficially owned by entities affiliated with
TIC. Mr. Jones is the Chairman and
indirect principal equity owner of TIC, TPT and TGT, and the indirect
principal equity owner of TAP. Mr. Jones may be deemed the beneficial
owner of shares beneficially owned, or deemed beneficially owned, by
entities affiliated with TIC. Mr. Jones disclaims beneficial ownership of
such shares. See Note 3.
(5) Based on a Schedule 13G/A dated February 13, 2002, the number of shares
owned by entities affiliated with Arnold H. Snider and Deerfield Capital
L.P. includes 522,849 shares held of record by Deerfield Capital L.P. and
Deerfield Partners, L.P., each a Delaware limited partnership and 221,951
shares held of record by Deerfield Management Company and Deerfield
International Limited, respectively a New York limited partnership and a
British Virgin Islands corporation.
(6) Includes 999,774 shares subject to stock options held by Dr. Maddon and
exercisable within 60 days of the date hereof.
(7) Includes 231,229 shares subject to stock options held by Mr. Prentki
exercisable within 60 days of the date hereof.
(8) Includes 18,481 shares owned by the Baker Family Limited Partnership and
62,500 shares subject to stock options held by Mr. Baker and exercisable
within 60 days of the date hereof.
(9) Includes 65,000 shares subject to stock options held by Mr. Briner
exercisable within 60 days of the date hereof.
(10) Includes 68,000 shares held of record directly by Mr. Dalton, 35,000
shares subject to options held by Mr. Dalton exercisable within 60 days of
the date hereof and 16,500 shares of record held by DF Partners, a family
partnership of which Mr. Dalton is the managing general partner with a 5%
interest. The remaining 95% partnership interest is held by trusts for the
benefit of Mr. Dalton's children. As to such 95% interest, Mr. Dalton
disclaims beneficial interest. The number set forth includes 2,342,388
shares beneficially owned by entities affiliated with TIC. Mr. Dalton is
President of TIC, TGH, TGT and TPT. Mr. Dalton disclaims beneficial
ownership of shares beneficially owned, or deemed beneficially owned, by
entities affiliated with TIC. See Note 3.
(11) Includes 67,500 shares subject to stock options held by Dr. Goff
exercisable within 60 days of the date hereof.
(12) Includes 35,000 shares subject to stock options held by Mr. Jacobson
exercisable within 60 days of the date hereof.
(13) Includes 227,000 shares subject to stock options held by Dr. Scheinberg
exercisable within 60 days of the date hereof.
(14) Includes 155,000 shares subject to stock options held by Dr. Israel
exercisable within 60 days of the date hereof.
(15) Includes 97,500 shares subject to stock options held by Mr. McKinney
exercisable within 60 days of the date hereof.
(16) Includes 12,000 shares subject to stock options held by Mr. Yachmetz
exercisable within 60 days of the date hereof.
(17) Includes shares held by affiliated entities as set forth in the above
table and 1,764,574 shares in the aggregate issuable upon the exercise of
stock options or warrants held by officers or directors or entities deemed
affiliates of certain directors.
12
EXECUTIVE COMPENSATION AND OTHER MATTERS
Summary Compensation Table
The following table sets forth information regarding the aggregate
compensation paid by the Company for the three fiscal years ended December 31,
2001 to the Company's Chief Executive Officer and other executive officers
whose total compensation exceeded $100,000 during the last fiscal year:
Annual Compensation
(1)
Fiscal -------------------- Stock Option
Name and Principal Position Year Salary Bonus Grants Other (2)
--------------------------- ------ -------- -------- -------------- ---------
Paul J. Maddon, M.D., Ph.D.......................................... 2001 $460,000 $110,000 -- $12,229
Chairman of the Board, Chief 2000 440,000 100,000 12,282 shares 11,729
Executive Officer and Chief 1999 400,000 212,000 7,680 shares 6,728
Science Officer
Ronald J. Prentki................................................... 2001 $317,000 $250,000 325,000 shares $10,500
President 2000 264,000 70,000 65,712 shares 17,000
1999 240,000 79,900 34,762 shares 12,800
Robert A. McKinney.................................................. 2001 $156,200 $ 40,000 25,000 shares $11,600
Vice President, Finance and 2000 142,000 27,000 52,977 shares 14,630
Operations and Treasurer 1999 133,000 30,500 27,271 shares 10,000
Philip K. Yachmetz.................................................. 2001 $195,000 $ 45,000 10,000 shares $58,400(4
Vice President, General Counsel 2000(3) 47,500 35,000 51,121 shares 5,780
and Secretary
Robert J. Israel, M.D............................................... 2001 $238,500 $ 60,000 25,000 shares $11,600
Vice President, Medical Affairs 2000 225,000 50,000 54,782 shares 16,200
1999 210,000 58,800 28,652 shares 12,200
---------------
(1) Annual compensation consists of base salary and bonus. As to each
individual named, the aggregate amounts of all perquisites and other
personal benefits, securities and property not included in the summary
compensation table above or described below do not exceed the lesser of
$50,000 or 10% of the annual compensation.
