def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
Endocyte, 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):
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Fee paid previously with preliminary materials. |
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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. |
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Form, Schedule or Registration Statement No.: |
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April 15,
2011
Dear Fellow Stockholder:
It is my pleasure to invite you to the 2011 Annual Meeting of
Stockholders of Endocyte, Inc. on Thursday, May 26, 2011 at
12:00 p.m. (EDT), at the offices of Baker &
Daniels LLP, Suite 600, 600 East 96th Street, Indianapolis,
Indiana 46260. At the meeting, stockholders will vote on the
business items listed in the notice of the meeting, which
follows on the next page.
As permitted by Securities and Exchange Commission rules, we are
furnishing proxy materials to our stockholders over the
Internet. We believe that this
e-proxy
process will expedite stockholders receipt of proxy
materials, help keep our costs low and reduce the environmental
impact of our annual meeting. On April 15, 2011, we mailed
our stockholders a Notice of Internet Availability containing
instructions on how to access our Proxy Statement and our 2010
Annual Report to Stockholders and vote online. The Notice also
contains instructions on how you can receive a paper copy of the
proxy statement and annual report.
Whether or not you plan to attend the meeting, your vote is
important and we encourage you to vote promptly.
You may vote your shares via a toll-free telephone number or
over the Internet. If you received a paper copy of the proxy
card by mail, you may sign, date and mail the proxy card in the
envelope provided. Instructions regarding all three methods of
voting are contained in the proxy statement and on the proxy
card.
I look forward to seeing you at the annual meeting.
Sincerely,
P. Ron Ellis
President
and Chief Executive Officer
Endocyte,
Inc.
3000 Kent Avenue,
Suite A1-100
West Lafayette, Indiana 47906
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
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TIME |
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12:00 p.m. (EDT) on Thursday, May 26, 2011 |
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PLACE |
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Offices of Baker & Daniels LLP, Suite 600, 600
East 96th
Street, Indianapolis, Indiana 46240 |
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ITEMS OF BUSINESS |
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(1) To elect three directors to serve until the 2014 annual
meeting of stockholders.
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(2) To hold an advisory vote on executive compensation.
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(3) To hold an advisory vote regarding the frequency of
future advisory votes on executive compensation.
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(4) To consider ratifying the appointment of
Ernst & Young LLP as our independent registered public
accounting firm for 2011.
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(5) To transact such other business as may properly come
before the meeting.
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RECORD DATE |
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You can vote if you are a stockholder of record on
April 11, 2011. |
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ANNUAL REPORT |
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Our 2010 annual report to stockholders accompanies but is not
part of these proxy materials. |
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PROXY VOTING |
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We cordially invite you to attend the meeting, but regardless of
whether you plan to be present, please vote in one of these ways: |
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(1) VISIT THE WEB SITE noted on your proxy card or the
Notice of Internet availability of proxy materials to vote via
the Internet;
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(2) If you receive a printed copy of the proxy materials by
mail, USE THE TOLL-FREE TELEPHONE NUMBER shown on your proxy
card (this is a free call in the U.S.);
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(3) If you receive a printed copy of the proxy materials by
mail, MARK, SIGN, DATE AND PROMPTLY RETURN your proxy card in
the envelope provided, which requires no additional postage if
mailed in the U.S.
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By order of the Board of Directors,
Daniel L. Boeglin
Secretary
April 15, 2011
TABLE OF
CONTENTS
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EXECUTIVE COMPENSATION
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Endocyte,
Inc.
3000 Kent Avenue,
Suite A1-100
West Lafayette, Indiana 47906
This proxy statement and accompanying proxy are being provided
to stockholders in connection with the solicitation by the Board
of Directors of Endocyte, Inc. (Endocyte,
we, us, our or the
company) of proxies to be voted at the 2011 annual
meeting on May 26, 2011.
QUESTIONS
AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
Why did
stockholders receive a Notice of Internet Availability of Proxy
Materials?
All of our stockholders will receive a Notice of Internet
Availability of Proxy Materials, or Notice, which was or will be
sent to stockholders on or about April 15, 2011, containing
information on the availability of our proxy materials on the
Internet. Stockholders will not receive a printed copy of our
proxy materials unless requested in the manner described in the
Notice. The Notice explains how to access and review this proxy
statement and our 2010 Annual Report to Stockholders, and how
you may vote by proxy.
What is a
proxy?
A proxy is your legal designation of another person to vote on
your behalf. By completing and returning the enclosed proxy
card, you are giving the persons named in the proxy card, P. Ron
Ellis and Michael A. Sherman, the authority to vote your shares
in the manner you indicate on your proxy card.
Who is
qualified to vote?
You are qualified to vote on all matters presented to the
stockholders at the meeting if you own shares of our common
stock, par value $.001 per share, at the close of business on
April 11, 2011.
How many
shares may vote at the meeting?
On April 11, 2011, there were 29,703,657 shares of
common stock outstanding, all of which are entitled to vote on
all matters presented to stockholders at the meeting.
How many
shares must be present to hold the meeting?
The presence at the meeting in person or by proxy of holders of
common stock representing a majority of all the votes entitled
to be cast at the meeting, or 14,851,829 shares, will
constitute a quorum for the transaction of business.
What is
the difference between a stockholder of record and a
street name holder?
These terms describe how your shares are held. If your shares
are registered directly in your name with Computershare
Trust Company, N.A. our transfer agent, you are a
stockholder of record. If your shares are held in
the name of a brokerage, bank, trust or other nominee as a
custodian, you are a street name holder.
How do I
vote my shares?
If you are a stockholder of record, you have
several choices. You can vote your shares by proxy:
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By mailing your proxy card;
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Over the telephone; or
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Via the Internet.
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Please refer to the specific instructions set forth on the
Notice or printed proxy materials. For security reasons, our
electronic voting system has been designed to authenticate your
identity as a stockholder.
If you hold your shares in street name, your
broker/bank/trustee/nominee will provide you with materials and
instructions for voting your shares.
Can I
vote in person at the meeting?
If you are a stockholder of record, you may
vote your shares in person at the meeting. If you hold your
shares in street name, you must obtain a proxy
from your broker, bank, trustee or nominee, giving you the right
to vote the shares at the meeting.
What do I
need to do to attend the meeting in person?
Proof of stock ownership and some form of government-issued
photo identification (such as a valid drivers license or
passport) will be required for admission to the meeting. Only
stockholders who owned Endocyte, Inc. common stock as of the
close of business on April 11, 2011 are entitled to attend
the meeting.
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If your shares are registered in your name and you owned
Endocyte, Inc. common stock as of the close of business on
April 11, 2011, you only need to provide some form of
government issued photo identification for admission.
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If your shares are held in a bank or brokerage account, contact
your bank or broker to obtain a written legal proxy in order to
vote your shares at the meeting. If you do not obtain a legal
proxy from your bank or broker, you will not be entitled to vote
your shares, but you can still attend the meeting if you bring a
recent bank or brokerage statement showing that you owned shares
of Endocyte, Inc. common stock on April 11, 2011.
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What are
my choices when voting?
Proposal 1 You may cast your vote FOR or
AGAINST the nominees for election as directors or you may
ABSTAIN from voting.
Proposal 2 You may cast your vote FOR or
AGAINST the advisory proposal to approve executive
compensation, or you may ABSTAIN from voting.
Proposal 3 On the advisory proposal concerning
the frequency of future advisory votes on executive
compensation, you may choose every (a) 1 YEAR,
(b) 2 YEARS, or (c) 3 YEARS, or you may
ABSTAIN from voting.
Proposal 4 You may cast your vote FOR or
AGAINST ratifying the appointment of the independent
auditor, or you may ABSTAIN from voting.
What are
the Boards recommendations on how I should vote my
shares?
The Board recommends that you vote your shares as follows:
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Proposal 1: FOR all of the
nominees for election as directors.
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Proposal 2: FOR the advisory
proposal on executive compensation.
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Proposal 3: Choose 3 YEARS for
future advisory votes on executive compensation.
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Proposal 4: FOR the proposal to
ratify the appointment of Ernst & Young LLP as our
independent registered public accounting firm (independent
auditors) for the year ending December 31, 2011.
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How would
my shares be voted if I do not specify how they should be
voted?
If you sign and return a proxy card without indicating how you
want your shares to be voted, the persons named as proxies will
vote your shares as follows:
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Proposal 1: FOR all of the
nominees for election as directors.
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Proposal 2: FOR the advisory
proposal on executive compensation.
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Proposal 3: In favor of 3 YEARS
for future advisory votes on executive compensation.
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Proposal 4: FOR the proposal to
ratify the appointment of Ernst & Young LLP as our
independent registered public accounting firm (independent
auditors) for the year ending December 31, 2011.
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What are
broker non-votes?
A broker non-vote occurs when a nominee holding shares for a
beneficial owner does not vote on a particular proposal because
the nominee does not have discretionary authority to vote for
that particular proposal and has not received instructions from
the beneficial owner as to how to vote its shares.
Proposals 1, 2 and 3 all fall into this category. If you do
not provide your broker with voting instructions, your shares
will not be voted on any of these proposals.
What vote
is required to approve each proposal?
The following votes are required from the holders of common
stock to approve each of the proposals:
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Proposal
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Impact of Abstentions and
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Number
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Subject
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Vote Required
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Broker Non-Votes, if any
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1
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Election of directors
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Directors will be elected by a plurality of the votes cast. The
three nominees receiving the most FOR votes will be elected.
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Abstentions and broker non-votes will not count as votes cast on
the proposal and will not affect the outcome of the vote.
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2
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Advisory vote on executive compensation
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Approval by a majority of the votes cast.
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Abstentions and broker non-votes will not count as votes cast on
the proposal and will not affect the outcome of the vote.
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Advisory vote on frequency of future advisory votes on executive
compensation
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Approval by a majority of the votes cast.*
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Abstentions and broker non-votes will not count as votes cast on
the proposal and will not affect the outcome of the vote.
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4
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Ratification of appointment of independent auditors
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Approval by a majority of the votes cast.
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Abstentions and broker non-votes will not count as votes cast on
the proposal and will not affect the outcome of the vote.
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This is the voting standard required under Delaware law.
However, the Board will consider the frequency (every three, two
or one year) receiving the most votes as representing the
stockholders views on how frequently to hold future
advisory votes on executive compensation. |
All shares entitled to vote at the meeting are entitled to one
vote per share.
Why did I
receive more than one Notice or proxy card?
You will receive multiple Notices or cards if you hold your
shares in different ways (e.g., joint tenancy, trusts, custodial
accounts) or in multiple accounts. If your shares are held by a
broker (i.e., in street name), you will receive your
proxy card or other voting information from your broker, and you
will return your proxy card(s) to your broker. You should vote
on and sign each proxy card you receive.
Can I
change my vote after I have mailed in my proxy card?
You may revoke your proxy by doing one of the following:
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By sending a written notice of revocation to Corporate
Secretary, Endocyte, Inc., 8910 Purdue Road, Suite 250,
Indianapolis, Indiana 46268 that is received prior to the
meeting, stating that you revoke your proxy;
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By signing a later-dated proxy card and submitting it so that it
is received prior to the meeting in accordance with the
instructions included in the proxy card(s); or
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By attending the meeting and voting your shares in person.
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Will the
results of the advisory vote on executive compensation or the
advisory vote on how frequently to conduct future advisory votes
on executive compensation be binding on the company or its board
of directors?
The outcome of the voting on these matters will be advisory only
and will not bind or restrict the Board of Directors. The Board
could, if it concluded it was in our best interests to do so,
choose not to follow or implement the stockholders advice
on either or both matters.
What
happens if additional matters are presented at the annual
meeting?
We know of no matters other than the items of business described
in this proxy statement that are to be considered at the
meeting. If other matters requiring a vote do arise, the persons
named as proxies will have the discretion to vote on those
matters for you.
Who will
count the votes?
Our controller has been appointed by our board of directors as
the inspector of election for the annual meeting. She will count
the votes and later certify such action. The inspector will be
present at the meeting.
Will the
meeting be accessible to disabled persons?
The location of the meeting is accessible to disabled persons.
Please call Joye Prosser at least five days in advance at
765-463-7175
if you require any special accommodations.
How can I
review the list of stockholders entitled to vote at the
meeting?
A list of stockholders entitled to vote at the meeting will be
available at the meeting and for ten days prior to the meeting,
between the hours of 8:45 a.m. and 4:30 p.m., at our
offices at 8910 Purdue Road, Suite 250, Indianapolis,
Indiana 46268. If you would like to view the stockholder list,
please contact our Corporate Secretary to schedule an
appointment.
Who pays
the cost of this proxy solicitation?
We will pay the cost of preparing, assembling and mailing the
proxy materials. We will also request banks, brokers and other
holders of record to send the proxy materials to, and obtain
proxies from, beneficial owners and will reimburse them for
their reasonable expenses in doing so.
Is this
proxy statement the only way that proxies are being
solicited?
Certain employees or other representatives of the company may
also solicit proxies by telephone, facsimile,
e-mail or
personal contact. They will not be specifically compensated for
doing so.
4
BENEFICIAL
OWNERSHIP OF COMMON STOCK BY CERTAIN
STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information concerning
each person (including any group) known to us to beneficially
own more than five percent (5%) of any class of our voting
securities as of April 11, 2011. Unless otherwise indicated
in the footnotes, shares are owned directly and the indicated
person has sole voting and investment power. Also, unless
otherwise noted below, the address of each person listed on the
table is
c/o Endocyte,
Inc., 3000 Kent Avenue,
Suite A1-100,
West Lafayette, Indiana 47906.
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Name and Address of
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Shares
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Beneficial Owner
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Number of Shares
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FMR LLC(1)
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3,600,000
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12.13
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82 Devonshire Street
Boston, MA 02109
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Pension Fund of the Christian Church (Disciples of Christ),
Inc.
