<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
FILED BY THE REGISTRANT /X/
FILED BY A PARTY OTHER THAN THE REGISTRANT / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Under Rule 14a-12
MILLENNIUM PHARMACEUTICALS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ No Fee Required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
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<PAGE>
MILLENNIUM PHARMACEUTICALS, INC.
75 SIDNEY STREET
CAMBRIDGE, MASSACHUSETTS 02139
NOTICE OF 2000 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 12, 2000
The 2000 Annual Meeting of Stockholders of Millennium Pharmaceuticals, Inc.
will be held at the offices of Hale and Dorr LLP, 60 State Street, Boston,
Massachusetts, on Wednesday, April 12, 2000 at 2:00 p.m., local time. At the
meeting, stockholders will act on the following matters:
1. Election of two Class I directors, each for a term of three years;
2. Approval of an amendment to the Company's Restated Certificate of
Incorporation increasing the number of shares of Common Stock authorized
for issuance from 100,000,000 to 500,000,000;
3. Approval of the Company's 2000 Stock Incentive Plan; and
4. Any other business as may properly come before the meeting or any
adjournment thereof.
Stockholders of record at the close of business on February 24, 2000 are
entitled to notice of and to vote at the meeting or any postponements or
adjournments. The stock transfer books of the Company will remain open.
By Order of the Board of Directors,
JOHN B. DOUGLAS III
Secretary
Cambridge, Massachusetts
March 6, 2000
<PAGE>
PROXY STATEMENT--2000 ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement contains information about the 2000 Annual Meeting of
Stockholders of Millennium Pharmaceuticals, Inc., including any postponements or
adjournments of the meeting. The meeting is scheduled to be held at the offices
of Hale and Dorr LLP, 60 State Street, Boston, Massachusetts, on Wednesday,
April 12, 2000 at 2:00 p.m., local time.
This Proxy Statement is furnished in connection with the solicitation of
proxies by Millennium's Board of Directors.
The Company's Annual Report for 1999 was first mailed to stockholders, along
with these proxy materials, on or about March 6, 2000.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1999 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, EXCEPT
FOR EXHIBITS, WILL BE FURNISHED WITHOUT CHARGE TO ANY STOCKHOLDER UPON WRITTEN
REQUEST TO INVESTOR RELATIONS, MILLENNIUM PHARMACEUTICALS, INC., 75 SIDNEY
STREET, CAMBRIDGE, MASSACHUSETTS 02139, OR BY E-MAILING INVESTOR RELATIONS AT
"[email protected]".
VOTING PROCEDURES
YOUR VOTE IS IMPORTANT. Whether or not you plan to attend the meeting,
please take the time to vote by completing and mailing the enclosed proxy card
as soon as possible. We have included a postage-prepaid envelope for your
convenience.
WHO CAN VOTE?
In order to vote, you must have been a stockholder of record at the close of
business on February 24, 2000 (the "record date"). Stockholders whose shares are
owned of record by brokers and other nominees should follow the voting
instructions provided by their broker or other nominee.
As of the record date, there were shares of Common Stock issued,
outstanding and entitled to vote. Each such share of Common Stock is entitled to
one vote on each matter to be voted upon.
HOW DO I VOTE?
You may vote by completing and returning the enclosed proxy or by voting in
person at the meeting.
VOTING BY PROXY. You may vote by completing and returning the enclosed
proxy. Your proxy will be voted in accordance your instructions. If you do not
specify a choice on one or more of the proposals described in this proxy
statement, your proxy will be voted in favor of that proposal. You may revoke
your proxy at any time before its exercise by delivering a written revocation or
a subsequently dated proxy to the Secretary of the Company or by voting in
person at the meeting.
VOTING IN PERSON AT THE MEETING. If you attend the meeting, you may deliver
your completed proxy card in person or you may vote by completing a ballot which
will be available at the meeting.
VOTING SHARES HELD IN "STREET NAME." If your shares are held in the name of
a bank, broker or other holder of record, you will receive instructions from the
holder of record that you must follow in order for your shares to be voted. If
your shares are not registered in your own name and you plan to attend the
Annual
2
<PAGE>
Meeting and vote your shares in person, you should contact your broker or agent
in whose name your shares are registered to obtain a broker's proxy card and
bring it to the Annual Meeting in order to vote.
WHAT CONSTITUTES A QUORUM?
In order for business to be conducted at the meeting, a quorum must be
present. A quorum consists of the holders of a majority of the shares of Common
Stock issued and outstanding as of the record date.
Shares of Common Stock present in person or represented by proxy (including
shares which abstain or do not vote with respect to one or more of the matters
to be voted upon) will be counted for purposes of determining whether a quorum
exists.
If a quorum is not present, it is expected that the meeting will be
adjourned until a quorum is obtained.
WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL?
The affirmative vote of the holders of a plurality of the shares of Common
Stock entitled to vote at the Meeting is required for the approval of proposal
1, the election of Class I directors. The affirmative vote of the holders of a
majority of the shares of Common Stock issued and outstanding on the record date
is required for the approval of proposal 2, approval of the amendment to the
Company's Restated Certificate of Incorporation. The affirmative vote of the
holders of a majority of the shares of Common Stock present or represented and
voting at the Meeting is required for the approval of proposal 3, the approval
of the 2000 Stock Incentive Plan.
HOW ARE VOTES COUNTED?
Shares which abstain from voting as to a particular matter or are held in
"street name" by brokers or nominees who indicate on their proxies that they do
not have discretionary authority to vote as to a particular matter ("broker
non-votes") will not be voted in favor of such matter, and will also not be
counted as shares voting on such matter. Accordingly, abstentions and broker
non-votes will have no effect on the outcome of voting on the matters to be
voted on at the meeting which require the affirmative vote of a certain
percentage of the votes cast or shares voting on a matter, and will have the
effect of a vote against proposal 2, approval of the amendment to the Company's
Restated Certificate of Incorporation.
ARE THERE OTHER MATTERS TO BE VOTED ON AT THE MEETING?
The Board of Directors does not know of any other matters which may come
before the meeting. If any other matters are properly presented to the meeting,
it is the intention of the persons named in the accompanying proxy to vote, or
otherwise act, in accordance with their judgment.
PROPOSAL ONE--ELECTION OF DIRECTORS
THE FIRST AGENDA ITEM TO BE VOTED ON IS THE ELECTION OF TWO CLASS I
DIRECTORS. THE BOARD HAS NOMINATED TWO PEOPLE, EACH OF WHOM IS CURRENTLY SERVING
AS A CLASS I DIRECTOR OF THE COMPANY, AND RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" SUCH NOMINEES.
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<PAGE>
Under the Company's Restated Certificate of Incorporation and By-laws, the
Board of Directors is divided into three classes, with one class being elected
each year and members of each class holding office for three-year terms. The
Board of Directors currently consists of eight directors, two of whom are
Class I Directors (with terms expiring at the 2000 Annual Meeting), three of
whom are Class II Directors (with terms expiring at the 2001 Annual Meeting) and
three of whom are Class III Directors (with terms expiring at the 2002 Annual
Meeting).
The persons named in the enclosed proxy will vote to elect as Class I
directors Christopher K. Mirabelli and Steven C. Wheelwright, the two nominees
listed below, unless authority to vote for the election of any or all of the
nominees is withheld by marking the proxy to that effect. If a stockholder
returns a proxy without contrary instructions, the persons named as proxies will
vote to elect as directors Dr. Mirabelli and Dr. Wheelwright to hold office
until the 2003 Annual Meeting of Stockholders and until their successors are
duly elected and qualified. Both of the nominees have indicated their
willingness to serve, if elected, but if either should be unable or unwilling to
serve, proxies may be voted for a substitute nominee designated by the Board of
Directors.
There are no family relationships between or among any officers or directors
of the Company.
Set forth below are the name and age of each member of the Board of
Directors (including the nominees for election as Class I Directors), and the
positions and offices held by him, his principal occupation and business
experience during the past five years, the names of other publicly held
companies of which he serves as a director and the year of the commencement of
his term as a director of the Company. Information with respect to the number of
shares of Common Stock beneficially owned by each director, directly or
indirectly, as of January 31, 2000, appears under the heading "Stock Ownership
Information."
NOMINEES FOR CLASS I DIRECTOR--TERMS TO EXPIRE IN 2003
CHRISTOPHER K. MIRABELLI, PH.D., age 45, has served as a director and
President, Pharmaceutical Research and Development of the Company since
December 22, 1999, the date on which LeukoSite, Inc. became a subsidiary of the
Company. Previously, he was Chairman of the Board of Directors, President and
Chief Executive Officer of LeukoSite, positions he had held since July 1993.
Dr. Mirabelli was a founder of Isis Pharmaceuticals, Inc., a biotechnology
company where he served as Executive Vice President from 1992 to 1993, Senior
Vice President of Research and Preclinical Development from 1991 to 1992, and
Vice President of Research from 1989 to 1991. Dr Mirabelli received his B.S. in
Biology from the State University of New York at Fredonia and his Ph.D. in
pharmacology from Baylor College of Medicine.
STEVEN C. WHEELWRIGHT, PH.D., age 56, has served as a director since
November 1999. Dr. Wheelwright serves as a Senior Associate Dean at the Graduate
School of Business Administration, Harvard University, where he has also been a
Professor of Business Administration since August 1988. Dr. Wheelwright also
served as a Professor at Harvard from August 1985 to August 1986. From
August 1986 to August 1988, Dr. Wheelwright served as a Professor at the
Graduate School of Business, Stanford University. Dr. Wheelwright is also a
member of the Board of Directors of Quantum Corp., Franklin-Covey Co. and
Heartport, Inc.