(2) "Other compensation" consisted of matching contributions made by the
Company under a defined contribution plan available to substantially all
employees and amounts to pay the after-tax cost of premiums on life
insurance and long-term disability policies.
(3) Mr. Yachmetz became an executive officer of the Company in September of
2000 with an annual base salary of $190,000.
(4) Mr. Yachmetz' "other compensation" consisted of matching contributions made
by the Company under a defined contribution plan available to substantially
all employees, amounts to pay the after-tax cost of premiums on life
insurance and long-term disability policies, and a special bonus paid
pursuant to Mr. Yachmetz' offer of employment to cover certain expenditures
by Mr. Yachmetz and an associated tax gross-up.
13
Stock Option Grants in the Fiscal year Ended December 31, 2001
The following table sets forth certain information relating to stock option
grants to the executive officers named above during the fiscal year ended
December 31, 2001. In addition, as required by SEC rules, the table sets forth
the hypothetical gains that would exist for the shares subject to such options
based on assumed annual compounded rates of stock price appreciation during
the option term.
Potential Realizable
Value
at Assumed Annual Rates
Number Percent of Stock Price
of Shares of Total Appreciation
Underlying Option Shares Exercise for Option Term
Options Granted to Price per Expiration -----------------------
Name Granted(1) Employees(2) Share(1) Date 5% 10%
---- ---------- ------------- --------- ---------- ---------- ----------
Paul J. Maddon, M.D., Ph.D. .................... 3,276 * $17.20 7/1/01 $ 35,436 $ 89,803
2,513 * 11.438 10/0/01 18,077 45,810
1,831 * 14.799 1/1/02 17,041 43,186
2,254 * 12.75 4/1/02 18,073 45,802
Ronald J. Prentki .............................. 2,164 * $17.20 7/1/01 $ 23,408 $ 59,320
1,543 * 11.438 10/0/01 11,099 28,128
3,418 * 14.799 1/1/02 31,765 80,498
1,553 * 12.75 4/1/02 12,453 31,557
325,000 33.3% 14.06 5/15/11 2,873,734 7,057,291
Robert A. McKinney ............................. 1,016 * $17.20 7/1/01 $ 10,990 $ 27,851
853 * 11.438 10/0/01 6,136 15,550
621 * 14.799 1/1/02 5,780 14,647
765 * 12.75 4/1/02 6,134 15,545
25,000 2.6% 17.19 12/26/11 268,695 684,911
Philip K. Yachmetz ............................. 904 * $17.20 7/1/01 $ 9,779 $ 24,781
1,065 * 11.438 10/0/01 7,661 19,414
776 * 14.799 1/1/02 7,222 18,303
955 * 12.75 4/1/02 7,658 19,406
10,000 1.0% 19.15 12/26/11 120,433 305,202
Robert J. Israel, M.D. ......................... 1,686 * $17.20 7/1/01 $ 18,248 $ 46,245
1,330 * 11.438 10/0/01 9,567 24,245
949 * 14.799 1/1/02 8,832 22,383
1,169 * 12.75 4/1/02 9,374 23,754
25,000 2.6% 17.19 12/26/11 268,695 684,911
---------------
* Less than 1%
(1) Options that expired in 2001 or 2002 were all granted under the Company's
Employee Stock Purchase Plan or Non-Qualified Employee Stock Purchase Plan
at exercise prices equal to the lower of the fair market value on the date
of grant or 85% of the fair market value on the date of exercise. Options
expiring in 2011 were all granted under the Company's Amended 1996 Stock
Incentive Plan.