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3,283,132
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11.06
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Pension Fund of the Christian Church
130 East Washington Street
Indianapolis, IN
46204-3645
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Entities related to Sanderling Ventures(2)
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3,329,786
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11.22
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Sanderling Ventures
400 S. El Camino Real, Suite 1200
San Mateo, CA 94402
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Cincinnati Financial Corporation
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1,491,610
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5.03
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6200 S. Gilmore Road
Fairfield, OH
45014-5141
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P. Ron Ellis(3)
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431,720
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1.45
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Michael A. Sherman(4)
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167,463
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*
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Philip S. Low, Ph.D.(5)
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557,606
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1.88
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Christopher P. Leamon, Ph.D.(6)
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123,984
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Chandra D. Lovejoy(7)
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26,478
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*
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Richard A. Messmann(8)
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96,383
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*
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Allen R. Ritter, Ph.D.(9)
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83,816
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John G. Clawson(10)
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19,956
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John C. Aplin, Ph.D.(11)
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437,365
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1.47
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Douglas G. Bailey(12)
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1,399,510
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4.72
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Keith E. Brauer(13)
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32,676
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*
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Ann F. Hanham, Ph.D.(14)
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1,337,970
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4.51
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Fred A. Middleton(15)
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3,335,021
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11.24
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James S. Shannon, M.D., MRCP(16)
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872
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*
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All directors and executive officers as a group
(14 people)(17)
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8,050,820
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27.13
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Based solely on information provided by FMR LLC in a
Schedule 13G filed with the Securities and Exchange
Commission on March 10, 2011. FMR LLC entities have the
sole power to dispose of 3,600,000 shares of common stock
and the sole power to vote 0 shares of common stock. |
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Consists of (i) 100,828 shares held by Sanderling V
Beteiligungs GmbH & Co. KG;
(ii) 162,170 shares held by Sanderling V Biomedical
Co-Investment Fund, L.P.; (iii) 249,148 shares held by
Sanderling V Biomedical, L.P.; (iv) 113,315 shares
held by Sanderling V Limited Partnership;
(v) 267,491 shares held by Sanderling Venture Partners
V Co-Investment Fund; (vi) 1,017,304 shares held by
Sanderling Venture Partners V, L.P.;
(vii) 435,861 shares held by Sanderling Venture
Partners VI Co-Investment Fund, L.P.;
(viii) 149,003 shares held by Sanderling Ventures
Management V; (ix) 30,766 shares held by Sanderling
Ventures Management VI; (x) 8,434 shares held by
Sanderling VI Beteiligungs GmbH and Co. KG;
(xi) 10,049 shares held by Sanderling |
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VI Limited Partnership. 72,502 shares held by Sanderling
Venture Partners V, L.P., and
(xii) 785,417 shares held by Sanderling V Strategic
Exit Fund, L.P., 2,089 shares held by Sanderling V
Biomedical, L.P., 8,529 shares held by Sanderling Ventures
Management V, 845 shares held by Sanderling Venture
Partners V, L.P. and 752 shares held by Sanderling V
Beteiligungs GmbH & Co. KG are subject to repurchase
based on milestones set forth in the Restricted Stock Purchase
Agreement dated July 10, 2001 between the Company and each
of Sanderling Venture Partners V, L.P., Sanderling V
Biomedical, L.P., ABV Holding Company 7 LLC, Douglas G. Bailey,
and Cincinnati Financial Corporation. Fred Middleton is a
managing director of Middleton, McNeil & Mills
Associates V, LLC which has the ultimate voting and
investment power over shares held of record by Sanderling V
Beteiligungs GmbH & Co. KG, Sanderling V Biomedical
Co-Investment Fund, L.P., Sanderling V Biomedical, L.P.,
Sanderling V Limited Partnership, Sanderling Venture
Partners V, L.P., Sanderling Venture Partners VI
Co-Investment Fund, L.P., Sanderling VI Beteiligungs GmbH and
Co. KG and Sanderling VI Limited Partnership and he may be
deemed to have voting and investment power over shares held of
record by Sanderling V Beteiligungs GmbH & Co. KG,
Sanderling V Biomedical Co-Investment Fund, L.P., Sanderling V
Biomedical, L.P., Sanderling V Limited Partnership, Sanderling
Venture Partners V, L.P., Sanderling Venture Partners VI
Co-Investment Fund, L.P., Sanderling VI Beteiligungs GmbH and
Co. KG and Sanderling VI Limited Partnership. Fred Middleton is
the owner of Sanderling Ventures Management V and Sanderling
Ventures Management VI Partnership and he may be deemed to have
voting and investment power over shares held of record by
Sanderling Ventures Management V and Sanderling Ventures
Management VI Partnership. Mr. Middleton disclaims
beneficial ownership of the shares directly held by the entities
affiliated with Sanderling except to the extent of his
individual pecuniary interest therein. |
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(3) |
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Consists of (i) 76,132 shares held by P. Ron Ellis and
Margaret Heard Ellis, JTWROS; (ii) 13,142 shares held
by P. Ron Ellis; and (iii) 339,946 shares held by P.
Ron Ellis issuable upon exercise of options exercisable within
60 days of April 11, 2011. |
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(4) |
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Includes 95,188 shares issuable upon exercise of options
exercisable within 60 days of April 11, 2011. |
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(5) |
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Consists of (i) 433,117 shares held by Philip S. Low
and Joan Low, JTWROS and (ii) 124,489 shares held by
Philip S. Low issuable upon exercise of options exercisable
within 60 days of April 11, 2011. |
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(6) |
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Consists of 103,911 shares issuable upon exercise of
options exercisable within 60 days of April 11, 2011. |
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(7) |
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Consists of 26,478 shares issuable upon exercise of options
exercisable within 60 days of April 11, 2011. |
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(8) |
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Consists of 96,383 shares issuable upon exercise of options
exercisable within 60 days of April 11, 2011. |
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(9) |
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Consists of 83,816 shares issuable upon exercise of options
exercisable within 60 days of April 11, 2011. |
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(10) |
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Consists of 5,235 shares issuable upon exercise of options
exercisable within 60 days of April 11, 2011. |
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(11) |
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Consists of (i) 288,235 shares held by CID Equity
Capital VIII, L.P., (ii) 143,895 shares held by CID
Seed Fund, L.P and (iii) 5,235 shares held by John C.
Aplin issuable upon exercise of options exercisable within
60 days of April 11, 2011. John Aplin is a
Class A member of CID Equity Partners VIII, LLC, which has
the ultimate voting and investment power over shares held of
record by CID Equity Capital VIII, L.P., and he may be deemed to
have voting and investment power over shares held of record by
CID Equity Capital VIII, L.P. John Aplin is a general partner of
CID Seed Fund Partners I which has the ultimate voting and
investment power over shares held of record by CID Seed Fund,
L.P., and he may be deemed to have voting and investment power
over shares held of record by CID Seed Fund, L.P. Mr. Aplin
disclaims beneficial ownership of the shares directly held by
the entities affiliated with CID except to the extent of his
individual pecuniary interest therein. |
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(12) |
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Consists of (i) 1,320,978 shares held by entities
affiliated with ABV Holding Company,
(ii) 73,297 shares held by Douglas G. Bailey and
(iii) 5,235 shares held by Douglas G. Bailey issuable
upon exercise of options exercisable within 60 days of
April 11, 2011. 3,490 shares held by Douglas G. Bailey
are subject to repurchase based on milestones set forth in the
Restricted Stock Purchase Agreement dated July 10, 2001
between the Company and each of Sanderling Venture
Partners V, L.P., Sanderling V Biomedical, L.P., ABV
Holding Company 7 LLC, Douglas G. Bailey, and Cincinnati
Financial Corporation. Douglas Bailey, a managing member of ABV
Holding Company 12 LLC, is a member of our Board of Directors.
Mr. Bailey disclaims beneficial ownership of the shares
directly held by the entities affiliated with American Bailey
Ventures LLC except to the extent of his pecuniary interest
therein. |
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(13) |
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Consists of 32,676 shares issuable upon exercise of options
exercisable within 60 days of April 11, 2011. |
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(14) |
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Consists of 1,332,735 shares held by entities affiliated
with Burrill & Company and 5,235 shares held by
Ann F. Hanham issuable upon exercise of options exercisable
within 60 days of April 11, 2011. |
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(15) |
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Consists of 3,329,786 shares held by entities affiliated
with Sanderling Ventures and 5,235 shares held by Fred A.
Middleton issuable upon exercise of options exercisable within
60 days of April 11, 2011. |
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(16) |
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Consists of 872 shares issuable upon exercise of options
exercisable within 60 days of April 11, 2011. |
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(17) |
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Includes 950,007 shares issuable upon exercise of options
exercisable within 60 days of April 11, 2011. |
CORPORATE
GOVERNANCE MATTERS
Policies
on Corporate Governance
Our Board of Directors recognizes that good corporate governance
is important to ensure that the company is managed for the
long-term benefit of stockholders. The Board has adopted
Corporate Governance Principles, written charters for each of
its standing committees and a Code of Ethics and Business
Conduct and will amend them as appropriate to reflect new
policies or practices. The current version of each of these
documents is available on our website, www.endocyte.com, in the
Investor Relations section, and will be provided in print
without charge upon written request to our Corporate Secretary
at 8910 Purdue Road, Suite 250, Indianapolis, Indiana 46268.
We will also either disclose on
Form 8-K
or post on our Internet website any substantive amendment to, or
waiver from, a provision of the Code of Ethics and Business
Conduct that applies to any of our directors or executive
officers.
Board
Composition
Our Board of Directors is currently composed of nine members,
divided into three staggered classes of directors. At each
annual meeting of stockholders, a class of directors will be
elected for a three-year term to succeed the same class whose
terms are then expiring. The terms of the directors will expire
upon the election and qualification of successor directors at
the Annual Meeting of Stockholders to be held during the years
2011 for the Class I directors, 2012 for the Class II
directors and 2013 for the Class III directors.
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Our Class I directors are Philip S. Low, John C. Aplin and
Douglas G. Bailey.
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Our Class II directors are John G. Clawson, Ann F. Hanham
and Keith E. Brauer.
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Our Class III directors are P. Ron Ellis, Fred A. Middleton
and James S. Shannon.
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Our amended and restated certificate of incorporation and bylaws
provide that the number of our directors, which is currently
nine members, shall be fixed from time to time by a resolution
of the majority of our Board of Directors.
Board
Leadership Structure
John G. Clawson, one of our independent directors, currently
serves as a non-executive Chairman of the Board. P. Ron Ellis is
our President and Chief Executive Officer. Mr. Clawson and
Mr. Ellis have closely worked together for some time in
complementary roles. Mr. Ellis focuses on the
day-to-day
developments of the company and establishes the companys
growth strategy and strategic plan. Mr. Clawson chairs the
Board and, in that capacity,
7
can impact the issues that are brought before the Board. The
Board of Directors believes that these complementary roles
provide an appropriate leadership structure for the company at
this time.
The Board of Directors expects to re-evaluate its leadership
structure on an ongoing basis and may change it as circumstances
warrant. As stated in our Corporate Governance Principles, the
Board believes that these two roles may, but need not be, the
same person. If the Chairman and the Chief Executive Officer is
combined in the future, the Board will designate one of its
independent directors as Lead Independent Director
with the responsibilities described in our Corporate Governance
Principles. The Board believes that it is in the best interest
of the company if the Board has the flexibility to change its
leadership structure to one in which the offices of Chairman of
the Board and Chief Executive Officer are held by one person
based upon the circumstances then present.
Boards
Role in Oversight of Risk Management
While risk management is primarily the responsibility of our
management, the Board of Directors, acting primarily through the
Audit Committee, provides overall risk oversight with a focus on
the most significant risks facing us. We use a risk management
process to identify and assess the major risks we face and
develop strategies for controlling, mitigating and monitoring
risk. As part of this process, we gather information throughout
the company to identify and prioritize major risks. The
identified risks and mitigation strategies are validated with
management and presented to the Audit Committee on an ongoing
basis.
Examples of major risks we have identified are our ability to
achieve regulatory milestones, enter into license or other
business development transactions, access capital, and execute
clinical trials in a timely manner.
Information concerning risks relating to our compensation
policies and practices is provided on page 27 of this proxy
statement.
Additional review or reporting on risks is conducted as needed
or as requested by the Board or Audit Committee.
Director
Independence
Our common stock is listed on The Nasdaq Global Market. Under
the rules of The Nasdaq Stock Market LLC, independent directors
must comprise a majority of a listed companys board of
directors within a specified period following the closing of our
initial public offering. In addition, the rules of The Nasdaq
Stock Market LLC require that, subject to specified exceptions,
each member of a listed companys audit, compensation and
nominating and corporate governance committees be independent.
Audit committee members must also satisfy the independence
criteria set forth in
Rule 10A-3
under the Securities Exchange Act of 1934, as amended. Under the
rules of The Nasdaq Stock Market LLC, a director will only
qualify as an independent director if, in the
opinion of that companys board of directors, that person
does not have a relationship that would interfere with the
exercise of independent judgment in carrying out the
responsibilities of a director.
In order to be considered to be independent for purposes of
Rule 10A-3,
a member of an audit committee of a listed company may not,
other than in his or her capacity as a member of the audit
committee, the board of directors, or any other board committee:
(1) accept, directly or indirectly, any consulting,
advisory, or other compensatory fee from the listed company or
any of its subsidiaries; or (2) be an affiliated person of
the listed company or any of its subsidiaries.
After reviewing the composition of the Board of Directors, the
composition of its committees and the independence of each
director, our Board of Directors has determined that none of
Messrs. Brauer, Bailey, Clawson and Middleton and
Drs. Aplin, Hanham and Shannon, representing seven of our
nine directors, has a relationship that would interfere with the
exercise of independent judgment in carrying out the
responsibilities of a director and that each of these directors
is independent as that term is defined under the
rules of The Nasdaq Stock Market LLC. Our Board of Directors
also determined that Mr. Brauer and Drs. Aplin and
Hanham, who comprise our audit committee, Messrs. Bailey,
Clawson and Middleton, who comprise our compensation committee,
and Dr. Shannon, who partially comprises our nominating and
corporate governance committee, satisfy the independence
standards for those committees established by applicable
Securities and Exchange Commission rules and the rules of The
Nasdaq Stock Market LLC.
8
In making our determination of independent status, our Board of
Directors considered the relationships that each non-employee
director has with our company and all other facts and
circumstances our Board of Directors deemed relevant in
determining their independence, including the beneficial
ownership of our capital stock by each non-employee director.
Our Board of Directors has determined that neither
Mr. Ellis nor Dr. Low meets the independence
eligibility requirements of The Nasdaq Stock Market LLC
(Nasdaq) or
Rule 10A-3
because they are presently executive officers of the company.
Consequently, Mr. Ellis and Dr. Low, are not
considered independent directors. Under Nasdaq Rule 5615
which permits a newly listed company to phase in its compliance
with the independent nominating and corporate governance
committee requirements set forth in Nasdaq Rule 5605(e),
Dr. Low may continue to serve on our nominating and
corporate governance committee until the one year anniversary of
our listing of our common stock if we are able to add at least
one additional independent director to the committee within
90 days of listing so that a majority of the directors
serving on the nominating and corporate governance committee are
independent directors. Since Dr. Low sits on our nominating
and corporate governance committee but does not satisfy the
independence standards, in conjunction with our plans to conduct
a search for additional qualified persons to be added to, or
replace current members of, our Board of Directors, we plan to
either add additional independent directors to our Board of
Directors who could become members of our nominating and
corporate governance committee or remove Dr. Low from this
committee, such that this committee has a majority of
independent directors by May 10, 2011 and is fully
independent by February 9, 2012, in accordance with
applicable Nasdaq rules.
Nominations
for Directors
The Nominating and Corporate Governance Committee will consider
director nominees recommended by stockholders. A stockholder who
wishes to recommend a director candidate should send such
recommendation to our Corporate Secretary at 8910 Purdue Road,
Suite 250, Indianapolis, Indiana 46268, who will forward it
to the committee. Any such recommendation should include a
description of the candidates qualifications for Board
service, the candidates written consent to be considered
for nomination and to serve if nominated and elected, and
addresses and telephone numbers for contacting the stockholder
and the candidate for more information. A stockholder who wishes
to nominate an individual as a director candidate at the annual
meeting of stockholders, rather than recommend the individual to
the Nominating and Corporate Governance Committee as a nominee,
must comply with the advance notice requirements for stockholder
nominations set forth in our Amended and Restated By-Laws.
Director
Qualifications
The Board of Directors believes that its members should exhibit
high standards of independent judgment and integrity, have a
strong record of achievement, have an understanding of our
business and the competitive environment in which we operate,
and bring the benefits of their experiences and backgrounds to
the Board and committee functions. Directors should be committed
to enhancing stockholder value on a long-term basis and have
sufficient time to carry out their duties.
Currently, neither the Board of Directors nor the Nominating and
Corporate Governance Committee has a policy with regard to
considering diversity as a factor in identifying nominees for
directors. The Nominating and Corporate Governance Committee
expects to consider adopting such a policy within the next year.