CLASS II DIRECTORS--TERMS TO EXPIRE IN 2001
EUGENE CORDES, PH.D., age 63, has served as a director since 1995.
Dr. Cordes has been a Professor of Pharmacy and Chemistry, University of
Michigan in Ann Arbor since September 1995. From 1988 to
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<PAGE>
October 1994, Dr. Cordes served as a Vice President of Sterling Winthrop, Inc.,
a pharmaceutical company, and as President of the Pharmaceuticals Research
Division.
RAJU S. KUCHERLAPATI, PH.D., age 57, has served as a director since 1993.
Dr. Kucherlapati is a founder of the Company. Since 1989, Dr. Kucherlapati has
served as the Lola and Saul Kramer Professor and Chairman of the Department of
Molecular Genetics at the Albert Einstein College of Medicine. He received his
M.S. in Biology from Andhra University (India) and his Ph.D. in Genetics from
the University of Illinois, Urbana. Dr. Kucherlapati also serves on the Board of
Directors of Abgenix, Inc. and Valentis, Inc.
ERIC S. LANDER, PH.D., age 43, has served as a director since 1993.
Dr. Lander is a founder of the Company. From 1993 to the present, Dr. Lander has
served as Director of the Whitehead/MIT Center for Genome Research and as a
member of the Whitehead Institute for Biomedical Research. From 1989 to the
present, Dr. Lander has also held the positions of Associate Professor and
Professor in the Department of Biology at the Massachusetts Institute of
Technology. Dr. Lander received his Ph.D. in Mathematics from Oxford University,
which he attended as a Rhodes Scholar.
CLASS III DIRECTORS--TERMS TO EXPIRE IN 2002
MARK J. LEVIN, age 49, has served as a director since 1993, Chairman of the
Board of Directors since March 1996 and President and Chief Executive Officer of
the Company since November 1994. From 1987 to 1994, Mr. Levin was a partner at
Mayfield Fund ("Mayfield"), a venture capital firm, and co-director of its Life
Science Group. While employed with Mayfield, Mr. Levin was the founding Chief
Executive Officer of several biotechnology and biomedical companies, including
Cell Genesys Inc., CytoTherapeutics Inc., Tularik Inc. and Focal, Inc.
Mr. Levin holds an M.S. in Chemical and Biomedical Engineering from Washington
University. Mr. Levin also serves on the Board of Directors of
CytoTherapeutics Inc. and Tularik, Inc.
JOSHUA BOGER, PH.D., age 48, has served as a director of the Company since
1995. Dr. Boger has been the President and Chief Executive Officer of Vertex
Pharmaceuticals Incorporated ("Vertex"), a biopharmaceutical company, from 1992
to the present, and served as President and Chief Scientific Officer of Vertex
from 1989 to 1992. Dr. Boger received M.A. and Ph.D. degrees in Chemistry from
Harvard University. He is also Chairman of the Board of Directors of Vertex.
A. GRANT HEIDRICH, III, age 47, has served as a director since 1993.
Mr. Heidrich has served as a general partner of Mayfield since 1983.
Mr. Heidrich received his M.B.A. from Columbia University Graduate School of
Business. Mr. Heidrich also serves on the Board of Directors of Tularik, Inc.
(as Chairman of the Board) and several private companies.
STOCK OWNERSHIP INFORMATION
OWNERSHIP BY MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth certain information, as of January 31, 2000
or such later date as is noted, with respect to the beneficial ownership of
(i) the Company's Common Stock by each person known by the Company to own
beneficially more than 5% of the outstanding shares of Common Stock; and
(ii) the Company's Common Stock and the capital stock of Millennium Predictive
Medicine, Inc., a privately-held, majority-owned subsidiary of the Company
("MPMx") by each director and nominee for director; each
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<PAGE>
executive officer named in the Summary Compensation Table under the heading
"Compensation of Executive Officers" below and all directors and executive
officers of the Company as a group.
Under the rules of the Securities and Exchange Commission, beneficial
ownership includes any shares as to which the individual has sole or shared
voting or investment power and also any shares which the individual has the
right to acquire within 60 days after January 31, 2000 through the exercise of
any stock option or other right. Unless otherwise indicated, each person has
sole investment and voting power (or shares such power with his spouse) with
respect to the shares set forth in the following table. The inclusion herein of
any shares deemed beneficially owned does not constitute an admission of
beneficial ownership of those shares.
The directors and officers of the Company disclaim beneficial ownership of
the shares of capital stock of MPMx which are owned by the Company.
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF SHARES OF
MILLENNIUM MILLENNIUM MPMX CAPITAL
COMMON STOCK COMMON STOCK
BENEFICIALLY STOCK BENEFICIALLY
NAME AND ADDRESS OWNED OUTSTANDING(1) OWNED(2)
- ---------------- ------------ -------------- ------------
<S> <C> <C> <C>
Bayer AG (3)......................................... 4,957,660 11.0% N/A
D51368 Leverkusen
Federal Republic of Germany
FMR Corp. (4)........................................ 4,179,614 9.3% N/A
82 Devonshire Street
Boston, Massachusetts 02109
Mark J. Levin (5)(6)................................. 1,088,113 2.4% 35,000
Joshua Boger, Ph.D. (5)(6)........................... 53,162 * 2,000
Eugene Cordes, Ph.D. (5)............................. 28,162 * 4,000
A. Grant Heidrich, III (5)(6)........................ 97,958 * 2,000
Raju S. Kucherlapati, Ph.D. (5)...................... 300,291 * 19,500
Eric S. Lander, Ph.D. (5)(6)(7)...................... 21,912 * 22,000
Christopher K. Mirabelli, Ph.D.(5)................... 101,231 * 0
Steven C. Wheelwright, Ph.D. (5)..................... 2,500 * 0
Steven H. Holtzman (5)............................... 126,662 * 44,500
Frank D. Lee, Ph.D. (5)(6)........................... 360,441 * 14,080
Michael R. Pavia, Ph.D. (5)(6)....................... 67,414 * 16,440
Robert Tepper (5)(6)(8).............................. 100,566 * 35,940
All directors and executive officers
as a group (15 persons) (5)(6)..................... 2,100,294 4.6% 762,060
</TABLE>
- ------------------------
* Represents holdings of less than one percent.
(1) Computed on the basis of 44,965,975 shares outstanding on January 31, 2000
and, with respect to each officer and director, shares subject to options
exercisable within 60 days of January 31, 2000.
(2) Shares of capital stock of MPMx beneficially owned by the named officer or
director and by all officers and directors as a group include shares
issuable to such officer or director within 60 days of January 31, 2000 upon
exercise of outstanding stock options. As of January 31, 2000, no director
of the Company and only one executive officer owned more than 1% of the MPMx
capital stock outstanding;
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<PAGE>
and all directors and executive officers as a group beneficially owned 6.0%
of the total MPMx capital stock outstanding as of such date.
(3) Represents shares held by Bayer AG as reported in a Schedule 13D filed with
the Securities and Exchange Commission on November 18, 1998.
(4) Represents shares held by FMR Corp. as reported in a Schedule 13G filed with
the Securities and Exchange Commission on February 11, 2000.
(5) Includes for the following persons, the following shares of Millennium
Common Stock which are subject to stock options exercisable within 60 days
of January 31, 2000: Mr. Levin, 145,807 shares; Dr. Boger, 53,162 shares;
Dr. Cordes, 2,917 shares; Mr. Heidrich, 19,167 shares; Dr. Kucherlapati,
100,834 shares; Dr. Lander, 19,412 shares; Dr. Mirabelli, 78,938 shares;
Dr. Wheelwright, 2,500 shares; Mr. Holtzman, 100,394 shares; Dr. Lee, 72,237
shares; Dr. Pavia, 52,642 shares; Dr. Tepper, 54,812 shares; and all
directors and executive officers as a group, 630,170 shares (does not
include shares held by Dr. Lee and Dr. Pavia).
(6) Includes for the following persons, the following shares of MPMx Capital
Stock which are subject to stock options exercisable within 60 days of
January 31, 2000: Mr. Levin, 10,000 shares; Dr. Boger, 2,000 shares;
Mr. Heidrich, 2,000 shares; Dr. Lander, 22,000 shares; Dr. Lee, 3,080
shares; Dr. Pavia, 2,940 shares, Dr. Tepper, 2,940 shares and all directors
and executive officers as a group, 44,570 shares (does not include shares
held by Dr. Lee and Dr. Pavia).
(7) Shares of Millennium Common Stock beneficially owned include 2,500 shares
beneficially owned by the Lander Family Charitable Trust for which
Dr. Lander disclaims beneficial ownership.
(8) Excludes 195 shares held by custodian under the Uniform Gifts to Minors Act
for each of Dr. Tepper's two sons. Dr. Tepper disclaims beneficial ownership
of these shares
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, executive officers and
holders of more than 10% of the Company's Common Stock to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Such persons are required by the SEC regulations to furnish the Company with
copies of all Section 16(a) forms filed by such person with respect to the
Company.
Based solely on its review of copies of reports filed by reporting persons
pursuant to Section 16(a) of the Exchange Act or written representations from
certain reporting persons that no Form 5 filing was required for such persons,
the Company believes that during fiscal 1999 all filings required to be made by
reporting persons were timely made in accordance with the requirements of the
Exchange Act.