(2) The Company's employees were granted options during the 2001 fiscal year
with respect to a total of 975,079 shares, 68,229 shares from the Company's
Employee Stock Purchase Plan or Non-Qualified Employee Stock Purchase Plan
and 906,850 shares from the Company's Amended 1996 Stock Incentive Plan, of
which 296,100 shares were issued in exchange for options cancelled under
the Company's Employee Option Exchange Program.
14
Aggregated Option Exercises in Last Fiscal year and Fiscal Year End Option
Values
The following table sets forth information as to the exercises of options
during the fiscal year ended December 31, 2001 and the number and value of
unexercised options held by the executive officers named above as of December
31, 2001:
Exercises During
the Fiscal Year Number of
--------------------- Shares Underlying Value of Unexercised
Number Unexercised Options In-the-Money Options (1)
of Shares Value --------------------------- ---------------------------
Name Acquired Realized (2) Exercisable Unexercisable Exercisable Unexercisable
---- --------- ------------ ----------- ------------- ----------- -------------
Paul J. Maddon, M.D., Ph.D .............. 10,654 $26,148 999,774 -- $9,605,282 --
Ronald J. Prentki ....................... 6,545 $16,216 187,086 417,914 $1,289,147 $2,205,353
Robert A. McKinney. ..................... 3,403 $ 8,362 74,500 63,000 $ 860,040 $ 212,160
Philip K. Yachmetz ...................... 3,090 $ 7,466 10,000 50,000 -- --
Robert J. Israel, M.D. .................. 5,449 $13,420 125,000 100,000 $1,597,175 $ 747,550
---------------
(1) Based on a closing price of $18.47 on December 31, 2001 on the Nasdaq
National Market.
(2) Based on closing prices on the NASDAQ National Market on the respective
dates of exercise for retained shares and on the resale prices for shares
immediately resold.
Employment Agreements
The Company, on December 22, 1998, entered into an employment agreement with
Paul J. Maddon, M.D., Ph.D. pursuant to which Dr. Maddon is to serve as
Chairman of the Board, Chief Executive Officer and Chief Science Officer of
the Company at an initial annual salary of $400,000 for 1999, to increase at a
rate of not less than 3% per year and a discretionary bonus in an amount to be
determined by the Board of Directors. While the initial term of the agreement
expired on December 31, 2001, the agreement is subject to automatic annual
extensions absent 90-day notice of non-extension by either party. Under the
agreement, Dr. Maddon was also granted options to purchase 525,000 shares of
the Common Stock at exercise prices of $12.00 per share with respect to
500,001 shares and $13.20 per share with respect to 24,999 shares. The options
with respect to 300,000 shares vested in equal portions on January 1, 1999,
2000 and 2001. The options with respect to 225,000 have become fully vested
because the average selling price for the Common Stock on the Nasdaq National
Market has exceeded certain specified levels. The agreement provides that,
upon termination by the Company without cause (as defined in the agreement) or
by Dr. Maddon for good reason (as defined in the agreement), the Company will
continue for two years to pay Dr. Maddon's annual salary and benefits and a
$50,000 annual bonus. With the automatic annual extension of the term of Dr.
Maddon's agreement on December 31, 2001, the Company and Dr. Maddon are in
discussions on revised terms of compensation and term extension.
The Company, on May 16, 2001, entered into a new employment agreement with
Ronald J. Prentki pursuant to which Mr. Prentki is to serve as President of
the Company at an initial annual salary of $317,000. The initial term of the
agreement expires on March 31, 2004, subject to automatic annual extensions
absent 180-day notice of non-extension by either party. The agreement provides
that, upon termination by the Company without cause (as defined in the
agreement) or by Mr. Prentki for good reason (as defined in the agreement),
the Company will continue for one year to pay Mr. Prentki's annual salary and
benefits and an annual bonus based on such bonus paid to Mr. Prentki in the
year prior to such termination. The agreement provided for the grant to Mr.