Communications
with the Independent Directors of the Board
The Board has implemented a process by which our stockholders
and other interested parties may communicate with the Board or
one or more members of our Board in a written communication
addressed to Corporate Secretary, Endocyte, Inc., 8910 Purdue
Road, Suite 250, Indianapolis, Indiana 46268. The Board has
instructed our Corporate Secretary to promptly forward all such
communications to the specified addressees thereof. However,
certain items which are unrelated to the duties and
responsibilities of the Board will be excluded, such as: product
complaints, product inquiries, new product suggestions, resumes,
surveys and advertisements. In addition, material that is unduly
hostile, threatening, illegal or similarly unsuitable will be
excluded, with the provision that any communication that is
filtered out must be made available to any non-management
director upon request.
9
TRANSACTIONS
WITH RELATED PERSONS
Policy
We have adopted a formal policy that our executive officers,
directors, holders of more than five percent of any class of our
voting securities, and any member of the immediate family of and
any entity affiliated with any of the foregoing persons, are not
permitted to enter into a related party transaction with us in
without the prior consent of our audit committee, or other
independent members of our Board of Directors in the case it is
inappropriate for our audit committee to review such transaction
due to a conflict of interest. In approving or rejecting any
such proposal, our audit committee is to consider the relevant
facts and circumstances available and deemed relevant to the
audit committee, including, but not limited to, whether the
transaction is on terms no less favorable than terms generally
available to an unaffiliated third party under the same or
similar circumstances and the extent of the related partys
interest in the transaction. All of the related party
transactions described below were entered into prior to the
adoption of this policy.
Related
Party Transactions
We have been a party to the following transactions since
January 1, 2010, in which the amount involved exceeded or
will exceed $120,000, and in which any director, executive
officer or holder of more than five percent of any class of our
voting stock, or any member of the immediate family of or
entities affiliated with any of them, had or will have a
material interest.
Sales
of Subordinated Notes
In December 2010, we issued $8.1 million of Subordinated
Notes and in January 2011 we issued an additional
$3.7 million of Subordinated Notes. A $7.0 million
investment was made by the Pension Fund of the Christian Church
(Disciples of Christ), Inc., a $4.7 million investment from
three other current holders of our preferred stock and $100,000
from Mike Sherman, our Chief Financial Officer. The Subordinated
Notes accrued interest in kind at an annual rate of
10.0 percent and were automatically converted into shares
of our common stock upon the closing of our initial public
offering on February 9, 2011 at a rate of 85% of the
original issue price of the shares sold in the initial public
offering.
Participation
in Our Initial Public Offering
Entities affiliated with Burrill & Company, which
prior to our initial public offering held more than five percent
of our voting securities, purchased 500,000 shares of our
common stock in our initial public offering for an aggregate
purchase price of approximately $3,000,000. Similarly, entities
affiliated with Sanderling Ventures, a current holder of more
than five percent of our voting securities purchased
833,333 shares of our common stock in our initial public
offering for an aggregate purchase price of approximately
$5,000,000.
Transactions
with Our Founders and Entities Affiliated with Our
Founders
Dr. Philip S. Low, our Chief Science Officer and one of our
founders and directors, conducts research at Purdue Research
Foundation. We entered into an exclusive license agreement dated
October 21, 1998, as amended, and an exclusive license
agreement effective March 1, 2010 with Purdue Research
Foundation to license certain intellectual property and methods
that were invented in Dr. Lows laboratory.
Additionally, we entered into a lease dated March 1, 2010
with Purdue Research Foundation.
Dr. Low is entitled to a total of $50,000 upon the
achievement of certain milestones pursuant to a patent
assignment agreement dated November 1, 2007 that we entered
into with Optical Therapeutic Technologies, or OTT, Dr. Low
and three other individuals, pursuant to which each of the
individuals assigned certain patent applications to us and OTT
released any rights to conjugate patents of such patent
applications. The patent assignment agreement provided each of
the individuals, but not OTT, with the following payments:
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$6,250 to each individual upon signing the patent assignment
agreement;
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$12,500 to each individual upon the issuance of the first
conjugate patent by the USPTO; and
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$37,500 to each individual upon the FDAs approval of the
first product comprising or containing any conjugate covered by
a valid claim of a conjugate patent.
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To date, we have paid the first payment of $6,250 to each
individual upon execution of the patent assignment agreement,
totaling $25,000. Potential payments totaling $200,000 may be
paid to the individuals upon the achievement of the two
milestones described above. The patent assignment agreement does
not provide a term or termination provisions.
MEETINGS
AND COMMITTEES OF THE BOARD
Meetings
and Attendance
Our business, property and affairs are managed under the
direction of our Board of Directors. Members of our Board of
Directors are kept informed of our business by our President and
Chief Executive Officer and other officers, by reviewing
materials provided to them, and by participating in meetings of
the Board and its committees. Directors are also expected to use
reasonable efforts to attend the annual meeting of stockholders.
This will be our first annual meeting as a public company. In
the absence of a conflicting responsibility, we expect all
directors will attend the annual meeting. During 2010, the Board
of Directors met 7 times. The Board conducts many of its
oversight responsibilities through three standing committees,
including an Audit Committee, a Compensation Committee, and a
Nominating and Corporate Governance Committee. During 2010, all
directors participated in 75% or more of the aggregate number of
meetings of the Board and the committees on which they served.
Executive
Sessions of Independent Directors
The independent directors meet in executive session without
management present following each regularly scheduled Board
meeting. The Chairman of the Board presides over these executive
sessions. He also helps to set agendas for Board meetings and
serves as a liaison between the independent directors and the
senior management team.
Committee
Membership
The table below provides current membership information for each
of the standing committees of the Board:
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Nominating
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and
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Name
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Audit
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Compensation
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Corporate Governance
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John C. Aplin, Ph.D.
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X
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Douglas G. Bailey
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X
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(1)
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Keith E. Brauer
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X
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(1)
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John G. Clawson(2)
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X
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P. Ron Ellis
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Ann F. Hanham, Ph.D.
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X
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Philip S. Low, Ph.D.
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X
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Fred A. Middleton
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X
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James S. Shannon, M.D., MRCP
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(1)
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Number of 2010 Meetings
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8
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6
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5
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(1) Committee Chairman
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(2) Chairman of Board
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The Audit
Committee
The members of our audit committee are Mr. Brauer and
Drs. Aplin and Hanham, each of whom is a non-employee
member of our Board of Directors. Our audit committee chairman,
Mr. Brauer, is our audit committee financial expert, as
that term is defined under the Securities and Exchange
Commission rules implementing
11
Section 407 of the Sarbanes-Oxley Act of 2002, and
possesses financial sophistication, as defined under the rules
of The Nasdaq Stock Market LLC. Our audit committee is
responsible for, among other things:
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reviewing and approving the selection of our independent
auditors, and approving the audit and non-audit services to be
performed by our independent auditors;
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monitoring the integrity of our financial statements and our
compliance with legal and regulatory requirements as they relate
to financial statements or accounting matters;
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reviewing the adequacy and effectiveness of our internal control
policies and procedures;
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discussing the scope and results of the audit with the
independent auditors and reviewing with management and the
independent auditors our interim and year-end operating
results; and
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preparing the audit committee report that the Securities and
Exchange Commission requires in our annual proxy statement.
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The
Compensation Committee
The members of our compensation committee are
Messrs. Bailey, Clawson and Middleton. Mr. Bailey is
the chairman of our compensation committee. The compensation
committee is responsible for, among other things:
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overseeing our compensation policies, plans and benefit programs;
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reviewing and approving for our executive officers: the annual
base salary, the annual incentive bonus, including the specific
goals and amount, equity compensation, employment agreements,
severance arrangements and change in control arrangements, and
any other benefits, compensations or arrangements;
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discussing the Compensation Discussion and Analysis required by
Securities and Exchange Commission regulations with management
and, if appropriate, recommending its inclusion in the
companys annual report on
Form 10-K
and proxy statement; and
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administering the issuance of stock options and other awards
under our stock plans.
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Compensation
Committee Interlocks and Insider Participation
No member of the Compensation Committee during 2010 was an
officer, employee or former officer of Endocyte or had any
relationship requiring disclosure in this proxy statement
pursuant to Securities and Exchange Commission regulations. None
of our executive officers served as a member of a compensation
committee or a director of another entity under the
circumstances requiring disclosure in this proxy statement
pursuant to Securities and Exchange Commission regulations.
The
Nominating and Corporate Governance Committee
The members of our nominating and corporate governance committee
are currently Drs. Shannon and Low. Dr. Shannon is the
chairman of our nominating and corporate governance committee.
The committee held five meetings during 2010. Our board of
directors has determined that Dr, Shannon meets the independence
standards of the companys Corporate Governance Principles,
listing standards of The Nasdaq Global Stock Market and
applicable securities laws, however, Dr. Low does not.
Please see Corporate Governance Matters
Director Independence for additional information. The
nominating and corporate governance committee is responsible
for, among other things:
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assisting our Board of Directors in identifying prospective
director nominees and recommending nominees for each annual
meeting of stockholders to our Board of Directors;
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reviewing developments in corporate governance practices and
developing and recommending governance principles applicable to
our Board of Directors;
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reviewing the succession planning for our executive officers;
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overseeing the evaluation of our Board of Directors and
management; and
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recommending members for each committee of our Board of
Directors.
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12
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors currently consists of nine members
divided into three classes whose terms of office expire at
successive annual meetings. Three directors are to be elected at
the annual meeting, to serve for a term of office expiring at
the 2014 annual meeting of stockholders. Based on the
recommendation of the Nominating and Corporate Governance
Committee, the Board has nominated the following three persons
listed below as Nominees for Director All of the
nominees are current directors.
We expect each nominee for election as a director will be able
to serve if elected. If any nominee is not able to serve,
proxies will be voted in favor of the remainder of those
nominated and may be voted for substitute nominees.
There are no family relationships among any of our directors or
executive officers. The names, principal occupations and certain
other information about the three nominees and the six directors
whose term of office is not expiring at the annual meeting, as
well as key experiences, qualifications, attributes and skills
of those persons that led the Nominating and Corporate
Governance Committee to conclude that such person is currently
qualified to serve as a director are set forth on the following
pages.
Nominees
for Director (Class I Directors)
John C. Aplin, Ph.D.
Age 65
Audit Committee
Dr. Aplin has served as a member of our Board of Directors
since May 2003. Since November 1990, Dr. Aplin has served
as General Partner and Managing Director of CID Capital, a
venture capital firm he joined after previously serving as
President and Chief Executive Officer of The Fuller Brush
Company, a supplier of consumer products. Dr. Aplin holds a
B.S. in business administration from Drake University, and an
M.A. in industrial and labor relations and a Ph.D. in business
administration from the University of Iowa. Dr. Aplin is
also a Certified Management Consultant.
We believe that Dr. Aplin possesses specific attributes
that qualify him to serve as a member of our Board of Directors,
including his experience in the venture capital industry, his
years of business and leadership experience and his financial
sophistication and expertise.
Douglas G. Bailey
Age 61
Compensation Committee (Chairman)
Mr. Bailey has served as a member of our Board of Directors
since July 2001. Mr. Bailey is the founder of American
Bailey Corporation, a private equity firm for which he has
served as President since October 1984 and as Chief Executive
Officer since 1996. Mr. Bailey has served as the President
and Chief Executive Officer since April 2010, Chairman of the
board of directors since January 2010, Deputy Chairman from 2002
through 2009, and a director since April 1998 of Fuel Tech,
Inc., a technology company enabling clean, efficient energy.
Mr. Bailey holds a B.S., an M.S. and Engineers
degree, all in mechanical engineering from Massachusetts
Institute of Technology, and an M.B.A. from the Harvard Business
School.
We believe that Mr. Bailey possesses specific attributes
that qualify him to serve as a member of our Board of Directors,
including his experience in the private equity industry and his
years of business and leadership experience.
Philip S. Low, Ph.D.
Age 60
Nominating and Corporate Governance Committee
Dr. Low is one of our founders and has served as our Chief
Science Officer since April 1998 and as a member of our Board of
Directors since December 1995. Dr. Low has served on the
faculty at Purdue University since
13
August 1976, where he is currently the Ralph C. Corley
Distinguished Professor of Chemistry. Dr. Low holds a B.S.
in chemistry from Brigham Young University and a Ph.D. in
biochemistry from the University of California, San Diego.
We believe that Dr. Low possesses specific attributes that
qualify him to serve as a member of our Board of Directors,
including the perspective and experience he brings as our Chief
Science Officer and as one of our co-founders, which brings
historic knowledge, scientific expertise and continuity to our
Board of Directors.
The Board
of Directors Unanimously Recommends that
Stockholders Vote For All of the Nominees Named
Above.
Continuing
Directors (Class II and Class III Directors)
Information regarding the companys directors continuing in
office is provided below.
Class II
Directors (Terms expire in 2012)
Keith E. Brauer
Age 62
Audit Committee (Chairman)
Mr. Brauer has served as a member of our Board of Directors
since August 2006. Since August 1999, Mr. Brauer has served
in various roles at the Community Hospitals of Indianapolis, or
CHI, including roles with CHIs affiliate, Indiana Heart
Hospital, or IHH. Mr. Brauer since August 1999 has served
as a member of CHIs finance committee, since April 2006 as
a member of IHHs board of directors and since July 2009 as
Chairman of IHHs board of directors. Mr. Brauer was
also a member of CHIs board of directors from October 2000
to December 2009 and as Chairman of CHIs board of
directors from August 2003 to August 2005. He has also served on
the board of directors since June 2006 and chairman of the audit
committee since September 2006 of NanoInk, Inc., a
nanometer-scale manufacturing and applications development
company. He has also served on the board of directors since
August 2008 and chairman of the audit committee since October
2008 of NICO Corporation, a neurosurgery company. From 1988 to
1994, Mr. Brauer served in various executive roles at Eli
Lilly and Company, a healthcare company, most recently as
Executive Director and Chief Accounting Officer. From July 1994
to April 2006, Mr. Brauer served as Vice President, Finance
and Chief Financial Officer of Guidant, which was acquired by
Boston Scientific Corporation, a medical device company, in
April 2006. Mr. Brauer retired with full benefits after the
acquisition of Guidant and has not sought full time employment
since that time. Mr. Brauer holds a B.S. in management from
Indiana University and an M.B.A. from the University of Michigan.
We believe that Mr. Brauer possesses specific attributes
that qualify him to serve as a member of our Board of Directors,
including his financial, general operational and management
experience.
John G. Clawson
Age 83
Chairman of the Board
Compensation Committee
Mr. Clawson has served as a member of our Board of
Directors since December 1995 and as Chairman of our Board of
Directors since August 2001. Mr. Clawson served as Chief
Executive Officer of Hill-Rom, Inc., a wholly owned subsidiary
of Hill-Rom Holdings, Inc., a medical device and equipment
company, and a former subsidiary of Hillenbrand Industries, a
healthcare and funeral services company, from 1975 to 1993. From
May 2002 to November 2008, Mr. Clawson served as a director
of Non-Invasive Monitoring Systems, a medical appliance and
equipment company. Mr. Clawson holds a B.A. in social
sciences from Brigham Young University and an M.B.A. from the
Harvard Business School.
We believe that Mr. Clawson possesses specific attributes
that qualify him to serve as a member of our Board of Directors,
including his general management and operational experience,
gained through his service as chief executive officer of several
companies.