CORPORATE GOVERNANCE
BOARD COMMITTEES
AUDIT COMMITTEE. The Company has a standing Audit Committee of the Board of
Directors, which provides the opportunity for direct contact between the
Company's independent auditors and the Board. The Audit Committee has
responsibility for recommending the appointment of the Company's independent
auditors, reviewing the scope and results of audits and reviewing the Company's
internal accounting
7
<PAGE>
control policies and procedures. The Audit Committee held one meeting in 1999.
The members of the Audit Committee are Dr. Boger and Dr. Lander.
COMPENSATION COMMITTEE. The Company also has a standing Compensation
Committee of the Board of Directors. The Committee's primary responsibilities
are to oversee compensation and benefit matters, management performance, and
management development and succession planning. The Compensation Committee held
five meetings during 1999. The members of the Compensation Committee are
Mr. Heidrich and Dr. Boger. Dr. Kucherlapati served on the Compensation
Committee through June 1999. See "Compensation Committee Report on Executive
Compensation," below.
NOMINATING AND BOARD GOVERNANCE COMMITTEE. The Company has a standing
Nominating and Board Governance Committee of the Board of Directors, which was
established in June 1999 and is responsible for considering Board governance
issues. The Committee also recommends individuals to serve as directors of the
Company and will consider nominees recommended by security holders.
Recommendations by security holders should be submitted in writing to the
Nominating and Board Governance Committee, in care of the Secretary of the
Company. The Committee held two meetings in 1999. The members of the Nominating
and Board Governance Committee are Dr. Kucherlapati, Dr. Cordes and
Dr. Wheelwright who was elected to the Committee in January 2000.
EXECUTIVE COMMITTEE. The Company has a standing Executive Committee of the
Board of Directors which was established in June 1999 and may exercise, when the
Board of Directors is not in session, all powers of the Board of Directors in
the management of the business and affairs of the Company to the extent
permitted by law, the By-laws of the Company and as specifically granted by the
Board of Directors. The Executive Committee did not meet in 1999. The members of
the Executive Committee are Mr. Levin and Dr. Boger.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. No member of
the Compensation Committee was at any time during 1999, or formerly, an officer
or employee of the Company or any subsidiary of the Company. No executive
officer of the Company has served as a director or member of the Compensation
Committee (or other committee serving an equivalent function) of any other
entity, one of whose executive officers served as a director of or member of the
Compensation Committee of the Company.
For a description of a consulting agreement between the Company and
Dr. Kucherlapati, see "Certain Relationships and Related Transactions."
Mr. Levin, the President, Chief Executive Officer and Chairman of the Board
of Directors of the Company, serves as a member of the Compensation Committee of
MPMx.
BOARD MEETINGS AND ATTENDANCE
The Board of Directors held nine meetings during 1999. Each director
attended at least 75% of the total number of meetings of the Board of Directors
and all committees of the Board on which he served.
DIRECTOR COMPENSATION
The Company's non-employee directors receive:
- an annual retainer of $10,000 for serving on the Board of Directors; and
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<PAGE>
- $1,500 plus reasonable travel and out-of-pocket expenses for attendance at
meetings of the Board of Directors.
Directors are also entitled to participate in the Company's 1996 Director
Option Plan (the "Director Plan"). Under the terms of the Director Plan
(i) options to purchase 20,000 shares of the Company's Common Stock were granted
to each non-employee director serving as a director as of the closing of the
Company's initial public offering on May 10, 1996 (the "Existing Director
Options"), except directors who received stock option grants in the 12 months
preceding the closing of the offering (the "Pre-Offering Director Options") and
(ii) options to purchase 30,000 shares of the Company's Common Stock are granted
to each person who first becomes an eligible non-employee director after
May 10, 1996 effective as of the date of election to the Board of Directors (the
"New Director Options"). The Existing Director Options and New Director Options
vest on a monthly basis in 48 equal installments, commencing on the 30th day
after the date of grant. Each Existing Director Option and New Director Option
terminates on the earlier of (i) ten years after the date of grant or (ii) the
date 60 days after the optionee ceases to serve as a director (or 180 days, if
service ends due to death or disability). Each eligible director will be granted
an additional option to purchase 20,000 shares of the Company's Common Stock as
of the date that such director's Existing Director Options, Pre-Offering
Director Options, or New Director Options have fully vested, and on each
four-year anniversary thereof. The exercisability of these options will be
accelerated upon the occurrence of a change in control (as defined in the
Director Plan). A total of 250,000 shares of the Company's Common Stock may be
issued upon the exercise of stock options granted under the Director Plan. The
exercise price of options granted under the Director Plan is equal to the
closing price of the Company's Common Stock on the Nasdaq National Market on the
date of grant.
Under the Director Plan, on August 10, 1999, Drs. Boger and Cordes were each
granted an option to purchase 20,000 shares upon the full vesting of their
Pre-Offering Director Options, at an option exercise price of $58.00 per share,
the fair market value on the date of grant, and on November 8, 1999,
Dr. Wheelwright was granted an option to purchase 30,000 shares upon his
election to the Board of Directors, at an option exercise price of $78.875, the
fair market value on the date of grant.
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<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION
The following table sets forth certain information with respect to the
annual and long-term compensation for the last three fiscal years of the
Company's Chief Executive Officer and the Company's four other most highly
compensated executive officers whose total annual salary and bonus for 1999
exceeded $100,000 (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION -------------------
---------------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING OPTIONS ALL OTHER
SALARY COMPENSATION NO. OF SHARES AND COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) BONUS(1) ($) COMPANY(#)(2) ($)
- --------------------------- -------- -------- -------- ------------- ------------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Mark J. Levin.............................. 1999 $400,400 $32,032 $76,632(3) 81,980 MPI $6,985(4)
Chief Executive Officer 1998 400,265 0 83,018(3) 10,100 MPMx 5,943(4)
1997 364,864 0 83,018(3) 100,000 MPI 4,752(4)
25,000 MPMx
4,904 MPMx
25,000 MPI
Steven H. Holtzman......................... 1999 316,656 21,964 -- 32,803 MPI 6,468(5)
Chief Business Officer 1998 312,965 0 -- 4,100 MPMx 4,476(5)
1997 277,025 0 -- 29,880 MPI 4,081(5)
15,500 MPMx
45,404 MPI
25,000 MPMx
Robert Tepper.............................. 1999 298,105 16,456 -- 39,115 MPI 3,923(6)
Chief Scientific Officer 1998 287,926 0 -- 3,040 MPMx 3,102(6)
1997 230,163 0 -- 17,280 MPI 4,570(6)
8,000 MPMx
31,814 MPI
25,000 MPMx
Frank D. Lee............................... 1999 285,325 17,120 -- 25,263 MPI 4,765(7)
Chief Research Technology Officer 1998 281,692 0 -- 3,180 MPMx 4,082(7)
1997 264,252 0 -- 16,326 MPI 4,752(7)
8,000 MPMx
30,678 MPI
3,000 MPMx
Michael R. Pavia(8)........................ 1999 232,422 13,364 -- 24,115 MPI 5,672(9)
Chief Technology Officer 1998 230,291 0 -- 3,040 MPMx 3,925(9)
1997 74,728 0 -- 14,020 MPI 272(9)
10,500 MPMx
150,196 MPI
3,000 MPMx
</TABLE>
- ------------------------------
(1) In 1999, a bonus was paid to each Named Executive Officer in lieu of an
increase in base salary.
10
<PAGE>
(2) In addition to receiving options to purchase shares of Common Stock of the
Company (designated in the table as MPI), the Named Executive Officers were
granted options in 1999 to purchase shares of common stock of MPMx as part
MPMx's stock option program.
(3) Represents amounts attributable to the forgiveness of a loan. See
"Employment Agreements" below for a description of the terms of the loan.
(4) Includes for 1999, $1,982; 1998, $2,613; and 1997, $1,566 representing term
life insurance premiums paid by the Company on Mr. Levin's behalf. Includes
for 1999, $5,003; 1998, $3,330; and 1997, $3,186 representing the dollar
value of shares of the Company's Common Stock contributed by the Company on
behalf of Mr. Levin pursuant to the Company's 401(k) Plan (the "401(k)
Plan").
(5) Includes for 1999, $1,468; 1998, $1,134; and 1997, $918 representing term
life insurance premiums paid by the Company on Mr. Holtzman's behalf.
Includes for 1999, $5,000; 1998, $3,342; and 1997, $3,163 representing the
dollar value of shares of the Company's Common Stock contributed by the
Company on behalf of Mr. Holtzman pursuant to the Company's 401(k) Plan.
(6) Includes for 1999, $893; 1998, $1,066; and 1997, $918 representing term life
insurance premiums paid by the Company on Dr. Tepper's behalf. Includes for
1999, $3,030; 1998, $2,036; and 1997, $3,652 representing the dollar value
of shares of the Company's Common Stock contributed by the Company on behalf
of Dr. Tepper pursuant to the Company's 401(k) Plan.
(7) Includes for 1999, $1,375; 1998, $1,812; and 1997, $1,566 representing term
life insurance premiums paid by the Company on Dr. Lee's behalf. Includes
for 1999, $3,390; 1998, $2,270; and 1997, $3,186 representing the dollar
value of shares of the Company's Common Stock contributed by the Company on
behalf of Dr. Lee pursuant to the Company's 401(k) Plan.
(8) Dr. Pavia joined the Company in July 1997.