Prentki of a ten-year option to purchase 225,000 shares of the Common Stock,
at an exercise price of $14.06 per share, such option vesting in equal
portions on six-month increments over the term of the agreement. In addition,
the agreement also provided for the grant to Mr. Prentki of a ten year option
to purchase 100,000 shares of Common Stock, at an exercise price of $14.06,
which shall vest on May 16, 2010 subject to accelerated vesting on the
achievement of certain valuation based milestones for the Company.
The Company has in effect an employment arrangement with Robert J. Israel,
M.D. pursuant to which Dr. Israel is to serve as Vice President, Medical
Affairs of the Company at an annual salary in 2002 of $252,800 and is entitled
to nine months' salary if his employment is terminated by the Company without
cause.
15
Indebtedness of Management
On February 16, 2000, the Company entered into an agreement to provide Dr.
Israel with a loan of up to $100,000 to help him purchase a home closer to the
Company's principal place of business. The loan is evidenced by a promissory
note bearing interest at the rate of 6% per year and calling for $10,000
principal payments on June 30 and December 31 of each year. Under the
agreement with Dr. Israel, principal and interest under the promissory note
will be forgiven and treated as additional compensation if Dr. Israel is an
employee of the Company when such amounts become due. At March 31, 2002,
$100,000 had been extended under the loan agreement and $40,000 had been
forgiven.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
During 2001, the Compensation Committee of the Company's board of directors
(the "Compensation Committee") consisted of Mark F. Dalton, as Chairman,
Charles A. Baker and Paul F. Jacobson. The members of the Compensation
Committee are non-employee directors. The Compensation Committee reviews,
recommends and approves changes to the Company's compensation policies and
benefits programs, administers the Company's stock option plans, including
approving stock option grants, and otherwise seeks to ensure that the
Company's compensation philosophy is consistent with the Company's best
interests and is properly implements.
The Compensation Committee's policies applicable to the compensation of the
Company's executive officers are based on the principle that total
compensation should be set to attract and retain those executives critical to
the overall success of the Company and should reward executives for their
contributions to the enhancement of shareholder value.
The key elements of the executive compensation package are base salary,
employee benefits applicable to all employees, an annual discretionary bonus
and long-term incentive compensation in the form of stock options. In general,
the Compensation Committee has adopted the policy that compensation for
executive officers should be competitive with that paid by leading
biotechnology companies for corresponding senior executives. The Compensation
Committee also believes that it is important to have stock options constitute
a substantial portion of executive compensation in order to help executives
align their interests with those of the stockholders.
In determining the compensation for each executive officer, the Compensation
Committee generally considers (i) data from outside studies and proxy
materials regarding compensation of executive officers at comparable
companies, (ii) the input of other directors regarding individual performance
of each executive officer and (iii) qualitative measures of Company
performance such as progress in the development of the Company's technology,
the engagement of corporate partners for the commercial development and
marketing of products and the success of the Company in raising the funds
necessary to conduct research and development. The Compensation Committee's
consideration of such factors is subjective and informal.
The compensation of Paul J. Maddon, the Chief Executive Officer of the
Company, for 2001 consisted of the $460,000 in annual salary and $110,000 in a
year-end discretionary bonus called for under his employment agreement
described above. With the automatic annual extension on December 31, 2001 of
the term of Dr. Maddon's agreement, the Compensation Committee and Dr. Maddon
are in discussions on revised terms of compensation and term extension. In
these negotiations, the Compensation Committee is mindful of the importance of
Dr. Maddon's leadership and contributions to the Company's progress in its
programs in HIV therapeutics, symptom management and supportive care
therapeutics, and cancer therapeutics, the Company's achievements and progress
in the past and the eventuality that Dr. Maddon will continue to make
significant contributions to the Company's performance in the future.
Also during 2001, the Board approved a program to give Company employees a
choice to cancel stock options granted to them on January 1, 2000 or January 7,
2000, and, solely with respect to employees hired on or between January 1,
2000 and February 28, 2001, options granted to them on their respective dates
of hire, in exchange for new options in the future (the "Exchange Program").
The new options were granted on December 27, 2001 and have an exercise price
equal to the closing market price on the preceding date as quoted by the
NASDAQ National Market. No members of the Company's board of directors,
including Dr. Maddon and Mr. Prentki, were eligible for the Exchange Program.