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Ann F. Hanham, Ph.D.
Age 57
Audit Committee
Dr. Hanham has served as a member of our Board of Directors
since November 2004. Dr. Hanham joined Burrill &
Company, a venture capital and merchant banking firm, in
February 2000 and has served as a Managing Director there since
January 2002. Dr. Hanham served on the board of directors
of BioMimetic Therapeutics, Inc., a biopharmaceutical company,
from May 2001 to September 2006; Biotie Therapies, a drug
discovery and development company, from March 2009 to April
2010; and Targacept, a biopharmaceutical company, from
September 2005 to August 2006. Dr. Hanham holds a
B.Sc. from the University of Toronto, a M.Sc. from Simon Fraser
University and a Ph.D. from the University of British Columbia.
We believe that Dr. Hanham possesses specific attributes
that qualify her to serve as a member of our Board of Directors,
including experience in the venture capital industry and her
years of financial, business and leadership experience in the
biomedical industry.
Class III
Directors (Terms expire in 2013)
P. Ron Ellis
Age 49
Mr. Ellis is one of our founders and has served as our
President and Chief Executive Officer since January 1996 and as
a member of our Board of Directors since December 1995. From May
1987 to December 1995, Mr. Ellis served in various
positions at Hill-Rom Company, but most recently as Vice
President of Strategy and Corporate Development of the specialty
care division. Mr. Ellis holds a B.S. in computer science
and an M.B.A. from Brigham Young University and a certification
in regulatory affairs from Purdue University.
We believe that Mr. Ellis possesses specific attributes
that qualify him to serve as a member of our Board of Directors,
including the perspective and experience he brings as our
President and Chief Executive Officer and as one of our
co-founders, which brings historic knowledge, operational
expertise and continuity to our Board of Directors.
Fred A. Middleton
Age 61
Compensation Committee
Mr. Middleton has served as a member of our Board of
Directors since July 2001. Since 1987, Mr. Middleton has
been a General Partner and Managing Director of Sanderling
Ventures, a biomedical venture capital firm. During the last
30 years, Mr. Middleton has served in a number of
roles as a member of management, board member or an investor of
in over 25 biomedical companies. Mr. Middleton currently
serves as Chairman of the Board of directors of Stereotaxis
(STXS), a medical device company, as Chairman of the Board of
Pacira Pharmaceuticals (PCRX), and as a member of board of
directors of CardioNet (BEAT), a cardiac rhythm management
services company. Mr. Middleton also serves on the board of
directors of six other privately-held biomedical and
biotechnology companies. He holds a B.S. in chemistry from the
Massachusetts Institute of Technology and an M.B.A. with
Distinction from the Harvard Business School.
We believe that Mr. Middleton possesses specific attributes
that qualify him to serve as a member of the Board of Directors,
including his experience in the venture capital industry and his
general operational and management experience working with
early-stage biomedical companies.
James S. Shannon, M.D., MRCP (UK)
Age 54
Nominating and Corporate Governance Committee (Chairman)
Dr. Shannon has served as a member of our Board of
Directors since February 2010. Dr. Shannon served as the
President and Chief Executive Officer of Cerimon
Pharmaceuticals, a biopharmaceutical company, from January 2009
to April 2010 and has served as a director since October 2008.
Dr. Shannon served in various executive roles at Novartis
AG, a healthcare products company from December 1994 to
September 2008, serving as Global Head of Pharma Development
from November 2005 to September 2008. From October 2008 to
December 2008
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Mr. Shannon was between jobs. He has served on the board of
directors of MannKind Corporation, a biopharmaceutical company,
since February 2010, Crucell, a biopharmaceutical company, since
June 2010, Biotie Therapies, a biopharmaceutical company, since
April 2010 and several other private companies. Dr. Shannon
holds a B.Sc., an M.B., a B.Ch., a B.A.O. and an M.D. in
medicine from Queens University of Belfast and is a Member
of the Royal College of Physicians (UK).
We believe that Dr. Shannon possesses specific attributes
that qualify him to serve as a member of our Board of Directors,
including his general operational and management experience in
the biomedical industry, his experience managing product
development programs and his experience in international markets.
PROPOSAL 2
ADVISORY STOCKHOLDER VOTE ON EXECUTIVE COMPENSATION
Our goal for our executive compensation program is to motivate
and retain qualified employees in a way that establishes an
appropriate relationship between executive pay and the creation
of stockholder value on a long-term basis. We believe that our
executive compensation program accomplishes this goal.
The Compensation Discussion and Analysis beginning on
page 19 of this proxy statement describes our executive
compensation program and the decisions made by the Compensation
Committee during 2010 in more detail. We are requesting that
stockholders vote to approve the compensation of our named
executive officers as disclosed in this proxy statement pursuant
to the SECs compensation disclosure rules (which
disclosures include the Compensation Discussion and Analysis,
the compensation tables and the narrative discussion following
the compensation tables). This advisory vote is generally
referred to as a
say-on-pay
vote.
Accordingly, we recommend that our stockholders vote
For the following resolution at the annual
meeting:
Resolved, that the compensation of the companys
named executive officers as disclosed in this proxy statement
pursuant to the compensation disclosure rules of the Securities
and Exchange Commission, including the Compensation Discussion
and Analysis, the compensation tables and the narrative
discussion, is approved.
As an advisory vote, this proposal will not be binding upon the
Board of Directors or us. However, we expect that the
Compensation Committee, which is responsible for designing and
administering our executive compensation program, will consider
the outcome of the vote when making future compensation
decisions for named executive officers.
The Board
of Directors Unanimously Recommends that Stockholders Vote
For the Advisory Proposal
Approving the Compensation of our Named Executive Officers as
Disclosed in this Proxy Statement.
PROPOSAL 3
ADVISORY VOTE TO DETERMINE FREQUENCY OF FUTURE ADVISORY VOTES ON
EXECUTIVE COMPENSATION
We are requesting stockholders to express their preference on
the frequency of future advisory votes on our executive
compensation. Stockholders may indicate whether we should hold
future advisory votes on executive compensation every
(a) 1 year, (b) 2 years or
(c) 3 years. The next time we would be required to
conduct a similar vote would be in connection with the 2017
annual meeting of stockholders.
After consideration, the Board of Directors recommends that we
hold future advisory votes on executive compensation every
three years. We believe that this frequency is
appropriate for us for a number of reasons, including:
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We are a small, newly public company with a simple executive
compensation program, and more frequent advisory shareholder
votes would be an unnecessary administrative cost;
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Three years should allow stockholders to evaluate whether we
have achieved key milestones during a multi-year period of
time; and
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Our long-term incentive performance plan is designed to reward
and incentivize long-term performance.
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Accordingly, the Board has concluded that holding an advisory
vote on executive compensation every three years should be
sufficient to permit stockholders to express their opinions
while, at the same time, minimizing the administrative costs of
such votes.
As an advisory vote, this proposal will not be binding upon the
Board of Directors or us. However, we expect that the Board of
Directors will consider the outcome of the vote when determining
how often to hold future advisory votes on our executive
compensation.
The Board
of Directors Unanimously Recommends that Stockholders Vote
3 Years on the Advisory Proposal to Determine
the Frequency of Future Advisory Votes on Executive
Compensation.
PROPOSAL 4
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
The Audit Committee has selected Ernst & Young LLP as
our independent registered public accounting firm for 2011, and
we are asking stockholders to ratify that appointment.
The Audit Committee approves all audit and permissible non-audit
services to be provided to the company by Ernst &
Young LLP prior to commencement of services and has delegated to
the Chairman of the Audit Committee the authority to approve
specific services up to specified individual and aggregate fee
amounts. These approval decisions are presented to the full
Audit Committee at the next scheduled meeting after such
approvals are made.
The company has incurred fees as shown below for services from
Ernst & Young LLP. Ernst & Young LLP has
advised us that it has billed or will bill the company the below
indicated amounts for the following categories of services for
the years ended December 31, 2010 and 2009, respectively:
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2010
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2009
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Audit Fees(1)
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$
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490,000
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$
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59,700
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Audit-Related Fees
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Tax Fees(2)
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142,400
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5,900
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All Other Fees
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(1) |
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Includes fees for services rendered for the annual audits for
the years ended December 31, 2010 and 2009, reviews of the
quarterly financial statements, issuance of consent and comfort
letters in connection with filing our registration statement for
our initial public offering and consultation services relating
to debt issuances. |
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Includes fees relating to tax return preparation and services in
2010 related to a Section 382 study relating to usage of
the companys net operating loss carryforwards. |
We expect that representatives of Ernst & Young LLP
will be present at the meeting and will be available to respond
to appropriate questions. They will also have an opportunity to
make a statement if they desire to do so.
If the holders of a majority of voting shares voting on this
matter do not ratify the selection, the Audit Committee will
reconsider its choice taking into consideration the views of the
stockholders and may, but will not be required to, appoint a
different independent registered public accounting firm.
The Board
of Directors Unanimously Recommends that Stockholders Vote
For Ratification of the
Appointment of Ernst &Young LLP as our Independent
Registered Public Accounting Firm for 2011.
17
REPORT OF
THE AUDIT COMMITTEE
The Audit Committee is responsible for monitoring the integrity
of the companys financial statements, the qualifications,
performance and independence of the companys independent
registered public accounting firm and the companys
compliance with legal and regulatory requirements. We have the
sole authority to appoint or replace the companys
independent registered public accounting firm. The committee
operates under a written charter adopted by the Board. The
committee currently has three members. The Board has determined
that each committee member is independent under the standards of
director independence established under our Corporate Governance
Principles, listing standards of The Nasdaq Global Stock Market
and applicable securities laws.
Management is responsible for the financial reporting process
and the preparation of financial statements in accordance with
accounting principles generally accepted in the United States.
The companys independent registered public accounting firm
is responsible for auditing the financial statements and
expressing an opinion on the financial statements. Our
responsibility is to oversee and review the financial reporting
process. We are not, however, professionally engaged in the
practice of accounting or auditing and do not provide any expert
or other special assurance as to such financial statements
concerning compliance with laws, regulations or accounting
principles generally accepted in the United States or as to the
independence of the independent registered public accounting
firm. We rely, without independent verification, on the
information provided to us and on the representations made by
management and the independent registered public accounting firm.
We held eight meetings during 2010. The meetings were designed,
among other things, to facilitate and encourage communication
among the committee, management and the independent registered
public accounting firm, Ernst & Young LLP.
We discussed with Ernst & Young LLP the overall scope
and plans for their respective audits. We met with
Ernst & Young LLP, with and without management
present, to discuss the results of their examinations.
We discussed with management the companys major financial
risk exposures and the steps management has taken to monitor and
control such exposures, particularly related to the
companys plans for compliance with Sarbanes-Oxley Act.
We reviewed and discussed the audited financial statements for
the year ended December 31, 2010 with management and
Ernst & Young LLP. We reviewed Ernst & Young
LLPs report on our financial statements which indicated
that the financial statements present fairly, in all material
respects, our financial position and results of operations and
cash flows in conformity with accounting principles generally
accepted in the United States. We also discussed with management
and Ernst & Young LLP the process used to support
certifications by the companys Chief Executive Officer and
Chief Financial Officer that are required by the Securities and
Exchange Commission to accompany the companys periodic
filings with the Securities and Exchange Commission.
We also discussed with Ernst & Young LLP matters
required to be discussed by their professional standards,
including, among other things, matters related to the conduct of
the audit of the companys financial statements and the
matters required to be discussed by Statement on Auditing
Standards No. 61, as amended (AICPA, Professional
Standards, Vol. 1, AU section 380), as adopted by the
Public Company Accounting Oversight Board in Rule 3200T.
We also received the written disclosures and the letter from
Ernst & Young LLP required by applicable requirements
of the Public Company Accounting Oversight Board regarding the
independent accountants communications with us concerning
independence and we discussed with Ernst & Young LLP
the independence of that firm.
When considering Ernst & Young LLPs
independence, we considered if services they provided to the
company beyond those rendered in connection with their audit of
the companys financial statements and reviews of the
companys quarterly unaudited financial statements were
compatible with maintaining their independence. We concluded
that the provision of such services by Ernst & Young
LLPs has not jeopardized Ernst & Young
LLPs independence.
Based on our review and these meetings, discussions and reports,
and subject to the limitations on our role and responsibilities
referred to above and in the Audit Committee Charter, we
recommended to the Board that the companys audited
financial statements for the year ended December 31, 2010
be included in the companys annual report on
Form 10-K.
The Committee has also selected Ernst & Young LLP as
the companys independent
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registered public accounting firm for the year ending
December 31, 2011 and will present the selection to the
stockholders for ratification at the meeting.
The Audit Committee:
Keith E. Brauer, Chairman
John C. Aplin
Ann F. Hanham
COMPENSATION
COMMITTEE REPORT
The Compensation Committee consists of the three directors named
below, each of whom meets the independence standards of the
companys Corporate Governance Principles, listing
standards of The Nasdaq Global Stock Market and applicable
securities laws.
The committee has the authority to engage its own advisers to
assist it in carrying out its responsibilities. The compensation
committee selected Radford, a subsidiary of Aon Consulting, and
J. Thelander Consulting, or Thelander, and each reports to the
compensation committee directly and interacts with management,
as necessary. For 2009 and 2010, Radford and Thelander provided
us with applicable survey benchmark data. These consultants have
not performed work for the company other than pursuant to an
engagement by the compensation committee.
The committee held six meetings during 2010. The meetings were
designed, among other things, to facilitate and encourage free
and frank discussion between committee members and the
consultant as well as extensive communication among committee
members, executive management, and other company personnel
involved in executive compensation matters.
The committee reviewed and discussed with management the
Compensation Discussion and Analysis that immediately follows
this report. Based on its review and these discussions with
management, the committee recommended to the Board of Directors
that the Compensation Discussion and Analysis be included in the
companys annual report on
Form 10-K
for the fiscal year ended December 31, 2010, and proxy
statement for the 2011 annual meeting of stockholders.
The Compensation Committee:
Douglas G. Bailey, Chairman
John G. Clawson
Fred A. Middleton
COMPENSATION
DISCUSSION AND ANALYSIS
Executive
Summary
The following discussion is intended to supplement the more
detailed information concerning executive compensation that
appears in the rest of this section and in the tables and the
accompanying narrative. Our goal is to provide a better
understanding of our compensation practices and the decisions
that affected the compensation payable for 2010 to our executive
officers, including the President and Chief Executive Officer,
the Chief Financial Officer and the three other most
highly-compensated executive officers named in the Summary
Compensation Table, which we refer to in this discussion as the
named executive officers, or NEOs.
The Compensation Committee of our Board of Directors, referred
to in this section as the committee, plays a key role in
designing and administering our executive compensation program.
All principal elements of compensation paid to our executive
officers are subject to approval by the committee. The
Compensation Committee Report immediately precedes this
discussion.
19
During 2010, we achieved a number of significant
accomplishments, including the following:
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we completed a phase 2b randomized study of our small-molecule
drug conjugate (SMDC) EC145, in the treatment of
platinum resistant ovarian cancer;
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we completed a phase 2 study of EC145 in the treatment of
advanced non-small cell lung cancer;
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we completed enrollment into a phase 1 study of EC0225,
initiated a phase 0 study of EC0652 and identified EC0746, a
SMDC that targets activated microphages involved in certain
inflammatory diseases; and
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we raised over $100 million by February 2011, which we
believe is sufficient to fund the phase 3 trial of EC145.