(9) Includes for 1999, $672; 1998, $846; and 1997, $272 representing term life
insurance premiums paid by the Company on Dr. Pavia's behalf. Includes for
1999, $5,000; and 1998, $3,079 representing the dollar value of shares of
the Company's Common Stock contributed by the Company on behalf of
Dr. Pavia pursuant to the Company's 401(k) Plan.
OPTION GRANTS, EXERCISES AND YEAR-END VALUES
The following table sets forth certain information regarding options granted
during the year ended December 31, 1999 by the Company and MPMx to the Named
Executive Officers.
11
<PAGE>
OPTION GRANTS TABLE
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------
PERCENT OF
TOTAL POTENTIAL REALIZABLE
OPTIONS VALUE AT ASSUMED
GRANTED ANNUAL RATES OF STOCK
TO EXERCISE PRICE APPRECIATION FOR
NUMBER OF SECURITIES EMPLOYEES OR BASE OPTION TERM(2)
UNDERLYING OPTIONS IN FISCAL PRICE EXPIRATION -----------------------
NAME GRANTED(1)(#) YEAR ($/SH) DATE 5%($) 10%($)
- ---- -------------------- ---------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Mark J. Levin................. 80,000 MPI(3) 2.8% $32.50 03/26/09 $1,635,126 $4,143,731
19 MPI(4)(5) * 5.6067 03/03/09 67 170
1,961 MPI(5)(6) * 5.6067 04/12/09 6,915 17,523
100 MPMx(4) * 0.05 03/03/09 3 8
10,000 MPMx(6) 1.1% 0.90 04/13/09 5,660 14,344
Steven H. Holtzman............ 32,000 MPI(3) 1.1% 32.50 03/26/09 654,050 1,657,492
19 MPI(4)(5) * 5.6067 03/03/09 67 170
784 MPI(5)(6) * 5.6067 04/12/09 2,764 7,006
100 MPMx(4) * 0.05 03/03/09 3 8
4,000 MPMx(6) * 0.90 02/25/09 2,264 5,737
Robert Tepper................. 38,520 MPI(3) 1.4% 32.50 03/26/09 787,313 1,995,206
19 MPI(4)(5) * 5.6067 03/03/09 67 170
576 MPI(5)(6) * 5.6067 04/12/09 2,031 5,147
100 MPMx(4) * 0.05 03/03/09 3 8
2,940 MPMx(6) * 0.90 02/25/09 1,664 4,217
Frank D. Lee.................. 24,640 MPI(3) * 32.50 03/26/09 503,619 1,276,269
19 MPI(4)(5) * 5.6067 03/03/09 67 170
604 MPI(5)(6) * 5.6067 04/12/09 2,130 5,397
100 MPMx(4) * 0.05 03/03/09 3 8
3,080 MPMx(6) * 0.90 02/25/09 1,743 4,418
Michael R. Pavia.............. 23,520 MPI(3) * 32.50 03/26/09 480,727 1,218,257
19 MPI(4)(5) * 5.6067 03/03/09 67 170
576 MPI(5)(6) * 5.6067 04/12/09 2,031 5,147
100 MPMx(4) * 0.05 03/03/09 3 8
2,940 MPMx(6) * 0.90 02/25/09 1,664 4,217
</TABLE>
- ------------------------
* Represents less than one percent of total options granted to employees in
fiscal year.
(1) Options have been granted during the fiscal year to the Named Executive
Officers to purchase Common Stock of the Company (designated in the table as
MPI), as well as common stock of MPMx.
(2) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock price appreciation of 5% and 10%
compounded annually from the date the respective options were granted to
their expiration date. This table does not take into account any
appreciation in the price of the Common Stock to date. Actual gains, if any,
on stock option exercises will depend on the future performance of the
Common Stock and the date on which the options are exercised.
(3) One forty-eighth of the total number of shares subject to each option are
exercisable at the end of the first month after the date of grant and an
additional one forty-eighth of the total number of shares
12
<PAGE>
subject to each option will be exercisable at the end of each month
thereafter until all of such shares are exercisable.
(4) Option becomes exercisable on 12/31/05.
(5) These options represent options that were originally granted to the Named
Executive Officer by a majority-owned subsidiary of the Company, which were
converted into options in the Company's Common Stock upon the merger of the
subsidiary into the Company.
(6) One forty-eighth of the total number of shares subject to the option are
exercisable at the end of the first month after the date of grant and an
additional one forty-eighth of the total number of shares subject to the
option will be exercisable at the end of each month thereafter until all of
such shares are exercisable; provided, however, that at the election of the
Named Executive Officer, all of such shares may be immediately exercisable,
in which event the portion of the shares of Common Stock issued upon
exercise corresponding to the vesting schedule for the original option shall
be subject to repurchase by the Company.
OPTION EXERCISES AND YEAR-END VALUES
The following table sets forth certain information regarding stock options
of the Company and MPMx which were exercised during the year ended December 31,
1999 and stock options of the Company and MPMx which were held as of
December 31, 1999 by the Named Executive Officers.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
SHARES OPTIONS AT FISCAL VALUE OF UNEXERCISED IN-
ACQUIRED YEAR-END THE-MONEY OPTIONS AT
ON (#) FISCAL YEAR-END($)
EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME COMPANY (1) REALIZED(2) UNEXERCISABLE UNEXERCISABLE(2)(3)
- ---- -------- -------- ----------- ----------------- ------------------------
<S> <C> <C> <C> <C> <C>
Mark J. Levin........... MPI 0 -- 129,351/152,629 $13,324,342/$15,043,616
MPMx 25,000 0 10,000/100 0/0
Steven H. Holtzman...... MPI 784 $ 40,096 90,848/62,401 9,801,138/6,183,138
MPMx 4,000 0 0/100 0/0
Robert Tepper........... MPI 0 -- 48,216/57,762 4,975,583/5,571,204
MPMx 0 -- 2,940/100 0/0
Frank D. Lee............ MPI 0 -- 65,254/46,399 6,850,650/4,581,954
MPMx 0 -- 3,080/100 0/0
Michael R. Pavia........ MPI 54,576 4,777,833 40,916/92,643 4,318,924/9,638,140
MPMx 0 -- 2,940/ 0 0/0
</TABLE>
13
<PAGE>
- ------------------------
(1) Shares of capital stock acquired upon exercise of stock options of MPMx
represent shares of restricted stock acquired upon exercise of stock options
of MPMx which are subject to repurchase by such company.
(2) No public market exists for the shares of MPMx capital stock. Accordingly,
no value in excess of the exercise price has been attributed to these
options.
(3) Value of unexercised in-the-money options to purchase shares of MPI Common
Stock is based on the closing sales price of the Company's Common Stock on
December 31, 1999 ($122.00), the last trading day of the Company's 1999
fiscal year, less the applicable option exercise price.
EMPLOYMENT AGREEMENTS
In November 1994, the Company entered into an employment agreement with
Mr. Levin, the Chief Executive Officer of the Company. Mr. Levin's employment
with the Company is at-will and may be terminated by the Company at any time
with or without cause. The agreement provided for an initial annual salary of
$300,000. In addition, Mr. Levin was granted an option to purchase 533,364
shares of the Company's Common Stock at an exercise price of $0.30 per share.
The option was exercised in full in November 1995. The shares issued upon
exercise of the option were subject to repurchase by the Company and were
released from such repurchase option at a rate of one forty-eighth of such
shares per month. In connection with the grant of the option, the Company agreed
to loan Mr. Levin up to $266,681, the net after tax purchase price for the
options. The loan had an interest rate of 7% per annum and was secured by a
pledge of the shares of Common Stock issued upon exercise of the option and the
Company agreed to forgive one forty-eighth of the principal plus accrued
interest of the loan monthly beginning on December 31, 1995, subject to
Mr. Levin's continued employment. The shares issued in 1995 are no longer
subject to any repurchase option and the loan has now been forgiven in full.
The Company is a party to employment agreements with Mr. Holtzman, Dr. Lee,
Dr. Pavia and Dr. Tepper. Each executive's employment with the Company is
at-will and may be terminated by the Company at any time with or without cause.
In the event the executive's employment is terminated without Justifiable Cause
(as defined) then, subject to certain conditions, the Company will be obligated
to pay him severance payments equal to twelve months' salary.
14
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Dr. Lander, a director of the Company, serves as a consultant to the Company
and is compensated for such consulting services at the rate of $2,375 (plus
travel and other appropriate expenses) per day. Dr. Lander received $95,000 from
the Company in 1999.
In April 1997, the Company entered into a corporate consortium to fund a
five-year research program in functional genomics at the Whitehead Institute for
Biomedical Research ("Whitehead"). Dr. Lander, a director of the Company, is a
Research Program Director of Whitehead. In 1999, the Company paid $2,500,000 to
Whitehead in connection with this consortium.
Dr. Kucherlapati, a director of the Company, serves as a consultant to the
Company and is compensated for such consulting services at the rate of $23,750
per quarter, based upon two days per month of service. Dr. Kucherlapati received
$95,000 from the Company in 1999.
In September 1998, the Company formed a strategic alliance with Bayer AG.
Pursuant to the terms of the strategic alliance agreement, in November 1998,
Bayer made an equity investment of $96.6 million in exchange for 4,957,660
shares of Common Stock of the Company. In addition, Bayer paid the Company
$33.4 million as an up-front license fee. Future payments provided for under the
strategic alliance agreement include $219 million of ongoing license and
research program funding as well as up to $116 million of performance payments,
assuming certain milestones are achieved.