All other executives and employees who had received stock
16
options on January 1, 2000, January 7, 2000, or, for those executives and
employees hired between January 1, 2000 and February 28, 2001, on their
effective date of hire during such period were eligible to participate in the
Exchange Program.
The board of directors approved the Exchange Program because it determined
that due to market conditions Company employees were in the unusual
circumstance of having stock options with exercise prices significantly above
then current trading prices. The board of directors determined that under the
circumstances, the subject options no longer had a value to motivate and
retain these employees in the tight employment market in the Company's
industry sector.
By the Compensation Committee of the Board of
Directors
Mark F. Dalton, Chairman
Charles A. Baker
Paul F. Jacobson
The table below provides information concerning the stock options covered by
the Exchange Program for the Company's executive officers who participated in
such program. Except for the Exchange program and an earlier exchange of an
option granted to Mr. Prentki pursuant to an amendment to his employment
agreement with the Company, no other repricing has occurred during the last
ten years.
Ten-Year Option Repricings
(This table title and the column headings below use the term "repricing" as
required by applicable regulation. However, as described above, the
Exchange Program and the exchange of the option granted
to Mr. Prentki were not traditional repricings.)
Length of
original
Securities Market price Exercise option term
underlying of stock at price at time remaining at
number of time of of repricing New date of
options/SARs repricing or or exercise repricing or
repriced or amendment amendment price amendment
Name Date amended (#) ($) ($) ($) (in months)
-------- ------------ ------------ ------------- -------- ------------
Ronald J. Prentki ........................... 8/8/98 190,000(1) 9.25 14.50 9.25 114
President
Robert A. McKinney .......................... 12/26/01 25,000 17.19 42.38 17.19 96
Vice President, Finance and
Operations and Treasurer
Robert J. Israel, M.D. ...................... 12/26/01 25,000 17.19 42.38 17.19 96
Vice President, Medical Affairs
---------------
(1) Mr. Prentki's employment agreement, originally entered into in March 1998,
provided for the grant to Mr. Prentki of a ten-year option to purchase
200,000 shares of the Company's Common Stock at an exercise price of $14.50
per share. Pursuant to a decision by the Company in October 1998 to amend
certain terms of Mr. Prentki's agreement, the amended agreement provided
for the cancellation of the first option and the grant of a new ten-year
option to purchase 190,000 shares of the Common Stock at an exercise price
of $9.25 per share, the closing price on the Nasdaq National Market on the
date of grant.
17
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
During 2001, the Audit Committee of the Company's board of directors (the
"Audit Committee") consisted of three non-employee directors, Paul F.
Jacobson, as Chairman, Kurt W. Briner and Charles A. Baker. The Board of
Directors and the Audit Committee believe that the Audit Committee's current
member composition satisfies the rule of the National Association of
Securities Dealers, Inc. that governs audit committee composition, including
the requirements that Audit Committee members all be "independent directors"
as that term is defined by NASD Rule 4200(a)(14) and be able to read and
understand fundamental financial statements, and that at least one Audit
Committee member be financially sophisticated. The Audit Committee operates
under a written Charter adopted by the Board of Directors that reflects
standards contained in the NASD rules.
The Audit Committee's primary function is to assist the Board in monitoring
and overseeing the integrity of the Company's financial statements, systems of
internal control and the audit process. Additionally, the Audit Committee
recommends to the board of directors, subject to stockholder ratification, the
selection of the Company's independent accountants. In this context the Audit
Committee has met and has reviewed and discussed with management and the
independent accountants the Company's audited financial statements as of and
for the year ended December 31, 2001. The Audit Committee has also discussed
with the independent accountants each of the matters required to be discussed
by Statement on Auditing Standards No. 61, Communication with Audit
Committees, as amended, issued by the Auditing Standards Board of the American
Institute of Certified Public Accountants.
The Company's independent accountants also provided to the Audit Committee
the written disclosure required by Independence Standards Board Standard No.