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Compensation
Philosophy
Our executive compensation program seeks to attract and retain
our senior executives and to motivate them to pursue our
corporate objectives while encouraging the creation of long-term
value for our stockholders. Through our annual goal-setting
process, organizational objectives are established for our
company and employees, including our named executive officers.
We evaluate and reward our NEOs through compensation intended to
motivate them to identify and capitalize on the opportunities
that result in our growth and success.
The main elements of our NEO compensation program are:
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base salary;
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short-term incentives through our cash bonus program;
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long-term incentives through equity award grants; and
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broad-based employee benefits.
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We believe these compensation components are necessary to help
us attract and retain the executive talent on which we depend.
These elements comprise a compensation package for our NEOs that
is intended to reward achievement of our business goals, link
individual performance to our corporate performance, provide
competitive pay and align the interests of our NEOs with those
of our stockholders.
Compensation
Decision Process
Role
of Our Board of Directors and Compensation
Committee
For 2010, the committee recommended the compensation of our NEOs
to our Board of Directors, and our Board of Directors had the
final decision-making authority with respect to the compensation
of our NEOs. Our Board of Directors, at its discretion, may
agree with or reject the committees recommendations, as
well as require revisions to such recommendations before it
approves our NEOs compensation. For 2010, our Board of
Directors agreed with the committees recommendations and
approved our NEOs compensation accordingly.
Role
of Management
The Chief Executive Officer, or CEO, typically attends all
meetings of the compensation committee, except for executive
sessions. At the request of the compensation committee, our CEO
provides his assessment of the performance of our NEOs, other
than himself. Our CEO also takes an active part in the
discussions of the compensation committee at which the
compensation of NEOs other than himself are discussed. The
committee may agree with our CEOs recommendations or may
require revisions to the compensation of such NEOs when making
recommendations to our Board of Directors. However, all
decisions regarding our CEOs compensation are recommended
by the committee and reviewed and approved by our Board of
Directors in closed sessions outside of our CEOs presence.
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Role
of Compensation Consultants
The committee has the authority to engage its own advisers to
assist it in carrying out its responsibilities. The committee
selected Radford, a subsidiary of Aon Consulting, and J.
Thelander Consulting, or Thelander, and each reports to the
committee directly and interacts with management, as necessary.
For 2010, Radford and Thelander provided us with applicable
survey benchmark data. These consultants have not performed work
for us other than pursuant to an engagement by the committee.
Comparator
Group Companies and Benchmarking
In determining compensation for our NEOs, the committee refers
to executive compensation surveys provided by Radford and
Thelander. Specifically, for 2010, the committee reviewed data
from the Radford Global Life Sciences Survey with respect to
private companies with at least $80 million of secured
financing and the Thelander Private Company Compensation Survey
with respect to private companies with at least $70 million
of secured financing. However, benchmarking is only one of many
factors we consider in setting NEO compensation. Accordingly, we
view benchmark data as a useful tool, but not as the sole
parameter for determining compensation. Generally, we consider
data between the 25(th) and 75(th) percentile with respect to
each of base salary, cash bonuses and equity awards for each
NEOs applicable position to validate and ensure that
compensation falls within a competitive range against industry
norms.
The committee retained Radford to determine a group of similarly
situated public peer companies, from which we will benchmark
competitive pay levels and compensation practices as disclosed
pursuant to such companies publicly filed compensation
data. The peer group was determined using the following criteria:
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U.S. companies operating in drug delivery systems or
biopharmaceutical industries that are similarly situated in
phase 3 clinical trials or after filing an NDA;
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comparable companies in terms of stage of development and our
forecasted financial profile; and
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sufficient room for growth without over-or under-extending the
breadth of our selected peer group.
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The committee approved the following peer group for compensation
purposes in August 2010:
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Alimera Sciences
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MAP Pharmaceuticals
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Ardea Biosciences
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Medivation
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ARIAD Pharmaceuticals
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Nabi Biopharmaceuticals
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ArQule
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Novavax
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AVEO Pharmaceuticals
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Omeros
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BioCryst Pharmaceuticals
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Optimer Pharmaceuticals
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Cadence Pharmaceuticals
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Orexigen Therapeutics
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Cytokinetics
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Pain Therapeutics
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DURECT
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Pharmacyclics
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Dynavax Technologies
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Targacept
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Performance-driven
Compensation
We emphasize performance in annually reviewing and setting our
NEOs base salary, bonuses and equity awards. This emphasis
on performance with respect to a substantial portion of
compensation is intended to motivate our NEOs to pursue our
business objectives, reward them for achievement of these
objectives and align their interests with those of our
stockholders.
Accordingly, on an annual basis and typically at the beginning
of each year, we determine a set of performance goals to be
achieved with respect to such year. Our performance as compared
to these goals and an individuals performance and
contributions primarily drive the recommendations that the
committee makes with respect to each NEOs base salary,
cash bonus and equity compensation. Other factors, such as
larger macroeconomic conditions of the industry and labor market
in which we compete, as well as strategic business decisions,
also may influence compensation decisions. For example, as
discussed below, for 2010, in determining equity awards, our
Board of
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Directors and the committee took into consideration the equity
ownership stakes of our NEOs to guide us in ensuring that our
NEOs compensation was competitive and had sufficient
retention value.
Typically, the performance goals for each year initially are
identified and developed by senior executives, and our CEO in
particular, during discussions of our strategic business
objectives that are particularly important in driving our
business, which after discussion with our Board of Directors are
approved. Upon completion of the year, our Board of Directors
reviews each performance goal and determines the extent to which
we achieved such goals, and our CEO assesses the achievement of
specific performance goals relating to other NEOs. Our Board of
Directors review of our CEOs compensation package
involves primarily the level of achievement of our performance
goals, while review of all other NEOs compensation
packages includes review of our performance goals and specific
performance goals that relate to each NEOs area of
responsibility.
Company
Performance Goals
The Board of Directors and the committee have identified four
key areas of company performance that apply to us generally:
(1) discovery of new SMDC and obtaining patent protection;
(2) meeting of clinical milestones (for example, protocol
sign-off, first patient in, last patient out, database lock,
final clinical study report, and similar items);
(3) financing the company and meeting our spending
targets; and
(4) licensing and partnering, which include both
in-licensing and out-licensing objectives.
These are long-term strategic objectives that are broken down
into specific plans. The CEO reviews each area of performance
with the committee at the applicable year-end and the committee
will assign an overall company rating on a scale of zero to
100 percent achievement. The rating takes into account the
difficulty as well as the achievement of the objectives in the
aggregate.
For 2010, the Board of Directors approved the following
performance goals:
(1) identify SMDCs using new mechanisms of cell killing;
(2) achieve operational milestones related to our phase 2
clinical trial for EC145;
(3) complete design of our phase 3 clinical trial for
EC145, which we refer to as our PROCEED trial;
(4) achieve manufacturing readiness for PROCEED; and
(5) execute corporate financing plans to fund PROCEED.
For 2010, the committee did not determine a specific score
related to the aggregate achievement of the performance goals
because no bonus pool was created for 2010.
Individual
Performance
The committee reviews our CEOs performance based on
achievement of the corporate performance goals. Other NEOs
performance reviews also include a separate review of any
corporate performance goals applicable to the NEOs area of
responsibility. The committee, with the assistance of our CEO,
determines the relative achievement of the performance goals
applicable to each NEO. Although no formula is used with respect
to setting any particular element of compensation, each
NEOs performance review generally is weighted so that
50 percent relates to the achievement of performance goals,
25 percent relates to performance of major job
responsibilities and 25 percent relates to overall
demonstration of teamwork, excellence and commitment.
Specifically, individual performance objectives for our NEOs for
2010 are as follows:
Mr. Sherman. Mr. Shermans
performance goals are to achieve key financial objectives, such
as implementing cost savings, managing spending and ensuring
adequate financing.
22
Dr. Leamon. Dr. Leamons
performance goals are to achieve key discovery objectives and
issue of key patents.
Dr. Messmann. Dr. Messmanns
performance goals are to achieve key clinical objectives related
to clinical research, including the design and execution of our
clinical programs.
Dr. Ritter. Dr. Ritters
performance goals are to achieve key manufacturing and quality
objectives related to insuring supply of drug product, managing
manufacturing and development costs and meeting certain
regulatory requirements.
Elements
of Executive Compensation
Base
Salary
We provide base salaries to our NEOs and other employees to
compensate them for services rendered on a
day-to-day
basis during the year. Generally, the base salary element of
compensation is used to recognize the experience, skills,
knowledge and responsibilities required of each NEO, and over
time reflects our NEOs overall sustained performance and
contributions to our business. The review of NEO base salary
levels by our CEO, except with respect to his own salary, the
committee and our Board of Directors is subjective, based on
their general experience with respect to setting salary levels
and supplemented by survey data and assessments of the
performance of our NEOs. Survey data also is used to validate
that determinations fall within acceptable parameters relative
to the market.
The following table sets forth information regarding the base
salary for 2010 for our NEOs:
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage Increase
|
Named Executive Officer
|
|
2010 Base Salary
|
|
from Prior Year
|
|
P. Ron Ellis
|
|
$
|
306,000
|
|
|
|
9.97
|
%
|
Michael A. Sherman
|
|
$
|
225,000
|
|
|
|
6.13
|
%
|
Christopher P. Leamon, Ph.D.
|
|
$
|
225,000
|
|
|
|
4.65
|
%
|
Richard A. Messmann, M.D.
|
|
$
|
260,600
|
|
|
|
3.00
|
%
|
Allen R. Ritter, Ph.D.
|
|
$
|
193,000
|
|
|
|
3.37
|
%
|
Base salaries were adjusted in early 2010, based on 2009
corporate and individual performance and taking into
consideration the survey data provided by Radford and Thelander.
The increase in 2010 base salaries over 2009 was made in
consideration of our successful achievement of most of the
corporate performance goals that had been set for 2009,
achievement of other performance goals as they related to each
NEO and the subjective assessment of each NEOs performance
of major job responsibilities and demonstration of teamwork,
excellence and commitment. Each of the base salary increases was
reviewed in light of the Radford and Thelander survey data to
validate that they were within acceptable ranges. The committee
considered that Mr. Ellis salary was below the 25(th)
percentile of the competitive salary data prior to the increase.
As a result, the amount of Mr. Ellis salary increase
was intended to bring his base salary more in line with CEO
salaries across the companies in the survey data and resulted in
a base salary for Mr. Ellis at slightly above the 25(th)
percentile. Other NEOs base salaries fell between the
25(th) and 75(th) percentiles.
Short-Term
Incentives (Cash Bonuses)
To focus NEOs on the importance of achieving our goals, they are
eligible to earn short-term cash incentive pay that is tied to
achievement of those goals. Bonuses are discretionary and the
committee and Board of Directors may determine bonuses based on
achievement of performance goals and other factors they deem
relevant, including a determination not to award any bonus. No
specific formula is used to derive the actual amount of bonus
for each NEO and any amounts actually paid are determined based
on subjective review by our Board of Directors, the committee
and, with respect to NEOs other than himself, our CEO.
After each year, the committee recommends to our Board of
Directors bonus pools to be set based on achievement of
corporate performance goals in the preceding year. Upon our
Board of Directors approval of the bonus pools, the
bonuses with respect to our NEOs are determined as a portion of
the applicable bonus pool, based
23
on each such NEOs individual performance in such preceding
year and in relation to each such NEOs targeted bonus
amount as a percentage of base salary. For 2010, target bonuses
were 25 percent of base salary for Mr. Ellis and
20 percent of base salary for all other NEOs.
The bonus payouts are awarded based on company and individual
performance. Performance goals are defined at the beginning of
each fiscal year. Goals are set at a company level and also at
an individual level for all employees (aligning with company
goals). Other factors that influence the bonus payout include
the health of financial markets or status of active fundraising
efforts impacting the prospects to raise additional capital and
the resulting need for us to conserve cash. These other factors
also impact the total size of the option pool, but the
allocation of that pool to individuals is determined solely by
their performance relative to key result areas.
Regardless of the achievement of the 2010 corporate performance
goals, management recommended and the committee concurred that
no bonus pool shall be created for 2010 in order to preserve
near-term cash resources. And as a result, since no bonus pool
would be available for 2010 distribution to NEOs, relative
individual performance was not assessed in connection with any
distributions.
Long-Term
Incentives (Equity Awards)
We believe that strong long-term corporate performance is
achieved with a corporate culture that encourages a long-term
focus by our NEOs through the use of equity awards, the value of
which depends on our stock performance. We have established
equity incentive plans to provide certain of our employees,
including our NEOs, with incentives to help align those
employees interests with the interests of our stockholders
and to enable them to participate in the long-term appreciation
of our stockholder value. Additionally, equity awards provide an
important retention tool for key employees, as the awards
generally are subject to vesting over an extended period of time
based on to continued service with us.
Typically, equity awards are granted annually at the beginning
of each year based primarily on corporate performance as a whole
during the preceding year. In addition, we may grant equity
awards upon the occurrence of certain events during the year,
for example, upon an employees hire or achievement of a
significant business objective.
No formula is used in setting equity award grants and the
determination of whether to grant equity awards, as well as the
size of such equity awards, to our NEOs, but involves subjective
assessments by our Board of Directors, the committee and, with
respect to NEOs other than himself, our CEO. Generally, annual
equity awards are driven by our performance during the
applicable year. We may consider individual performance and
contributions during such preceding year to the extent our Board
of Directors and the committee believe such factors are
relevant. As with base salary and cash bonuses, our Board of
Directors and the committee also consider the survey data in
determining equity award grants to our NEOs. Our Board of
Directors and the committee refer to the 25(th) and 75(th)
percentiles of the survey data generally to substantiate that
the size of equity award grants to NEOs are appropriate.
However, based on our emphasis on performance-driven
compensation, and in offsetting the slightly lower base salaries
as compared to survey data that we provide to our NEOs, equity
awards tend to fall between the 50(th) and 75(th) percentiles of
the survey data used.
2010
Milestone Equity Awards
In February 2010, concurrent with its decision not to provide
base salary increases or cash bonuses to our NEOs and in order
to continue to drive performance, our Board of Directors set
certain key milestones for us to be achieved during 2010, upon
which our Board of Directors were to grant additional stock
options to our NEOs. The
24
following table describes the applicable milestones and stock
options granted upon achievement of such milestones, with
respect to each NEO:
|
|
|
|
|
|
|
|
|
Milestone
|
|
|
|
|
Option Grants
|
|
|
Named Executive Officer
|
|
(Number of Shares)
|
|
Milestones
|
|
P. Ron Ellis
|
|
|
52,356
|
|
|
Leadership to meet company objectives
|
Michael A. Sherman
|
|
|
10,471
|
|
|
Completion of successful financing
|
Christopher P. Leamon, Ph.D.
|
|
|
10,471
|
|
|
Completion of key discovery goals
|
Richard A. Messmann, M.D.
|
|
|
1,570
|
|
|
Completion of certain clinical studies and presentations
|
Allen R. Ritter, Ph.D.
|
|
|
7,852
|
|
|
Achievement of key manufacturing and quality objectives
|
2010
Annual Equity Awards
In early 2010, based on the committees determination that
the companys achievement of the performance goals for 2009
resulted in a 75 percent score, or Highly Successful
Performance rating, and the individual NEOs
contributions, our Board of Directors approved the equity awards
set forth in the following table:
|
|
|
|
|
|
|
February 2010 Option
|
|
|
Grants
|
Named Executive Officer
|
|
(Number of Shares)(1)
|
|
P. Ron Ellis
|
|
|
91,623
|
|
Michael A. Sherman
|
|
|
15,706
|
|
Christopher P. Leamon, Ph.D.
|
|
|
15,706
|
|
Richard A. Messmann, M.D.
|
|
|
15,706
|
|
Allen R. Ritter, Ph.D.
|
|
|
15,706
|
|
|
|
|
(1) |
|
The option grants vest on a monthly basis over a period of
48 months beginning February 28 2010, subject to continued
service with us through each relevant date. |
For 2010, our Board of Directors and the committee took into
account the equity holdings of each of our NEOs and engaged in
benchmarking ownership levels of individual NEOs as compared
with our peer group. As a result of previous recommendations
from Radford regarding increasing equity ownership to the extent
deemed essential in ensuring NEOs have sufficient incentive and
retention value, our Board of Directors and the committee
continued to monitor our NEOs equity ownership level,
including total equity ownership and unvested equity stakes.