For a description of certain indebtedness to the Company of Mr. Levin,
President, Chief Executive Officer and Chairman of the Board of Directors of the
Company, see "Employment Agreements."
STOCK PERFORMANCE GRAPH
The Company's Common Stock has been listed for trading on the Nasdaq
National Market under the symbol MLNM since May 6, 1996.
The following graph compares the cumulative stockholder return on the Common
Stock of the Company for the period from May 6, 1996, the date of the Company's
initial public offering, through December 31, 1999 with the cumulative total
return on (i) the Nasdaq Stock Market (U.S. Companies) Index and (ii) the Nasdaq
Pharmaceuticals Index.
This graph assumes the investment of $100 on May 6, 1996 in the Company's
Common Stock (at the initial public offering price) and each of the indices
listed above, and assumes dividends are reinvested. Measurement points are on
May 6, 1996 and the last trading days of the years ended December 31, 1996,
December 31, 1997, December 31, 1998 and December 31, 1999.
<TABLE>
<CAPTION>
5/6/96 12/31/96 12/31/97 12/31/98 12/31/99
-------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Millennium Pharmaceuticals, Inc............... $100.00 $144.79 $158.33 $215.63 $1,016.67
Nasdaq Stock Market (U.S.).................... 100.00 108.86 133.39 187.96 339.58
Nasdaq Pharmaceuticals Index.................. 100.00 93.99 97.06 123.47 230.73
</TABLE>
15
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Company is currently composed of two
non-employee directors, Mr. Heidrich and Dr. Boger. The Compensation Committee:
- reviews and approves compensation policy and philosophy for the Company;
- fixes the annual salary and other elements of total compensation of the
Chief Executive Officer and/or President, subject to approval by the full
Board of Directors;
- administers the Company's equity incentive plans and the issuance of
equity participation rights pursuant to those plans, and approves all
grants to executive officers; and
- approves and recommends to the full Board of Directors the adoption of,
and suggested changes to: (a) any equity incentive plans; (b) any
qualified or non-qualified employee pension, profit-sharing or retirement
plans; and (c) any employee incentive compensation plans.
In addition, the Board of Directors (and/or Compensation Committee of the
Board of Directors) of MPMx has granted stock options to employees of the
Company pursuant to its stock option plan.
The Company's executive compensation program is designed to provide
incentives to the Company's executive officers and, thereby, to promote
achievement of the Company's business goals and shareholder returns. For 1999
executive compensation consisted of a combination of base salary, stock
incentives and employee benefits. The Compensation Committee considers stock
incentives to be a critical component of an executive's compensation package in
order to help align executive interests with stockholder interests.
COMPENSATION PHILOSOPHY
The objectives of the executive compensation program are to align
compensation with business objectives and individual performance, and to enable
the Company to attract, retain, motivate and reward executive officers who are
expected to contribute to the long-term success of the Company. The Company's
executive compensation philosophy is based on the principles of competitive and
fair compensation and sustained performance.
- COMPETITIVE AND FAIR COMPENSATION
The Company is committed to providing an executive compensation program
that helps attract and retain highly qualified executives. To ensure that
compensation is competitive, the Compensation Committee compares the
Company's compensation practices with those of other companies in the
industry and sets the Company's compensation guidelines based on this
review. The Compensation Committee believes compensation for the Company's
executive officers is within the range of compensation paid to executives
with comparable qualifications, experience and responsibilities who are
with companies that are in the same or similar business and of comparable
size and success as the Company. The Compensation Committee also strives
to achieve equitable relationships both among the compensation of
individual officers and between the compensation of officers and other
employees throughout the Company.
- SUSTAINED PERFORMANCE
Executive officers are rewarded based upon corporate performance and
individual performance. Corporate performance is evaluated by reviewing
the extent to which strategic scientific and business plan goals are met,
including such factors as timely delivery of validated targets to partners
16
<PAGE>
for screening, effective development of new programs for future alliances,
continued innovation in the development of the Company's technologies,
formation of new business alliances, and meeting stated financial
objectives. Individual performance is evaluated by reviewing attainment of
specified individual objectives and the degree to which teamwork and
Company values are fostered.
In evaluating each executive officer's performance, the Compensation
Committee generally conforms to the following process:
- Company and individual goals and objectives generally are set at the
beginning of the performance cycle.
- At the end of the performance cycle, the accomplishment of the executive's
goals and objectives and his or her contributions to the Company are
evaluated.
- The executive's performance is then compared with peers within the Company
and the results are communicated to the executive.
- The comparative results, combined with comparative compensation practices
of other companies in the industry, are then used to determine salary and
stock compensation levels.
Annual compensation for the Company's executives has generally consisted of
two elements--salary and stock options. Beginning with 2000, the Company's
executives will be eligible for a bonus equal to a target percentage of base
salary, based in part on Company performance against goals established by the
Committee at the beginning of the year and in part on the executive's
performance against individual goals, established at the beginning of the year.
The salary for executives is generally set by reviewing compensation for
competitive positions in the market and the historical compensation levels of
the executives. Increases in annual salaries are based on actual corporate and
individual performance against targeted performance and various subjective
performance criteria. Targeted performance criteria vary for each executive
based on his area of responsibility. Subjective performance criteria include an
executive's ability to motivate others, develop the skills necessary to mature
with the Company, recognize and pursue new business opportunities and initiate
programs to enhance the Company's growth and success. The Compensation Committee
does not use a specific formula based on these targeted performance and
subjective criteria, but instead makes an evaluation of each executive officer's
contributions in light of all such criteria. For 1999, executive officers
received a lump-sum bonus, payable in two installments during 1999, in lieu of a
salary increase, with the amount of the bonus equal to the foregone increase in
salary.
Compensation at the executive officer level also includes the long-term
incentives afforded by stock options. The Company's stock option program is
designed to promote the identity of long-term interests between the Company's
employees and its shareholders and assist in the retention of executives. In
addition, the Board of Directors of MPMx has adopted a stock option program
which has provided for the grant of stock options to, among others, the
executive officers of the Company. The Compensation Committee of the Board of
Directors believes that the award of stock options by MPMx has, among other
things, created incentives for executive officers of the Company to contribute
to the success of the entire organization through the ownership of equity.
The size of option grants is generally intended to reflect the executive's
position with the Company and his or her contributions to the Company, including
his or her success in achieving the individual performance criteria described
above. The Company's option program generally uses a four-year vesting
17
<PAGE>
period to encourage key employees to continue in the employ of the Company. All
stock options granted to executive officers in 1999 under the Company's stock
option plans, as well as the stock option plan of MPMx, were granted at fair
market value on the date of grant. During 1999, all current executive officers
received options to purchase:
- an aggregate of 378,575 shares of Common Stock of the Company, at a
weighted average exercise price of $38.09 per share; and
- an aggregate of 94,490 shares of common stock of MPMx, at a weighted
average exercise price of $0.51 per share.
Executive officers are also eligible to participate in the Company's 1996
Employee Stock Purchase Plan (the "Purchase Plan"). The Purchase Plan is
available to virtually all employees of the Company and generally permits
participants to purchase shares at a discount of approximately 15% from the fair
market value at the beginning or end of the applicable purchase period.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M). Section 162(m) of the
Internal Revenue Code, of 1986, as amended (the "Code"), generally disallows a
tax deduction to public companies for compensation over $1.0 million paid to the
corporation's Chief Executive Officer and four other most highly compensated
executive officers. Qualifying performance-based compensation will not be
subject to the deduction limit if certain requirements are met. The Company
generally intends to structure the stock options granted to its executive
officers in a manner that complies with the statute to mitigate any disallowance
of deductions under Section 162(m). However, the Compensation Committee reserves
the right to use its judgment to authorize compensation payments which may be in
excess of the limit when the Compensation Committee believes such payment is
appropriate, after taking into consideration changing business conditions or the
officer's performance, and is in the best interests of the stockholders.
MR. LEVIN'S 1999 COMPENSATION
Mr. Levin is eligible to participate in the same executive compensation
plans available to the other executive officers of the Company. The Compensation
Committee believes that Mr. Levin's annual compensation, including the portion
of his compensation based upon the Company's merit-based stock option program,
has been set at a level competitive with other companies in the industry.
Mr. Levin's salary for 1999 was unchanged from 1998. In lieu of any salary
increase, Mr. Levin received a lump-sum bonus equal to the amount that he would
have received in increased salary, payable in two installments during 1999. In
March 1999, Mr. Levin was granted a stock option to purchase 80,000 shares of
the Company's Common Stock at an exercise price of $32.50 per share (the closing
price of a share of the Company's Common Stock on the Nasdaq National Market on
the date of grant) for services performed during the 1998 fiscal year and his
expected future contributions to the Company's success.
In determining Mr. Levin's 1999 compensation, including whether to grant
stock options of the Company to Mr. Levin, the Compensation Committee considered
Mr. Levin's overall compensation package relative to that of other chief
executives in the Company's industry and past option grants as well as the
effectiveness of Mr. Levin's leadership of the Company and the resulting success
of the Company in the attainment of its goals. In addition, in 1999 Mr. Levin
was granted stock options to purchase 100 shares of MPMx common stock at an
exercise price of $0.05 per share and 10,000 shares of MPMx common stock at an
exercise price of $0.90 per share (which represented, in each case, the fair
market value of the common stock of MPMx on the dates of the grant) and
Mr. Levin was granted stock options to purchase
18
<PAGE>
an aggregate of 10,100 shares of Millennium BioTherapeutics, Inc. ("MBio"),
formerly a majority-owned subsidiary of the Company, at an exercise price of
$1.10 per share (which represented the fair market value of the common stock of
MBio on the date of the grant). In connection with the merger of MBio into the
Company on December 21, 1999, Mr. Levin's option to purchase 10,100 shares was
converted to an option to purchase an aggregate of 1,980 shares of the Company's
Common Stock at an exercise price of $5.6067 per share.