1, "Independence Discussions with Audit Committees," as amended. We have
received and reviewed the written disclosures and the letter from the
independent accountants required by this Standard, and we have discussed with
the independent accountants their independence. When considering the
accountants' independence, we considered whether their provision of services
to the Company beyond those rendered in connection with their audit and review
of the Company's consolidated financial statements was compatible with
maintaining their independence and discussed with the auditors any
relationships that may impact their objectivity and independence. We also
reviewed, among other things, the amount of fees paid to the independent
accountants for audit and non-audit services in 2001. Information about the
independent accountants' fees for 2001 is listed below in this proxy statement
under Independent Accountants. Based on these discussions and considerations,
we are satisfied as to the independent accountants' independence.
Based on the reviews and discussions referred to above, we recommended to
the Board of Directors that the audited financial statements referred to above
be included in the Company's Annual Report on Form 10-K for the year ended
December 31, 2001. We have also recommended to the Board of Directors that
Pricewaterhouse Coopers LLP be selected as the Company's independent auditors
for the fiscal year ending December 31, 2002.
Audit Committee of the Board of
Directors
Paul F. Jacobson, Chairman
Kurt W. Briner
Charles A. Baker
FEES BILLED FOR SERVICES RENDERED BY INDEPENDENT ACCOUNTANTS
Audit Fees
The aggregate fees for professionally services performed by
PricewaterhouseCoopers LLP in connection with the annual audit of the
Company's financial statement for the fiscal year ended December 31, 2001, and
the quarterly reviews of the Company's financial statements for the quarters
ended March 31, 2001, June 30, 2001 and September 30, 2001, were $128,000 of
which $24,000 was billed through December 31, 2001.
Financial Information Systems Design and Implementation
There were no fees billed by PricewaterhouseCoopers LLP during the year
ended December 31, 2001 for professional services performed in connection with
financial information systems design and implementation.
18
All Other Fees
All other fees billed by PricewaterhouseCoopers LLP during the year ended
December 31, 2001 totaled $71,418. Such fees related primarily to tax
planning, compliance and advisory services, statutory government grant audit,
accounting advice and professional services performed in connection with
various filings with the SEC.
COMPARATIVE STOCK PERFORMANCE GRAPH
The graph below compares the cumulative total stockholder return on the
Company's Common Stock with the cumulative total stockholder return of (i) the
Nasdaq Stock Market (U.S.) Index and (ii) the Nasdaq Pharmaceutical Index,
assuming an investment of $100 on November 19, 1997, the date of the Company's
initial public offering, in each of the Company's Common Stock, the stocks
comprising the Nasdaq Market Index and the stocks comprising the Nasdaq
Pharmaceutical Index.
Indexed Price Performance
11/19/97 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
Progenics Pharmaceuticals, Inc. $100.00 $173.63 $153.48 $606.16 $213.94 $229.07
Nasdaq Stock Market (US Companies) $100.00 $ 98.36 $138.71 $257.78 $155.10 $123.07
Chase H&Q Internet Index $100.00 $ 96.71 $123.11 $231.40 $287.83 $245.93
Progenics Pharmaceuticals, Inc. 8.0630 14.0000 12.3750 48.8750 17.2500 18.47
Nasdaq Stock Market (US Companies) 529.4320 520.7550 734.3760 1364.7460 821.1460 651.571
Nasdaq Pharmaceutical Stocks 425.1820 411.2060 523.4540 983.8730 1223.7820 1045.667
CERTAIN TRANSACTIONS
The Company has entered into indemnification agreements with each of the
directors and executive officers. These agreements require the Company to
indemnify such individuals, to the fullest extent permitted by Delaware law,
for certain liabilities to which they may become subject as a result of their
affiliation with the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING AND COMPLIANCE
Based solely on a review of the reports under Section 16(a) of the Exchange
Act and representations furnished to the Company with respect to the last
fiscal year, the Company believes that each of the persons required to file
such reports is in compliance with all applicable filing requirements, except
that David A. Scheinberg, M.D., Ph.D., one of the Company's directors,
inadvertently failed to file on a timely basis a required report on Form 4.
FORM 10-K
Stockholders may obtain without charge a copy of the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 2001 by directing written
requests to Investor Relations, Progenics Pharmaceuticals, Inc., 777 Old Saw
Mill River Road, Tarrytown, New York 10591.