Particularly, our Board of Directors and the committee believed
that Mr. Ellis equity ownership was low in comparison
to survey data, below the 25(th) percentile with respect to both
founder and non-founder survey data. As a result, immediately
following the option grants made in early 2010,
Mr. Ellis equity ownership increased to slightly
above the 25(th) percentile with respect to founder survey data,
although still below the 25(th) percentile with respect to
non-founder survey data.
In addition, with respect to Mr. Ellis and Dr. Leamon,
our Board of Directors and the committee also considered that
certain previously granted equity awards held by these NEOs were
set to expire. Accordingly, the grant of the new equity awards
in 2010 was intended both to reward performance in 2009 as well
as to address potential retention concerns related to the
reduction in outstanding equity awards and diminishing
outstanding equity awards that remain unvested.
In addition to the award granted to Mr. Ritter in February
2010, Mr. Ritter was awarded an additional option grant of
5,235 shares in November 2010 related to the successful
execution of activities in preparation for PROCEED.
The stock option grants referenced above brought our NEOs to
appropriate ownership percentiles compared to survey data:
ranging from the 25(th) percentile to the 80(th) percentile.
Based on Radford benchmarking and what
25
the committee determined appropriate for Mr. Ellis, the
committee determined that the foregoing ownership levels, when
compared to the survey data, was fair and at reasonable levels
for incentive and retention purposes.
Broad-based
Employee Benefits
Our NEOs are eligible to participate in the same group insurance
and employee benefit plans as our other salaried employees. We
provide employee benefits to all eligible employees, including
our NEOs, which our Board of Directors and the committee believe
are reasonable and consistent with its overall compensation
objective to better enable us to attract and retain employees.
These benefits include medical, dental, vision, and disability
benefits and life insurance.
Until 2009, we provided NEOs with healthcare coverage for which
all premiums were paid by us. The benefit was provided because
we believed that it was necessary as an additional incentive to
attract and recruit key talent in a highly competitive labor
market. At this time, we do not provide special plans or
programs for our NEOs.
We sponsor a 401(k) tax-qualified retirement savings plan
pursuant to which employees are entitled to participate.
Employees can make contributions to the plan on a before-tax
basis to the maximum amount prescribed by the U.S. Internal
Revenue Service. We do not provide any matching to these
contributions. Other than this plan, we do not maintain any
other deferred savings plans in which our NEOs participate. We
do not maintain or provide any defined benefit plans for our
employees.
Our Board of Directors has adopted the 2010 Employee Stock
Purchase Plan, or the ESPP, but we have chosen to delay
commencing the ESPP until such date in the future, if ever, that
the committee determines in its sole discretion that it is in
our best interest to do so. We also intend to seek stockholder
approval of the ESPP at a future date. The plan administrator
will determine who is eligible, which may include our executive
officers and other employees should we ever decide to commence
offerings under it.
Change in
Control and Severance Benefits
The committee considers maintaining a stable and effective
management team to be essential to protecting and enhancing the
best interests of us and our stockholders. In August 2010, we
established change in control and severance arrangements with
certain key executives including our NEOs to provide assurances
of specified severance benefits to such executives whose
employment is subject to involuntary termination other than for
death, disability, or cause or voluntary termination for good
reason. We believe that it is imperative to provide such
individuals with severance benefits upon certain terminations of
employment, which we recognize can be triggered at any time, to
(i) secure their continued dedication to their work,
notwithstanding the possibility of a termination by us, and
(ii) provide such individuals with an incentive to continue
employment with us. We believe that the severance benefits are
competitive relative to the severance protection provided to
similarly situated individuals at companies in our peer group
and appropriate given that the benefits are subject to the
participants entry into a release of claims in favor of us.
We also recognize that the possibility of a change in control
may exist from time to time, and that this possibility, and the
uncertainty and questions it may raise among management, may
result in the departure or distraction of management to our and
our stockholders detriment. Accordingly, the committee and
Board of Directors decided to take appropriate steps to
encourage the continued attention, dedication and continuity of
members of our management to their assigned duties without the
distraction that may arise from the possibility or occurrence of
a change in control. As a result, we entered into agreements
with each of our NEOs and certain other senior executives that
provide additional benefits in the event of a change in control.
For more detail, see Estimated Post Employment Payouts
Under Alternative Termination Scenarios Potential
Payments Upon Termination or Change in Control.
Mr. Ellis is a party to an employment agreement under which
he would become entitled to receive certain benefits upon a
termination without cause or a change in control, which was
superseded by a change of control agreement that was approved by
our Board of Directors. For more detail, see Estimated
Post Employment Payouts Under Alternative Termination
Scenarios Potential Payments Upon Termination or
Change in Control.
26
Tax and
Accounting Considerations
We have not provided any executive officer or director with a
gross-up or
other reimbursement for tax amounts the executive officer or
director might pay pursuant to Section 280G or
Section 409A of the Code. Section 280G and related
Code sections provide that executive officers, directors who
hold significant stockholder interests and certain other service
providers could be subject to significant additional taxes if
they receive payments or benefits in connection with a change in
control of our company that exceeds certain limits, and that we
or our successor could lose a deduction on the amounts subject
to the additional tax. Section 409A also imposes additional
significant taxes on the individual in the event that an
executive officer, director or service provider receives
deferred compensation that does not meet the
requirements of Section 409A.
Due to the limitations of Section 162(m) of the
U.S. Internal Revenue Code Section, or Code, we generally
receive a federal income tax deduction for compensation paid to
our chief executive officer and to certain other highly
compensated officers only if the compensation is less than
$1,000,000 per person during any year or is
performance-based under Code Section 162(m). In
addition to salary and bonus compensation, upon the exercise of
stock options that are not treated as incentive stock options,
the excess of the current market price over the option price, or
option spread, is treated as compensation and accordingly, in
any year, such exercise may cause an officers total
compensation to exceed $1,000,000. Option spread compensation
from options that meet certain requirements will not be subject
to the $1,000,000 cap on deductibility, and in the past we have
granted options that we believe met those requirements.
Additionally, under a special Code Section 162(m)
exception, any compensation paid pursuant to a compensation plan
in existence before February 9, 2011, the date we closed
our initial public offering, will not be subject to the
$1,000,000 limitation until the earliest of: (i) the
expiration of the compensation plan, (ii) a material
modification of the compensation plan as determined under Code
Section 162(m), (iii) the issuance of all the employer
stock and other compensation allocated under the compensation
plan, or (iv) the first meeting of stockholders at which
directors are elected after the close of the third calendar year
following the year in which the public offering occurs. Although
the committee cannot predict how the deductibility limit may
impact our compensation program in future years, the committee
intends to maintain an approach to executive compensation that
strongly links pay to performance. In addition, although the
committee has not adopted a formal policy regarding tax
deductibility of compensation paid to our NEOs, the committee
intends to consider tax deductibility under Code
Section 162(m) as a factor in compensation decisions.
ASSESSMENT
OF COMPENSATION-RELATED RISKS
We believe that our compensation policies and practices are
designed to encourage our employees to act in the long-term best
interests of the company and are not reasonably likely to have a
material adverse effect on our business. We believe that the
performance goals we establish for our employees are aligned
with the enhancement of stockholder value and do not encourage
our employees to take excessive risks.
27
SUMMARY
COMPENSATION TABLE
The following table provides information regarding the
compensation of our principal executive officer, principal
financial officer and each of the next three most highly
compensated executive officers. We refer to these persons as our
Named Executive Officers or NEOs elsewhere in this
proxy statement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
Incentive Plan
|
|
All Other
|
|
|
Name and
|
|
|
|
Salary
|
|
Awards
|
|
Compensation
|
|
Compensation
|
|
Total
|
Principal Position
|
|
Year
|
|
($)(1)
|
|
($)(2)
|
|
($)(3)
|
|
($)
|
|
($)
|
|
P. Ron Ellis
|
|
|
2010
|
|
|
$
|
302,798
|
|
|
$
|
131,537
|
|
|
$
|
|
|
|
$
|
1,005
|
|
|
$
|
435,340
|
|
President and Chief Executive Officer
|
|
|
2009
|
|
|
|
288,952
|
|
|
|
99,230
|
|
|
|
63,000
|
|
|
|
3,271
|
|
|
|
454,453
|
|
Michael A. Sherman
|
|
|
2010
|
|
|
|
223,500
|
|
|
|
45,717
|
|
|
|
|
|
|
|
6,005
|
|
|
|
275,222
|
|
Chief Financial Officer
|
|
|
2009
|
|
|
|
220,154
|
|
|
|
15,519
|
|
|
|
40,000
|
|
|
|
5,267
|
|
|
|
280,940
|
|
Christopher P. Leamon, Ph.D.
|
|
|
2010
|
|
|
|
223,846
|
|
|
|
38,513
|
|
|
|
|
|
|
|
6,005
|
|
|
|
268,364
|
|
Vice President of Research
|
|
|
2009
|
|
|
|
223,269
|
|
|
|
34,193
|
|
|
|
40,000
|
|
|
|
3,271
|
|
|
|
300,733
|
|
Richard A. Messmann, M.D.
|
|
|
2010
|
|
|
|
259,723
|
|
|
|
27,871
|
|
|
|
|
|
|
|
13,471
|
|
|
|
301,065
|
|
Vice President of Medical Affairs
|
|
|
2009
|
|
|
|
262,731
|
|
|
|
13,670
|
|
|
|
38,000
|
|
|
|
8,713
|
|
|
|
323,114
|
|
Allen R. Ritter, Ph.D.
|
|
|
2010
|
|
|
|
192,273
|
|
|
|
28,548
|
|
|
|
|
|
|
|
6,005
|
|
|
|
226,826
|
|
Vice President of Manufacturing and CMC
|
|
|
2009
|
|
|
|
193,881
|
|
|
|
11,469
|
|
|
|
35,000
|
|
|
|
3,271
|
|
|
|
243,621
|
|
|
|
|
(1) |
|
With respect to 2009, the amounts represent the actual salary
amounts paid in 2009, which includes an extra pay check at the
end of December 2009 due to timing of holidays and our policy of
making payroll early when a payday falls on a holiday. |
|
(2) |
|
The amounts in this column represent the aggregate grant date
fair value of the option awards vested and computed in
accordance with FASB Topic ASC 718. See Note 10 of
Notes to Financial Statements for a discussion of assumptions
made in determining the grant date fair value and compensation
expense of our stock options. |
|
(3) |
|
See Compensation Discussion and Analysis
Elements of Executive Compensation Short-Term
Incentives (Cash Bonuses) for a discussion of our bonus
program. |
GRANTS OF
PLAN-BASED AWARDS IN 2010
The following table presents information concerning grants of
plan-based awards to each NEO during the year ended
December 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
Option
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Awards:
|
|
Exercise
|
|
Date
|
|
|
|
|
|
|
Estimated Future Payouts
|
|
|
|
|
|
|
|
Awards:
|
|
Number of
|
|
or Base
|
|
Fair
|
|
|
|
|
|
|
Under Non-Equity Incentive
|
|
Estimated Future Payouts
|
|
Number of
|
|
Securities
|
|
Price of
|
|
Value of
|
|
|
|
|
|
|
Plan Awards(1)
|
|
Under Equity Incentive Plan Awards(2)
|
|
Shares of
|
|
Underlying
|
|
Option
|
|
Stock and
|
|
|
Grant
|
|
Name of
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Stock of
|
|
Option
|
|
Awards
|
|
Option
|
Name
|
|
Date
|
|
Plan
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
Units (#)
|
|
(#)
|
|
($/SH)
|
|
Awards(3)
|
|
P. Ron Ellis
|
|
|
02/11/2010
|
|
|
|
2007 Plan
Bonus
Program
|
|
|
|
|
|
|
$
|
76,500
|
|
|
|
|
|
|
|
|
|
|
|
52,356
|
(4)
|
|
|
|
|
|
|
|
|
|
|
91,623
|
(4)
|
|
$
|
3.82
|
|
|
$
|
286,248
|
|
Michael A. Sherman
|
|
|
02/11/2010
|
|
|
|
2007 Plan
Bonus
Program
|
|
|
|
|
|
|
|
45,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.82
|
|
|
|
31,227
|
|
Christopher P. Leamon, Ph.D.
|
|
|
02/11/2010
|
|
|
|
2007 Plan
Bonus
Program
|
|
|
|
|
|
|
|
45,000
|
|
|
|
|
|
|
|
|
|
|
|
10,471
|
(4)
|
|
|
|
|
|
|
|
|
|
|
15,706
|
(4)
|
|
|
3.82
|
|
|
|
52,045
|
|
Richard A. Messmann, M.D.
|
|
|
02/11/2010
|
|
|
|
2007 Plan
Bonus
Program
|
|
|
|
|
|
|
|
52,120
|
|
|
|
|
|
|
|
|
|
|
|
1,570
|
(4)
|
|
|
|
|
|
|
|
|
|
|
15,706
|
(4)
|
|
|
3.82
|
|
|
|
34,350
|
|
Allen R. Ritter, Ph.D.
|
|
|
11/10/2010
|
|
|
|
2007 Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,235
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7.26
|
|
|
|
29,382
|
|
|
|
|
02/11/2010
|
|
|
|
2007 Plan
Bonus Plan
|
|
|
|
|
|
|
|
38,600
|
|
|
|
|
|
|
|
|
|
|
|
2,617
|
(4)
|
|
|
|
|
|
|
|
|
|
|
15,706
|
(4)
|
|
|
3.82
|
|
|
|
36,432
|
|
28
|
|
|
(1) |
|
Amounts represent amounts payable under our bonus program. The
target column assumes the full achievement of performance goals
and other factors deemed relevant by our Board of Directors and
compensation committee. No specific formula is used under the
bonus program to derive the actual amount of bonus for each of
the NEOs. Actual amounts paid are set forth under the heading
Executive Compensation Summary Compensation
Table.