For 2000, Mr. Levin will be eligible for a bonus equal to a target
percentage of his base salary. The amount of this bonus, if any, will be based
in part on Company performance against goals established by the Committee at the
beginning of the year and in part on his performance against individual goals
established at the beginning of the year.
Compensation Committee
A. Grant Heidrich, III
Joshua Boger, Ph.D.
19
<PAGE>
PROPOSAL TWO--APPROVAL OF AMENDMENT TO THE COMPANY'S
RESTATED CERTIFICATE OF INCOROPRATION
THE SECOND AGENDA ITEM TO BE VOTED ON IS THE AMENDMENT TO THE COMPANY'S RESTATED
CERTIFICATE OF INCORPORATION. THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE AMENDMENT.
On January 31, 2000, the Board of Directors voted to recommend to the
stockholders that the Company's Restated Certificate of Incorporation be amended
in order to increase the authorized Common Stock from 100,000,000 shares to
500,000,000 shares. On January 31, 2000, there were outstanding 44,965,975
shares of Common Stock, and an additional 9,119,567 shares were reserved for
issuance pursuant to the Company's stock option and stock benefit plans (the
"Stock Plans") (excluding shares reserved for issuance under the 2000 Stock
Incentive Plan which is subject to approval by the stockholders at the Annual
Meeting), 341,744 shares were reserved for issuance upon exercise of outstanding
warrants (the "Warrants") and 2,376,990 shares were reserved for issuance upon
conversion of the Company's 5.5% Convertible Subordinated Notes due January 15,
2007 (the "Notes"). A copy of the Certificate of Amendment to the Restated
Certificate of Incorporation is attached as Appendix A to this Proxy Statement.
The Board of Directors believes that the authorization of additional shares
of Common Stock is desirable to provide shares for issuance in connection with
possible future stock splits, stock dividends, acquisitions, financings,
management and employee incentive plans or other general corporate purposes.
However, other than the ongoing consideration by the Board of Directors of the
Company of the possibility of effecting a stock split in the form of a stock
dividend, as of the date of mailing of this proxy statement to stockholders,
there is no plan, understanding or agreement for the issuance of any shares of
Common Stock with the exception of the shares of Common Stock available for
issuance under the Stock Plans, Warrants and the Notes described above. If the
amendment is approved by the stockholders, the Board of Directors will have
authority to issue additional shares of Common Stock without the necessity of
further stockholder action. The issuance of additional shares of Common Stock,
while providing desired flexibility in connection with possible acquisitions and
other corporate purposes, would have the effect of diluting the Company's
current stockholders. Holders of our Common Stock have no preemptive rights with
respect to any shares which may be issued in the future.
PROPOSAL THREE--APPROVAL OF 2000 STOCK INCENTIVE PLAN
THE THIRD AGENDA ITEM TO BE VOTED ON IS THE APPROVAL OF THE COMPANY'S 2000 STOCK
INCENTIVE PLAN. THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" APPROVAL OF
THE PLAN.
On January 31, 2000, the Board of Directors of the Company adopted, subject
to stockholder approval, the 2000 Stock Incentive Plan (the "2000 Plan"). The
stockholders are being asked to approve the adoption of the 2000 Plan and the
reservation of a number of shares thereunder equal to (i) 5% of the number of
shares of the Company's Common Stock outstanding on April 12, 2000 (the "Annual
Meeting Date") plus (ii) an annual increase to be made on the first day of each
of January 1, 2001, 2002 and 2003 equal to the lesser of (A) 5% of the number of
shares of the Company's Common Stock outstanding on the last business day
preceding January 1, 2001, 2002 and 2003, respectively or (B) a lesser amount
determined by the Board of Directors. Based upon the 44,965,975 shares of Common
Stock outstanding as of January 31, 2000, the Company estimates that the number
of authorized shares on the Annual Meeting Date will be approximately 2,248,300
shares.
20
<PAGE>
The 2000 Plan is intended to supplement the Company's existing stock option
plans, namely, the 1993 Incentive Stock Plan, the 1996 Equity Incentive Plan,
the 1997 Equity Incentive Plan, the assumed MBio 1997 Stock Incentive Plan and
the 1996 Director Option Plan, under which only approximately 1,600,000 shares
remained available for new option grants as of January 31, 2000. The Company's
management anticipates that all or most of the shares available under the
existing stock option plans will be used in connection with grants of additional
stock options prior to the date of the Annual Meeting.
The Board of Directors believes that the future success of the Company
depends, in large part, upon the ability of the Company to maintain a
competitive position in attracting, retaining and motivating key personnel. The
Board of Directors believes that stock awards have been, and will continue to
be, an important element in attracting and retaining key personnel who are
expected to contribute to the Company's growth and success.
The principal provisions of the 2000 Plan are summarized below. The summary
is qualified in its entirety by reference to the 2000 Plan, a copy of which is
attached as Appendix B to this Proxy Statement.
DESCRIPTION OF AWARDS
The 2000 Plan provides for the grant of incentive stock options intended to
qualify under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), nonstatutory stock options, restricted stock awards and other
stock-based awards, including the grant of shares based upon certain conditions,
the grant of securities convertible into Common Stock and the grant of stock
appreciation rights (collectively "Awards").
INCENTIVE STOCK OPTIONS AND NONSTATUTORY STOCK OPTIONS. Optionees receive
the right to purchase a specified number of shares of Common Stock at a
specified option price and subject to such other terms and conditions as are
specified in connection with the option grant. The Board will establish the
exercise price of an option at the time it is granted. The option price will not
be less than 100% of the fair market value of the Common Stock. Options may not
be granted for a term in excess of ten years. The 2000 Plan permits the Board to
determine the manner of payment of the exercise price of options, including
through payment by cash, check or in connection with a "cashless exercise"
through a broker, by surrender to the Company of shares of Common Stock, by
delivery to the Company of a promissory note, or by any other lawful means. The
maximum cumulative number of shares available for grants of incentive stock
options under the 2000 Plan is the lesser of 10,000,000 or the total number of
shares authorized under the 2000 Plan.
RESTRICTED STOCK AWARDS. Restricted Stock Awards entitle recipients to
acquire shares of Common Stock, subject to the right of the Company to
repurchase all or part of such shares from the recipient in the event that the
conditions specified in the applicable Award are not satisfied prior to the end
of the applicable restriction period established for such Award. The 2000 Plan
provides that restricted stock awards and other stock-based awards shall be made
for no more than 10% of the aggregate number of shares reserved for issuance at
any time under the 2000 Plan.
OTHER STOCK-BASED AWARDS. Under the 2000 Plan, the Board has the right to
grant other Awards based upon the Common Stock having such terms and conditions
as the Board may determine, including the grant of shares based upon certain
conditions, the grant of securities convertible into Common Stock and the grant
of stock appreciation rights.
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ELIGIBILITY TO RECEIVE AWARDS
Officers, employees, directors, consultants and advisors of the Company and
any future subsidiaries are eligible to be granted Awards under the 2000 Plan.
Under present law, however, incentive stock options may only be granted to
employees. The maximum number of shares with respect to which an Award may be
granted to any participant under the 2000 Plan may not exceed 500,000 shares per
calendar year.
As of December 31, 1999, approximately 950 persons were eligible to receive
Awards under the 2000 Plan, including the Company's nine executive officers and
six non-employee directors. The granting of Awards under the 2000 Plan is
discretionary, and the Company cannot now determine the number or type of Awards
to be granted in the future to any particular person or group.
On January 31, 2000, the last reported sale price of the Company's Common
Stock on the Nasdaq National Market was $187.44.
ADMINISTRATION
The 2000 Plan is administered by the Board of Directors. The Board has the
authority to adopt, amend and repeal the administrative rules, guidelines and
practices relating to the 2000 Plan and to interpret the provisions of the 2000
Plan. Pursuant to the terms of the 2000 Plan, the Board of Directors may
delegate authority under the 2000 Plan to one or more committees of the Board,
and subject to certain limitations, to one or more executive officers of the
Company. The Board has authorized the Compensation Committee to administer
certain aspects of the 2000 Plan, including the granting of options to executive
officers. Subject to any applicable limitations contained in the 2000 Plan, the
Board of Directors, the Compensation Committee, or any other committee or
executive officer to whom the Board delegates authority, as the case may be,
selects the recipients of Awards and determines (i) the number of shares of
Common Stock covered by options and the dates upon which such options become
exercisable, (ii) the exercise price of options, (iii) the duration of options,
and (iv) the number of shares of Common Stock subject to any restricted stock or
other stock-based Awards and the terms and conditions of such Awards, including
conditions for repurchase, issue price and repurchase price. The 2000 Plan
prohibits the Board of Directors from repricing any outstanding Awards.