19
STOCKHOLDER PROPOSALS
The proxy rules adopted by the Securities and Exchange Commission provide
that certain stockholder proposals must be included in the proxy statement for
the Company's Annual Meeting. For a proposal to be considered for inclusion in
next year's proxy statement, it must be submitted in writing to the Corporate
Secretary of the Company no later than December 31, 2002. Stockholders who
wish to submit a proposal in person at next year's Annual Meeting, but do not
comply with requirements for inclusion of the proposal in next year's proxy
statement, must submit the proposal in writing to the Corporate Secretary of
the Company no later than April 10, 2003.
OTHER BUSINESS
The Board of Directors knows of no other business to be acted upon at the
meeting. However, if any other business properly comes before the meeting, it
is the intention of the persons named in the enclosed proxy to vote on such
matters as recommended by the Company.
The prompt return of your proxy will be appreciated and helpful in obtaining
the necessary vote. Therefore, whether or not you expect to attend the
meeting, please sign the proxy and return it in the enclosed envelope.
By order of the Board of Directors
PHILIP K. YACHMETZ
Vice President, General Counsel and
Secretary
Tarrytown, New York
April 30, 2002
20
PROGENICS PHARMACEUTICALS, INC.
777 Old Saw Mill River Road
Tarrytown, New York 10591
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Paul J. Maddon, M.D., Ph.D., Ronald J.
Prentki and Philip K. Yachmetz, and each of them, as Proxies each with the power
to appoint his substitute and hereby authorizes them to represent and to vote,
as designated below, all of the shares of Common Stock of Progenics
Pharmaceuticals, Inc. held of record by the undersigned on May 3, 2001 at the
Annual Meeting of Stockholders to be held on June 18, 2001 or any adjournments
or postponements thereof.
1. ELECTION OF DIRECTORS
Nominees:
Paul J. Maddon, M.D., Ph.D. STOCKHOLDERS MAY WITHHOLD AUTHORITY TO
Ronald J. Prentki VOTE FOR ANY NOMINEE BY DRAWING A LINE
Charles A. Baker THROUGH OR OTHERWISE STRIKING OUT THE
Kurt W. Briner NAME OF SUCH NOMINEE. ANY PROXY EXECUTED
Mark F. Dalton IN SUCH MANNER AS NOT TO WITHHOLD
Stephen P. Goff, Ph.D. AUTHORITY TO VOTE FOR THE ELECTION OF
Paul F. Jacobson ANY NOMINEE SHALL BE DEEMED TO GRANT
David A. Scheinberg, M.D., Ph.D. SUCH AUTHORITY.
/ / GRANT authority to vote for the / / WITHOLD authority to vote for the
eight nominees as a group eight nominees as a group
2. Approval of an amendment to the Company's Amended 1996 Stock Incentive
Plan to increase the number of shares available for issuance under the
Plan by an aggregate of 1,000,000 shares to 5,000,000 shares.
/ / FOR / / AGAINST / / ABSTAIN
3. Approval of an amendment to the 1998 Employee Stock Purchase Plan to
increase the number of share of common stock reserved for issuance
thereunder by 250,000 to 400,000 and the amendment of the Company's 1998
Non-Qualified Employee Stock Purchase Plan to increase the number of
shares of common stock reserved for issuance thereunder by 25,000 to
75,000.
/ / FOR / / AGAINST / / ABSTAIN
4. Ratification of the Board of Directors' selection of
PricewaterhouseCoopers LLP to serve as the Company's independent
accountants for the fiscal year ending December 31, 2002
/ / FOR / / AGAINST / / ABSTAIN
5. Authority to vote in their discretion on such other business as may
properly come before the meeting
/ / FOR / / AGAINST / / ABSTAIN
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted for each of the proposals named above.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY, USING THE ENCLOSED
ENVELOPE.
Dated , 2002
-----------------------------
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(Signature)
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(Signature if held jointly)
Please sign exactly as name appears
hereon. When shares are held by joint
tenants, both should sign. When signing
as attorney, executor, administrator,
trustee or guardian, please give full
title as such. If a corporation, please
sign in full corporate name by president
or other authorized officer. If a
partnership, please sign in partnership
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