|
|
(2) |
|
Amounts represent 2010 Milestone Equity Awards. The target
column assumes the full achievement of the milestones identified
in the table under the heading Compensation Discussion and
Analysis Elements of Executive
Compensation 2010 Milestone Equity Awards. No
specific formula is used to determine the actual amount of
shares issued to each of the NEOs as a 2010 Milestone Equity
Award. Actual amounts issued are set forth in the table under
the heading Compensation Discussion and
Analysis Elements of Executive
Compensation 2010 Milestone Equity Awards. |
|
(3) |
|
Reflects the grant date fair value of each award computed in
accordance with FASB Topic ASC 718. These amounts do not
correspond to the actual value that will be recognized by the
NEOs. The assumptions used in the valuation of these awards are
consistent with the valuation methodologies specified in the
notes to our financial statements. |
|
(4) |
|
Shares subject to the option vest monthly over a period of
48 months beginning on February 28, 2010. |
|
(5) |
|
Shares subject to the option vest monthly over a period of
48 months beginning on November 30, 2010. |
OUTSTANDING
EQUITY AWARDS AT 2010 FISCAL YEAR-END
The following table presents certain information concerning
equity awards held by the Named Executive Officers at
December 31, 2010. We have not granted any restricted stock
awards prior to December 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
Number of
|
|
|
|
Number of
|
|
|
|
|
|
|
Securities
|
|
Number of
|
|
Securities
|
|
|
|
|
|
|
Underlying
|
|
Shares or
|
|
Underlying
|
|
|
|
|
|
|
Unexercised
|
|
Units of Stock
|
|
Unexercised
|
|
Option
|
|
Option
|
|
|
Options (#)
|
|
That Have
|
|
Unearned
|
|
Exercise
|
|
Expiration
|
Name
|
|
Exercisable
|
|
Not Vested (#)
|
|
Options (#)
|
|
Price ($)
|
|
Date
|
|
P. Ron Ellis
|
|
|
14
|
(1)
|
|
|
|
|
|
|
|
|
|
$
|
0.19
|
|
|
|
8/8/2011
|
|
|
|
|
6,998
|
(1)
|
|
|
|
|
|
|
|
|
|
|
0.19
|
|
|
|
2/7/2012
|
|
|
|
|
13,089
|
(1)
|
|
|
|
|
|
|
|
|
|
|
1.91
|
|
|
|
2/10/2015
|
|
|
|
|
26,178
|
(1)
|
|
|
|
|
|
|
|
|
|
|
1.91
|
|
|
|
2/17/2016
|
|
|
|
|
77,793
|
(1)
|
|
|
|
|
|
|
|
|
|
|
1.91
|
|
|
|
8/31/2016
|
|
|
|
|
51,265
|
(2)
|
|
|
1,090
|
|
|
|
|
|
|
|
2.10
|
|
|
|
5/31/2017
|
|
|
|
|
47,719
|
(3)
|
|
|
17,725
|
|
|
|
|
|
|
|
3.06
|
|
|
|
2/12/2018
|
|
|
|
|
49,701
|
(4)
|
|
|
58,737
|
|
|
|
|
|
|
|
2.54
|
|
|
|
3/5/2019
|
|
|
|
|
32,993
|
(8)
|
|
|
110,984
|
|
|
|
|
|
|
|
3.82
|
|
|
|
2/11/2020
|
|
Michael A. Sherman
|
|
|
13,089
|
(1)
|
|
|
|
|
|
|
|
|
|
$
|
1.91
|
|
|
|
11/1/2016
|
|
|
|
|
7,689
|
(1)
|
|
|
163
|
|
|
|
|
|
|
|
2.10
|
|
|
|
2/1/2017
|
|
|
|
|
47,992
|
(6)
|
|
|
4,363
|
|
|
|
|
|
|
|
2.10
|
|
|
|
5/31/2017
|
|
|
|
|
7,635
|
(3)
|
|
|
2,836
|
|
|
|
|
|
|
|
3.06
|
|
|
|
2/12/2018
|
|
|
|
|
3,085
|
(4)
|
|
|
3,647
|
|
|
|
|
|
|
|
2.54
|
|
|
|
3/5/2019
|
|
|
|
|
3,053
|
(7)
|
|
|
7,417
|
|
|
|
|
|
|
|
2.54
|
|
|
|
11/12/2019
|
|
|
|
|
3,599
|
(8)
|
|
|
12,107
|
|
|
|
|
|
|
|
3.82
|
|
|
|
2/11/2020
|
|
29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
Number of
|
|
|
|
Number of
|
|
|
|
|
|
|
Securities
|
|
Number of
|
|
Securities
|
|
|
|
|
|
|
Underlying
|
|
Shares or
|
|
Underlying
|
|
|
|
|
|
|
Unexercised
|
|
Units of Stock
|
|
Unexercised
|
|
Option
|
|
Option
|
|
|
Options (#)
|
|
That Have
|
|
Unearned
|
|
Exercise
|
|
Expiration
|
Name
|
|
Exercisable
|
|
Not Vested (#)
|
|
Options (#)
|
|
Price ($)
|
|
Date
|
|
Christopher P. Leamon, Ph.D.
|
|
|
13,089
|
(1)
|
|
|
|
|
|
|
|
|
|
$
|
7.64
|
|
|
|
1/1/2011
|
|
|
|
|
9,027
|
(1)
|
|
|
|
|
|
|
|
|
|
|
0.19
|
|
|
|
8/8/2011
|
|
|
|
|
6,544
|
(1)
|
|
|
|
|
|
|
|
|
|
|
0.19
|
|
|
|
2/2/2012
|
|
|
|
|
4,502
|
(1)
|
|
|
|
|
|
|
|
|
|
|
0.57
|
|
|
|
2/20/2013
|
|
|
|
|
13,089
|
(1)
|
|
|
|
|
|
|
|
|
|
|
1.91
|
|
|
|
2/10/2015
|
|
|
|
|
13,089
|
(1)
|
|
|
|
|
|
|
|
|
|
|
1.91
|
|
|
|
2/17/2016
|
|
|
|
|
25,632
|
(5)
|
|
|
545
|
|
|
|
|
|
|
|
2.10
|
|
|
|
2/11/2017
|
|
|
|
|
19,087
|
(3)
|
|
|
7,090
|
|
|
|
|
|
|
|
3.05
|
|
|
|
2/12/2018
|
|
|
|
|
17,126
|
(4)
|
|
|
20,240
|
|
|
|
|
|
|
|
2.54
|
|
|
|
3/5/2019
|
|
|
|
|
5,998
|
(8)
|
|
|
20,178
|
|
|
|
|
|
|
|
3.82
|
|
|
|
2/11/2020
|
|
Richard A. Messmann, M.D.
|
|
|
26,178
|
(1)
|
|
|
|
|
|
|
|
|
|
$
|
1.91
|
|
|
|
7/1/2015
|
|
|
|
|
13,089
|
(1)
|
|
|
|
|
|
|
|
|
|
|
1.91
|
|
|
|
2/17/2016
|
|
|
|
|
20,505
|
(5)
|
|
|
436
|
|
|
|
|
|
|
|
2.10
|
|
|
|
2/1/2017
|
|
|
|
|
19,087
|
(3)
|
|
|
7,090
|
|
|
|
|
|
|
|
3.06
|
|
|
|
2/12/2018
|
|
|
|
|
7,010
|
(4)
|
|
|
8,285
|
|
|
|
|
|
|
|
2.54
|
|
|
|
3/5/2019
|
|
|
|
|
3,958
|
(8)
|
|
|
13,317
|
|
|
|
|
|
|
|
3.82
|
|
|
|
2/11/2020
|
|
Allen R. Ritter, Ph.D.
|
|
|
8,722
|
(1)
|
|
|
|
|
|
|
|
|
|
$
|
0.76
|
|
|
|
5/20/2014
|
|
|
|
|
5,261
|
(1)
|
|
|
|
|
|
|
|
|
|
|
1.91
|
|
|
|
2/10/2015
|
|
|
|
|
12,722
|
(1)
|
|
|
|
|
|
|
|
|
|
|
1.91
|
|
|
|
2/17/2016
|
|
|
|
|
23,069
|
(5)
|
|
|
491
|
|
|
|
|
|
|
|
2.10
|
|
|
|
2/1/2017
|
|
|
|
|
17,179
|
(3)
|
|
|
6,381
|
|
|
|
|
|
|
|
3.05
|
|
|
|
2/12/2018
|
|
|
|
|
5,744
|
(4)
|
|
|
6,789
|
|
|
|
|
|
|
|
2.54
|
|
|
|
3/5/2019
|
|
|
|
|
4,198
|
(8)
|
|
|
14,125
|
|
|
|
|
|
|
|
3.82
|
|
|
|
2/11/2020
|
|
|
|
|
217
|
(9)
|
|
|
5,017
|
|
|
|
|
|
|
|
7.26
|
|
|
|
11/10/2020
|
|
|
|
|
(1) |
|
The option is fully vested and immediately exercisable. |
|
(2) |
|
Shares subject to the option vest as follows: 4,363 shares
vest on May 31, 2007; 1,090 shares vest on each of
June 30, 2007 and July 31, 2007; 5,453 shares
vest on January 1, 2008 and the remaining
40,357 shares vest monthly over a period of 48 months
beginning on January 31, 2008. |
|
(3) |
|
Shares subject to the option vest monthly over a period of
48 months beginning on February 29, 2008. |
|
(4) |
|
Shares subject to the option vest monthly over a period of
48 months beginning on March 31, 2009. |
|
(5) |
|
Shares subject to the option vest monthly over a period of
48 months beginning on February 28, 2007. |
|
(6) |
|
Shares subject to the option vest monthly over a period of
48 months beginning on May 31, 2007. |
|
(7) |
|
Shares subject to the option vest monthly over a period of
48 months beginning on November 30, 2009. |
|
(8) |
|
Shares subject to the option vest monthly over a period of
48 months beginning on February 28, 2010. |
|
(9) |
|
Shares subject to the option vest monthly over a period of
48 months beginning on November 30, 2010. |
30
OPTION
EXERCISES AND STOCK VESTED AT YEAR-END 2010
The following table sets forth information regarding options
exercised by our named executive officers during the fiscal year
ended December 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
Shares
|
|
Value
|
|
|
Acquired on
|
|
Realized on
|
Name
|
|
Exercise (#)
|
|
Exercise ($)
|
|
P. Ron Ellis
|
|
|
|
|
|
|
|
|
Michael A. Sherman
|
|
|
52,356
|
|
|
$
|
280,105
|
(1)
|
Christopher P. Leamon
|
|
|
|
|
|
|
|
|
Richard A. Messmann
|
|
|
|
|
|
|
|
|
Allen R. Ritter
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The aggregate dollar amount realized upon the exercise of the
option represents the amount by which (x) the aggregate
market price of the shares of our common stock for which
Mr. Sherman exercised the option on December 15, 2010,
the date of exercise, as calculated using a per share fair
market value of $7.26, which is based on the most recent
independent appraisal completed prior to the date of exercise
exceeds (y) the aggregate exercise price of the option, as
calculated using a per share exercise price of $1.91. |
OTHER
2010 COMPENSATION INFORMATION
Pensions
We did not maintain any plan providing for payments or other
benefits at, following, or in connection with retirement, during
the fiscal year ended December 31, 2010.
Nonqualified
Deferred Compensation
There were no nonqualified defined contributions or other
deferred compensation plans for any Named Executive Officer for
the year ended December 31, 2010.
Employment
Agreements and Change in Control Arrangements
We do not have employment agreements with any of our NEOs, only
change-in-control
agreements which are described in the following section.
ESTIMATED
POST-EMPLOYMENT PAYMENTS
UNDER ALTERNATIVE TERMINATION SCENARIOS
Change in
Control and Severance Agreements
On August 12, 2010, in connection with our initial public
offering, our Board of Directors approved entering into Change
in Control and Severance Agreements with each of our NEOs. These
agreements, each of which were entered into on August 25,
2010, provide for the following benefits:
If the NEOs employment is terminated without Cause, or if
he terminates his employment with us for Good Reason, prior to a
Change in Control or after 12 months following a Change in
Control, he will be entitled to:
|
|
|
|
|
a lump sum severance payment equal to nine months
(12 months for Mr. Ellis) of his then-current base
salary; and
|
|
|
|
nine months (12 months for Mr. Ellis) reimbursement of
premiums under the Consolidated Omnibus Budget Reconciliation
Act, or COBRA, for continued coverage under our medical, dental,
or vision plans for him
and/or his
eligible dependents.
|
31
If the NEO is terminated without Cause, or if he terminates his
employment with us for Good Reason, within one year following a
Change in Control, he will be entitled to:
|
|
|
|
|
a lump sum payment equal to 12 months of base salary, as in
effect immediately prior to the Change in Control or his
termination, whichever is greater;
|
|
|
|
a lump sum payment equal to his target bonus for the year of
termination or, if greater, for the year during which the Change
in Control occurs;
|
|
|
|
twelve months reimbursement of COBRA premiums for continued
coverage under our medical, dental,
and/or
vision plans for him
and/or his
eligible dependents; and
|
|
|
|
100 percent of his unvested equity awards will immediately
vest and become exercisable in full.
|
The foregoing severance benefits will be subject to the NEO
providing us with an executed release of claims.
Potential
Payments in the Event of Termination Without Cause or by
Executive for Good Reason Prior to a Change in Control or More
than Twelve Months Following a Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intrinsic Value of
|
|
|
|
|
Accelerated Equity Awards
|
|
|
Cash Severance
|
|
Options
|
|
Restricted Stock
|
Name
|
|
($)(1)
|
|
($)
|
|
($)
|
|
P. Ron Ellis
|
|
|
306,000
|
|
|
|
|
|
|
|
|
|
Michael A. Sherman
|
|
|
225,000
|
|
|
|
|
|
|
|
|
|
Christopher P. Leamon, Ph.D.
|
|
|
225,000
|
|
|
|
|
|
|
|
|
|
Richard A. Messmann, M.D.
|
|
|
260,600
|
|
|
|
|
|
|
|
|
|
Allen R. Ritter, Ph.D.
|
|
|
193,000
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The severance amount related to base salary was determined based
on base salaries in effect on December 31, 2010. |
Potential
Payments in the Event of a Termination Within Twelve Months
Following a Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intrinsic Value of
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Accelerated Equity Awards(2)
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Restricted
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Cash Severance
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Options
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Stock
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Name
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($)(1)
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($)
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($)
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P. Ron Ellis
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382,500
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501,538
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Michael A. Sherman
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270,000
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90,664
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Christopher P. Leamon, Ph.D.
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270,000
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137,059
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Richard A. Messmann, M.D.
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312,720
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80,242
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Allen R. Ritter, Ph.D.
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231,600
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68,700
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(1) |
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The severance amount related to base salary was determined based
on base salaries in effect in August 2010 and target bonuses for
2010. |
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(2) |
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Represents intrinsic value of all unvested awards as of the
assumed date of termination. All calculations assume a $6.00 per
share stock price in the date of termination. |
For the purposes of the above agreements, cause,
change in control, and good reason are
defined as follows:
Cause
(i) an act of personal dishonesty taken by the NEO in
connection with his or her responsibilities as an employee and
intended to result in the NEOs substantial personal
enrichment;
32
(ii) the NEO being convicted of, or pleading no contest or
guilty to, a felony or misdemeanor that the Company reasonably
believes has had or will have a material detrimental effect on
the company;
(iii) a willful act by the NEO that constitutes gross
misconduct and that is injurious to the company;
(iv) following delivery to the NEO of a written demand for
performance that describes the basis for the companys
reasonable belief that the NEO has not substantially performed
his or her duties, the NEOs continued violations of his or
her obligations to the company that are demonstrably willful and
deliberate on the NEOs part; and
(v) the NEOs material violation of any written
employment policy or standard of conduct of the company.