The Board of Directors is required to make appropriate adjustments in
connection with the 2000 Plan and any outstanding Awards to reflect stock
dividends, stock splits and certain other events. In the event of a merger,
liquidation or other Acquisition Event (as defined in the 2000 Plan), the Board
of Directors is authorized to provide for outstanding options or other
stock-based Awards to be assumed or substituted for, by the acquiring or
succeeding corporation. If the acquiring or succeeding corporation does not
agree to assume, or substitute for, such options, then the Board of Directors
shall provide that all unexercised options will become exercisable in full prior
to the Acquisition Event and will terminate immediately prior to the Acquisition
Event if not exercised; provided that, if holders of the Company's Common Stock
receive a cash payment for each share of Common Stock surrendered pursuant to
the Acquisition Event, then the Board may provide that all outstanding options
shall terminate upon such Acquisition Event and that each participant shall
receive, in exchange therefor, a cash payment.
If any Award expires or is terminated, surrendered, canceled or forfeited,
the unused shares of Common Stock covered by such Award will again be available
for grant under the 2000 Plan.
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AMENDMENT OR TERMINATION
No Award may be made under the 2000 Plan after January 31, 2010, but Awards
previously granted may extend beyond that date. The Board of Directors may at
any time amend, suspend or terminate the 2000 Plan, except that after the date
of such amendment no Award intended to comply with Section 162(m) of the Code
shall become exercisable, realizable or vested unless and until such amendment
shall have been approved by the Company's stockholders.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the United States federal income tax
consequences that generally will arise with respect to Awards granted under the
2000 Plan and with respect to the sale of Common Stock acquired under the 2000
Plan.
INCENTIVE STOCK OPTIONS. In general, a participant will not recognize
taxable income upon the grant or exercise of an incentive stock option. Instead,
a participant will recognize taxable income with respect to an incentive stock
option only upon the sale of Common Stock acquired through the exercise of the
option ("ISO Stock"). The exercise of an incentive stock option, however, may
subject the participant to the alternative minimum tax.
Generally, the tax consequences of selling ISO Stock will vary with the
length of time that the participant has owned the ISO Stock at the time it is
sold. If the participant sells ISO Stock after having owned it for at least two
years from the date the option was granted (the "Grant Date") and one year from
the date the option was exercised (the "Exercise Date"), then the participant
will recognize long-term capital gain in an amount equal to the excess of the
sale price of the ISO Stock over the exercise price.
If the participant sells ISO Stock for more than the exercise price prior to
having owned it for at least two years from the Grant Date and one year from the
Exercise Date (a "Disqualifying Disposition"), then all or a portion of the gain
recognized by the participant will be ordinary compensation income and the
remaining gain, if any, will be a capital gain. This capital gain will be a
long-term capital gain if the participant has held the ISO Stock for more than
one year prior to the date of sale.
If a participant sells ISO Stock for less than the exercise price, then the
participant will recognize capital loss equal to the excess of the exercise
price over the sale price of the ISO Stock. This capital loss will be a
long-term capital loss if the participant has held the ISO Stock for more than
one year prior to the date of sale.
NONSTATUTORY STOCK OPTIONS. As in the case of an incentive stock option, a
participant will not recognize taxable income upon the grant of a nonstatutory
stock option. Unlike the case of an incentive stock option, however, a
participant who exercises a nonstatutory stock option generally will recognize
ordinary compensation income in an amount equal to the excess of the fair market
value of the Common Stock acquired through the exercise of the option ("NSO
Stock") on the Exercise Date over the exercise price.
With respect to any NSO Stock, a participant will have a tax basis equal to
the exercise price plus any income recognized upon the exercise of the option.
Upon selling NSO Stock, a participant generally will recognize capital gain or
loss in an amount equal to the difference between the sale price of the NSO
Stock and the participant's tax basis in the NSO Stock. This capital gain or
loss will be a long-term gain or loss if the participant has held the NSO Stock
for more than one year prior to the date of the sale.
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RESTRICTED STOCK AWARDS. A participant will not recognize taxable income
upon the grant of a restricted stock Award, unless the participant makes an
election under Section 83(b) of the Code (a "Section 83(b) Election"). If the
participant makes a Section 83(b) Election within 30 days of the date of the
grant, then the participant will recognize ordinary compensation income, for the
year in which the Award is granted, in an amount equal to the difference between
the fair market value of the Common Stock at the time the Award is granted and
the purchase price paid for the Common Stock. If a Section 83(b) Election is not
made, then the participant will recognize ordinary compensation income, at the
time that the forfeiture provisions or restrictions on transfer lapse, in an
amount equal to the difference between the fair market value of the Common Stock
at the time of such lapse and the original purchase price paid for the Common
Stock. The participant will have a tax basis in the Common Stock acquired equal
to the sum of the price paid and the amount of ordinary compensation income
recognized.
Upon the disposition of the Common Stock acquired pursuant to a restricted
stock Award, the participant will recognize a capital gain or loss equal to the
difference between the sale price of the Common Stock and the participant's
basis in the Common Stock. The gain or loss will be a long-term gain or loss if
the shares are held for more than one year. For this purpose, the holding period
shall begin just after the date on which the forfeiture provisions or
restrictions lapse if a Section 83(b) Election is not made, or just after the
Award is granted if a Section 83(b) Election is made.
OTHER STOCK-BASED AWARDS. The tax consequences associated with any other
stock-based Award granted under the 2000 Plan will vary depending on the
specific terms of such Award, including whether or not the Award has a readily
ascertainable fair market value, whether or not the Award is subject to
forfeiture provisions or restrictions on transfer, the nature of the property to
be received by the participant under the Award, the applicable holding period
and the participant's tax basis.
TAX CONSEQUENCES TO THE COMPANY
The grant of an Award under the 2000 Plan will have no tax consequences to
the Company. Moreover, in general, neither the exercise of an incentive stock
option nor the sale of any Common Stock acquired under the 2000 Plan will have
any tax consequences to the Company. The Company generally will be entitled to a
business-expense deduction, however, with respect to any ordinary compensation
income recognized by a participant under the 2000 Plan, including as a result of
the exercise of a nonstatutory stock option, a Disqualifying Disposition or a
Section 83(b) Election. Any such deduction will be subject to the limitations of
Section 162(m) of the Code.
INDEPENDENT AUDITORS
The Board of Directors, at the recommendation of the Audit Committee, has
selected the firm of Ernst & Young LLP as the Company's independent auditors for
the current fiscal year. Ernst & Young LLP has served as the Company's
independent auditors since the Company's inception.
Representatives of Ernst & Young LLP are expected to be present at the
meeting and will have the opportunity to make a statement if they desire to do
so and will also be available to respond to appropriate questions from
stockholders.
ADDITIONAL INFORMATION
All costs of solicitation of proxies will be paid by the Company. In
addition to solicitations by mail, the Company's directors, officers and
employees, without additional pay, may solicit proxies by telephone, or
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personal meetings. Brokers, custodians and fiduciaries will be requested to
forward proxy soliciting material to the owners of stock held in their names,
and, as required by law, the Company will reimburse them for their out-of-pocket
expenses in this regard.
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Proposals of stockholders intended to be presented at the 2001 Annual
Meeting of Stockholders must be received by the Secretary of the Company at the
principal office of the Company not later than November 6, 2000 for inclusion in
the proxy statement for the 2001 Annual Meeting.
If a stockholder of the Company wishes to present a proposal before the 2001
Annual Meeting, but does not wish to have the proposal considered for inclusion
in the Company's proxy statement and proxy card, such stockholder must also give
written notice to the Secretary of the Company at the address noted above. The
Secretary must receive such notice not less than 60 days nor more than 90 days
prior to the 2001 Annual Meeting; provided that, in the event that less than
70 days' notice or prior public disclosure of the date of the 2001 Annual
Meeting is given or made, notice by the stockholder must be received not later
than the close of business on the 10th day following the date on which such
notice of the date of the meeting was mailed or such public disclosure was made,
whichever occurs first. If a stockholder fails to provide timely notice of a
proposal to be presented at the 2001 Annual Meeting, the proxies designated by
the Board of Directors of the Company will have discretionary authority to vote
on any such proposal.
By Order of the Board of Directors
John B. Douglas III
Secretary
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APPENDIX A
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
MILLENNIUM PHARMACEUTICALS, INC.
Pursuant to Section 242 of the General Corporation Law of the State of
Delaware, Millennium Pharmaceuticals, Inc., a corporation organized and existing
under the General Corporation Law of the State of Delaware (the "Corporation"),
does hereby certify:
FIRST: That the Board of Directors of the Corporation, at a meeting duly
called and held on January 31, 2000, duly adopted resolutions proposing and
declaring advisable the following amendment to the Restated Certificate of
Incorporation of the Corporation:
RESOLVED: That the Restated Certificate of Incorporation of the Corporation
be amended by deleting the first paragraph of Article FOURTH in its entirety and
inserting the following in lieu thereof:
"FOURTH. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 505,000,000 shares, consisting of
(i) 500,000,000 shares of Common Stock, $.001 par value per share ("Common
Stock"), and (ii) 5,000,000 shares of Preferred Stock, $.001 par value per share
("Preferred Stock").
SECOND: That the stockholders of the Corporation, at the 2000 Annual Meeting
of Stockholders held on April 12, 2000, duly approved said proposed Certificate
of Amendment of Restated Certificate of Incorporation in accordance with
Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment
to be signed by its Chief Executive Officer on this 12th day of April, 2000.
MILLENNIUM PHARMACEUTICALS, INC.
By: /s/ MARK J. LEVIN
Mark J. Levin
Chief Executive Officer
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APPENDIX B
MILLENNIUM PHARMACEUTICALS, INC.