Change
in Control
(i) a change in the ownership of the company which occurs
on the date that any one person, or more than one person acting
as a group (Person), acquires ownership of the stock
of the company that, together with the stock held by such
Person, constitutes more than 50 percent of the total
voting power of the stock of the company; provided, however,
that for purposes of this subsection (i), the acquisition of
additional stock by any one Person, who is considered to own
more than 50 percent of the total voting power of the stock
of the company will not be considered a Change in
Control; or
(ii) a change in the effective control of the company which
occurs on the date that a majority of members of the Board
(each, a Director) is replaced during any
12 month period by Directors whose appointment or election
is not endorsed by a majority of the members of the Board prior
to the date of the appointment or election. For purposes of this
subsection (ii), if any Person is considered to be in effective
control of the company, the acquisition of additional control of
the company by the same Person will not be considered a Change
in Control; or
(iii) a change in the ownership of a substantial portion of
the companys assets which occurs on the date that any
Person acquires (or has acquired during the twelve month period
ending on the date of the most recent acquisition by such person
or persons) assets from the company that have a total gross fair
market value equal to or more than 50 percent of the total
gross fair market value of all of the assets of the company
immediately prior to such acquisition or acquisitions; provided,
however, that for purposes of this subsection (iii), the
following will not constitute a change in the ownership of a
substantial portion of the companys assets: (A) a
transfer to an entity that is controlled by the companys
stockholders immediately after the transfer, or (B) a
transfer of assets by the company to: (1) a stockholder of
the company (immediately before the asset transfer) in exchange
for or with respect to the companys stock, (2) an
entity, 50 percent or more of the total value or voting
power of which is owned, directly or indirectly, by the company,
(3) a Person, that owns, directly or indirectly,
50 percent or more of the total value or voting power of
all the outstanding stock of the company, or (4) an entity,
at least 50 percent of the total value or voting power of
which is owned, directly or indirectly, by a Person described in
this subsection (iii)(B)(3). For purposes of this subsection
(iii), gross fair market value means the value of the assets of
the company, or the value of the assets being disposed of,
determined without regard to any liabilities associated with
such assets.
For purposes of this definition of Change in Control, persons
will be considered to be acting as a group if they are owners of
a corporation that enters into a merger, consolidation, purchase
or acquisition of stock, or similar business transaction with
the company.
Good Reason means the NEOs
termination of employment within 90 days following the
expiration of any cure period (discussed below) following the
occurrence of one or more of the following, without the
NEOs express written consent:
(i) a material reduction of the NEOs duties,
position, or responsibilities, relative to the NEOs
duties, position, or responsibilities in effect immediately
prior to such reduction, unless the NEO is provided with a
comparable position (i.e., a position of equal or greater
organizational level, duties, authority, compensation and
status), provided, however, that a reduction in duties,
position, or responsibilities solely by virtue of the company
being acquired and made part of a larger entity (as, for
example, when the Chief Executive Officer of
33
the company remains as such following a Change in Control but is
not the Chief Executive Officer of the acquiring corporation)
will not constitute Good Reason;
(ii) a material reduction by the company in the NEOs
annualized base pay as in effect immediately prior to such
reduction;
(iii) the relocation of the NEOs principal place of
performing his or her duties as an employee of the company by
more than fifty (50) miles; or
(iv) the failure of the company to obtain the assumption of
the agreement by a successor.
In order for an event to qualify as Good Reason, the NEO must
not terminate employment with the company without first
providing the company with written notice of the acts or
omissions constituting the grounds for Good Reason
within ninety (90) days of the initial existence of the
grounds for Good Reason and a reasonable cure period
of not less than thirty (30) days following the date of
such notice.
2010
DIRECTOR COMPENSATION
The following table sets forth information concerning
compensation paid or accrued for services rendered to us by
members of our Board of Directors for the year ended
December 31, 2010. The table excludes Mr. Ellis, our
President and Chief Executive Officer, and Dr. Low, our
Chief Science Officer, who as employees do not receive any
compensation from us in their roles as directors.
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Fees Earned
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Option
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Name
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or Paid in Cash
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Awards(2)
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Total
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(a)(1)
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($)(b)
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($)(d)
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($)(h)
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John C. Aplin, Ph.D.
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Douglas G. Bailey
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|
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Keith E. Brauer
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25,000
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17,104
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42,104
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John G. Clawson
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Ann F. Hanham, Ph.D.
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Fred A. Middleton
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James S. Shannon, M.D., MRCP
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25,000
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25,000
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(1) |
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Neither P. Ron Ellis and Philip S. Low, who were also directors
of the company during 2010, is included in this table because
they did not receive any additional compensation for their
respective service as a director. The respective compensation
received by Mr. Ellis and Mr. Low is shown in the
Summary Compensation Table on page 28. |
|
(2) |
|
The amount in this column represents the aggregate grant date
fair value of the option awards vested during 2010, computed in
accordance with FASB Topic ASC 718. This amount does not
correspond to the actual value that will be recognized by the
director. The assumptions used in the valuation of this award
are consistent with the valuation methodologies specified in the
notes to our financial statements. For a discussion of the
assumptions used to determine grant date value, see footnote 3
to the Summary Compensation Table on page 28. |
34
The aggregate number of shares subject to stock awards and stock
options outstanding at December 31, 2010 for each
non-employee director is as follows:
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Aggregate Number of Stock
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Awards and Stock
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Options Outstanding
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Name
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as of December 31, 2010
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John C. Aplin, Ph.D.
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Douglas G. Bailey
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Keith E. Brauer
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31,804
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(1)
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John G. Clawson
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Ann F. Hanham, Ph.D.
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Fred A. Middleton
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|
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James S. Shannon, M.D., MRCP
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13,089
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(2)
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(1) |
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Of the 31,804 option shares, 21,333 shares vested
immediately upon grant, and 10,471 shares vest monthly over
a period of 48 months beginning on August 31, 2006. |
|
(2) |
|
50 percent of the option shares vest on February 11,
2012 and 272 shares vest monthly over a period of
24 months beginning on February 28, 2012. |
Beginning in 2010, our non-investor and non-employee members of
our Board of Directors each received an annual $25,000 payment
as cash compensation for their service.
We refer to each of our non-employee directors as an outside
director. Beginning in 2011, each outside director will receive
$25,000 annually for his or her service on our Board of
Directors and our chair of the Board of Directors will receive
an additional $15,000 annually for his or her service as our
chair of the Board of Directors. Each outside director who
serves as a chair of our audit committee, compensation committee
or nominating and corporate governance committee will receive
respectively $15,000, $10,000 or $7,500 annually for his or her
service as chair on such committee, and other members of our
audit committee, compensation committee or nominating and
corporate governance committee will receive, respectively,
$7,500, $5,000 or $3,750 annually for his or her service on such
committee. Each of the payments to our outside directors will be
on a quarterly basis, in consideration for their services in
these respective roles.
On August 12, 2010, our Board of Directors authorized the
grant of an option to each of our outside directors who had not
previously received option grants from us, or initial option
grant, to purchase 15,706 shares of our common stock
effective upon the closing of our initial public offering. In
addition, at the same meeting, our Board of Directors authorized
the grant of an option to each of Messrs. Brauer and
Shannon to purchase 2,617 shares of our common stock
effective upon the closing of our initial public offering. Such
initial option grants will be exercisable as to
1/3
of the shares upon the business day before each annual
stockholder meeting following the closing of our initial public
offering, subject to such directors continued service
through each relevant vesting date.
Our outside director equity compensation policy was adopted by
our Board of Directors on August 12, 2010 and became
effective upon the closing of our initial public offering. The
policy is intended to formalize the granting of equity
compensation to our non-employee directors under the 2010 Equity
Incentive Plan, or EIP. Non-employee directors may receive all
types of awards under the EIP, except for incentive stock
options. The policy provides for automatic and nondiscretionary
grants of nonstatutory stock options subject to the terms and
conditions of the policy and the EIP.
Under the policy, each non-employee director who first becomes a
non-employee director following our initial public offering will
be automatically granted a stock option to purchase
15,706 shares of our common stock on the date such person
first becomes a non-employee director. A director who is an
employee and who ceases to be an employee, but who remains a
director, will not receive such an initial award.
In addition, each non-employee director will be automatically
granted an annual stock option to purchase 7,853 shares of
our common stock on the date of each annual stockholder meeting
beginning on the date of the first annual meeting following our
initial public offering.
35
The exercise price of all stock options granted pursuant to the
EIP will be equal to the fair market value of our common stock
on the date of grant. The term of all stock options will be ten
years. Subject to the adjustment provisions of the EIP, initial
awards will vest as to
1/3
of the shares subject to such awards on the business day before
each date of each annual stockholder meeting following their
respective commencement of service, provided such non-employee
director continues to serve as a director through each such
date. The annual awards will vest as to 100 percent of the
shares on the business day prior to the next annual stockholder
meeting following the date of grant, provided such non-employee
director continues to serve as a director through such date.
The administrator of the EIP in its discretion may change or
otherwise revise the terms of awards granted under the outside
director equity compensation policy on a prospective basis.
In the event of a change in control, as defined in
our EIP, with respect to awards granted under the EIP to
non-employee directors, the non-employee director will fully
vest in and have the right to exercise awards as to all shares
underlying such awards and all restrictions on awards will
lapse, and all performance goals or other vesting criteria will
be deemed achieved at 100 percent of target level and all
other terms and conditions met if the non-employee director is
terminated following the change in control other than by
voluntary resignation (unless such resignation is at the request
of the acquiror).
ANNUAL
REPORT
Our Annual Report for the year ended December 31, 2010,
including financial statements audited by Ernst &
Young LLP, our independent registered public accounting firm,
and Ernst & Young LLPs report thereon, is
available to our stockholders on the Internet as described in
the Notice of Internet availability of proxy materials. In
addition, a copy of our Annual Report on
Form 10-K
for the year ended December 31, 2010, will be sent to any
stockholder without charge (except for exhibits, if requested,
for which a reasonable fee will be charged), upon written
request to Corporate Secretary, Endocyte, Inc., 8910 Purdue
Road, Suite 250, Indianapolis, Indiana 46268. Our
Form 10-K
is also available and may be accessed free of charge through the
Investor Relations section of our internet website at
www.Endocyte.com.
STOCKHOLDER
PROPOSALS AT
2012 ANNUAL MEETING
The date by which we must receive stockholder proposals for
inclusion in the proxy materials relating to the 2012 annual
meeting of stockholders, or for presentation at such meeting, is
January 17, 2012. In the event that the 2012 annual meeting
of stockholders is called for a date that is not within
30 days before or after May 26, 2012, in order to be
timely, we must receive notice by the stockholder not later than
the close of business on the later of 120 calendar days in
advance of the 2012 annual meeting of stockholders or ten
calendar days following the date on which public announcement of
the date of the meeting is first made. Stockholder proposals
must comply with all of the applicable requirements set forth in
the rules and regulations of the Securities and Exchange
Commission, including
Rule 14a-8,
as well as the advance notification requirements set forth in
our By-Laws. A copy of the advance notification requirements may
be obtained upon request to Corporate Secretary, Endocyte, Inc.,
8910 Purdue Road, Suite 250, Indianapolis, Indiana 46268.
WHERE YOU
CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Exchange
Act and so, we file periodic reports and other information with
the Securities and Exchange Commission. These reports and the
other information we file with the Securities and Exchange
Commission can be read and copied at the public reference room
facilities maintained by the Securities and Exchange Commission
in Washington, DC at 100 F Street, N.E., Washington,
DC 20549. The Securities and Exchange Commissions
telephone number to obtain information on the operation of the
public reference room is (800) SEC-0330. These reports and
other information are also filed by us electronically with the
Securities and Exchange Commission and are available at its
website, www.sec.gov.
INCORPORATION
BY REFERENCE
To the extent this proxy statement has been or will be
specifically incorporated by reference into any filing under the
Securities Act of 1933, as amended, and the Exchange Act, the
sections of this proxy statement entitled COMPENSATION
COMMITTEE REPORT and REPORT OF THE AUDIT
COMMITTEE should not be deemed to be so incorporated
unless specifically otherwise provided in any such filing.
36
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Electronic Voting Instructions
You can vote by Internet or telephone! Available 24 hours a day, 7 days a week!
Instead of mailing your proxy, you may choose
one of the two voting methods outlined below to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW
IN THE TITLE BAR.
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Proxies submitted by the
Internet or telephone must be received by 1:00 a.m., Central Standard Time, on May 26, 2011. |
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Vote by
Internet Log on to the
Internet and go
to www.envisionreports.com/ECYT Follow
the steps outlined on the secured website. |
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Vote by
telephone Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada any
time on a touch tone telephone. There is NO CHARGE to you for the call.
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Using a black
ink pen, mark your votes with an X as shown in this
example. Please do not write outside the designated areas. |
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x |
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Follow the
instructions provided by the recorded message. |
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Annual Meeting Proxy Card |
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▼
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
▼
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A
Proposals The Board recommends a vote FOR all nominees, FOR Proposals 2 and 4 and 3 YRS for Proposal 3. |
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1.
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Election of Directors:
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For
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Withhold
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For
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Withhold
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For
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Withhold |
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+ |
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01 - John C. Aplin, Ph.D.
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o
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02 - Douglas G. Bailey
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03 - Philip S. Low, Ph.D.
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For |
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Abstain
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1 Yr |
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2 Yrs
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3 Yrs
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Abstain |
2.
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Vote on a non-binding advisory
proposal regarding executive
compensation (Say-on-Pay)
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o
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o
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o
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3. |
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Vote on a non-binding advisory
proposal regarding the frequency
of future advisory votes on executive compensation.
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o
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4.
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Ratify the appointment of Ernst &
Young LLP as our independent Registered
Public Accounting Firm for 2011.
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B
Non-Voting Items |
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Change of Address
Please print your new address below. |
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Comments
Please print your comments below. |
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Meeting Attendance |
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Mark
the box to the right if you plan to attend the Annual Meeting. |
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o |
C |
Authorized Signatures This section must be
completed for your vote to be counted. Date and Sign Below
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Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full
title.
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Date (mm/dd/yyyy) Please
print date below. |
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Signature 1 Please keep signature within the
box. |
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Signature 2 Please keep signature within the
box. |
/ / |
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2011 Annual Meeting Admission Ticket
2011 Annual Meeting of
Endocyte, Inc. Stockholders
May 26, 2011, 12:00 p.m. (EDT)
Offices of Baker & Daniels LLP, Suite 600
600 East 96th Street, Indianapolis, Indiana
Upon arrival, please present this admission ticket
and photo identification at the registration desk.
For directions to the meeting, call 317-569-9600 or go to
http://maps.google.com/maps?q=600+E.+96th+Street+Suite+600+Indianapolis%2c+Indiana+46240
▼ IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION,
DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. ▼
Proxy Endocyte, Inc.
Notice of 2011 Annual Meeting of Stockholders
Offices of Baker & Daniels LLP, Suite
600
600 East 96th Street, Indianapolis,
Indiana
Proxy Solicited by Board of Directors for Annual Meeting May 26, 2011
P. Ron Ellis, Michael A. Sherman, or either of them, each with the power of substitution, are
hereby authorized to represent and vote the shares of the undersigned, with all the powers which
the undersigned would possess if personally present, at the Annual Meeting of Stockholders of
Endocyte, Inc. to be held on May 26, 2011 or at any postponement or adjournment thereof.
Shares represented by this proxy will be voted by the stockholder. If no such directions are indicated, the Proxies will
have authority to vote FOR all nominees for election, FOR the
Say-on-Pay Proposal, For 3 Yrs for future Say-on-Pay votes and FOR ratification of auditors.
In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting.
(Items to be voted appear on reverse side.)