2000 STOCK INCENTIVE PLAN
1. PURPOSE
The purpose of this 2000 Stock Incentive Plan (the "Plan") of Millennium
Pharmaceuticals, Inc., a Delaware corporation (the "Company"), is to advance the
interests of the Company's stockholders by enhancing the Company's ability to
attract, retain and motivate persons who make (or are expected to make)
important contributions to the Company by providing such persons with equity
ownership opportunities and performance-based incentives and thereby better
aligning the interests of such persons with those of the Company's stockholders.
Except where the context otherwise requires, the term "Company" shall include
any of the Company's present or future subsidiary corporations as defined in
Section 424(f) of the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder (the "Code").
2. ELIGIBILITY
All of the Company's employees, officers, directors, consultants and
advisors (and any individuals who have accepted an offer for employment) are
eligible to be granted options, restricted stock awards, or other stock-based
awards (each, an "Award") under the Plan. Each person who has been granted an
Award under the Plan shall be deemed a "Participant."
3. ADMINISTRATION, DELEGATION
(a) ADMINISTRATION BY BOARD OF DIRECTORS. The Plan will be administered by
the Board of Directors of the Company (the "Board"). The Board shall have
authority to grant Awards and to adopt, amend and repeal such administrative
rules, guidelines and practices relating to the Plan as it shall deem advisable.
The Board may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it shall
deem expedient to carry the Plan into effect and it shall be the sole and final
judge of such expediency. All decisions by the Board shall be made in the
Board's sole discretion and shall be final and binding on all persons having or
claiming any interest in the Plan or in any Award. No director or person acting
pursuant to the authority delegated by the Board shall be liable for any action
or determination relating to or under the Plan made in good faith.
(b) DELEGATION TO EXECUTIVE OFFICERS. To the extent permitted by
applicable law, the Board may delegate to one or more executive officers of the
Company the power to make Awards and exercise such other powers under the Plan
as the Board may determine, provided that the Board shall fix the maximum number
of shares subject to Awards and the maximum number of shares for any one
Participant to be made by such executive officers.
(c) APPOINTMENT OF COMMITTEES. To the extent permitted by applicable law,
the Board may delegate any or all of its powers under the Plan to one or more
committees or subcommittees of the Board (a "Committee"). All references in the
Plan to the "Board" shall mean the Board or a Committee of the Board or the
executive officer referred to in Section 3(b) to the extent that the Board's
powers or authority under the Plan have been delegated to such Committee or
executive officer.
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MILLENNIUM PHARMACEUTICALS, INC.
2000 STOCK INCENTIVE PLAN
4. STOCK AVAILABLE FOR AWARDS
(a) NUMBER OF SHARES. Subject to adjustment under Section 8, Awards may be
made under the Plan for (i) up to five percent (5%) of the number of shares of
the Company's common stock, $.001 par value per share ("Common Stock") which are
issued and outstanding on April 12, 2000, the date of the Company's 2000 Annual
Meeting of Stockholders, plus (ii) an annual increase in the number of shares
available for Awards on the first day of each of January 1, 2001, 2002 and 2003
equal to the lesser of (A) 5% of the number of shares of Common Stock
outstanding on the last business day preceding each of January 1, 2001, 2002 and
2003, respectively or (B) a lesser number of shares determined by the Board of
Directors. The aggregate number of shares available for grants of incentive
stock options under the Plan is the lesser of 10,000,000 shares or the total
number of shares authorized under the Plan.
If any Award expires or is terminated, surrendered or canceled without
having been fully exercised or is forfeited in whole or in part or results in
any Common Stock not being issued, the unused Common Stock covered by such Award
shall again be available for the grant of Awards under the Plan, subject,
however, in the case of Incentive Stock Options (as hereinafter defined), to any
limitation required under the Code. Shares issued under the Plan may consist in
whole or in part of authorized but unissued shares or treasury shares.
(b) PER-PARTICIPANT LIMIT. Subject to adjustment under Section 8, the
maximum number of shares of Common Stock with respect to which an Award may be
granted to any Participant under the Plan shall be 500,000 per calendar year.
The per-Participant limit described in this Section 4(b) shall be construed and
applied consistently with Section 162(m) of the Code ("Section 162(m)").
5. STOCK OPTIONS
(a) GENERAL. The Board may grant options to purchase Common Stock (each,
an "Option") and determine the number of shares of Common Stock to be covered by
each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option which is not intended to be an Incentive Stock
Option (as hereinafter defined) shall be designated a "Nonstatutory Stock
Option."
(b) INCENTIVE STOCK OPTIONS. An Option that the Board intends to be an
"incentive stock option" as defined in Section 422 of the Code (an "Incentive
Stock Option") shall only be granted to employees of the Company and shall be
subject to and shall be construed consistently with the requirements of
Section 422 of the Code. The Company shall have no liability to a Participant,
or any other party, if an Option (or any part thereof) which is intended to be
an Incentive Stock Option is not an Incentive Stock Option.
(c) EXERCISE PRICE. The Board shall establish the exercise price at the
time each Option is granted and specify it in the applicable option agreement;
provided, however, that the exercise price shall be not less than 100% of the
fair market value of the Common Stock, as determined by the Board, at the time
the Option is granted.
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MILLENNIUM PHARMACEUTICALS, INC.
2000 STOCK INCENTIVE PLAN
(d) DURATION OF OPTIONS. Each Option shall be exercisable at such times
and subject to such terms and conditions as the Board may specify in the
applicable option agreement; PROVIDED, HOWEVER, that no Option will be granted
for a term in excess of 10 years.
(e) EXERCISE OF OPTION. Options may be exercised by delivery to the
Company of a written notice of exercise signed by the proper person or by any
other form of notice (including electronic notice) approved by the Board
together with payment in full as specified in Section 5(f) for the number of
shares for which the Option is exercised.
(f) PAYMENT UPON EXERCISE. Common Stock purchased upon the exercise of an
Option granted under the Plan shall be paid for as follows:
(1) in cash or by check, payable to the order of the Company;
(2) except as the Board may, in its sole discretion, otherwise provide
in an option agreement, by (i) delivery of an irrevocable and unconditional
undertaking by a creditworthy broker to deliver promptly to the Company
sufficient funds to pay the exercise price or (ii) delivery by the
Participant to the Company of a copy of irrevocable and unconditional
instructions to a creditworthy broker to deliver promptly to the Company
cash or a check sufficient to pay the exercise price;
(3) when the Common Stock is registered under the Securities Exchange
Act of 1934 (the "Exchange Act"), by delivery of shares of Common Stock
owned by the Participant valued at their fair market value as determined by
(or in a manner approved by) the Board in good faith ("Fair Market Value"),
provided (i) such method of payment is then permitted under applicable law
and (ii) such Common Stock was owned by the Participant at least six months
prior to such delivery;
(4) to the extent permitted by the Board, in its sole discretion by
(i) delivery of a promissory note of the Participant to the Company on terms
determined by the Board, or (ii) payment of such other lawful consideration
as the Board may determine; or
(5) by any combination of the above permitted forms of payment.
(g) SUBSTITUTE OPTIONS. In connection with a merger or consolidation of an
entity with the Company or the acquisition by the Company of property or stock
of an entity, the Board may grant Options in substitution for any options or
other stock or stock-based awards granted by such entity or an affiliate
thereof. Substitute Options may be granted on such terms as the Board deems
appropriate in the circumstances, notwithstanding any limitations on Options
contained in the other sections of this Section 5.
6. RESTRICTED STOCK
(a) GRANTS. The Board may grant Awards entitling recipients to acquire
shares of Common Stock, subject to the right of the Company to repurchase all or
part of such shares at their issue price or other stated or formula price (or to
require forfeiture of such shares if issued at no cost) from the recipient in
the event that conditions specified by the Board in the applicable Award are not
satisfied prior to the end of the applicable restriction period or periods
established by the Board for such Award (each, a "Restricted Stock Award");
PROVIDED THAT, Restricted Stock Awards and other Awards issued pursuant to
Section 7
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MILLENNIUM PHARMACEUTICALS, INC.
2000 STOCK INCENTIVE PLAN
below shall be made for no more than 10% of the maximum cumulative number of
shares reserved for issuance under the Plan.
(b) TERMS AND CONDITIONS. The Board shall determine the terms and
conditions of any such Restricted Stock Award, including the conditions for
repurchase (or forfeiture) and the issue price, if any. Any stock certificates
issued in respect of a Restricted Stock Award shall be registered in the name of
the Participant and, unless otherwise determined by the Board, deposited by the
Participant, together with a stock power endorsed in blank, with the Company (or
its designee). At the expiration of the applicable restriction periods, the
Company (or such designee) shall deliver the certificates no longer subject to
such restrictions to the Participant or if the Participant has died, to the
beneficiary designated, in a manner determined by the Board, by a Participant to
receive amounts due or exercise rights of the Participant in the event of the
Participant's death (the "Designated Beneficiary"). In the absence of an
effective designation by a Participant, Designated Beneficiary shall mean the
Participant's estate.
7. OTHER STOCK-BASED AWARDS
The Board shall have the right to grant other Awards based upon the Common
Stock having such terms and conditions as the Board may determine, including the
grant of shares based upon certain conditions, the grant of securities
convertible into Common Stock and the grant of stock appreciation rights.
8. ADJUSTMENTS FOR CHANGES IN COMMON STOCK AND CERTAIN OTHER EVENTS
(a) CHANGES IN CAPITALIZATION. In the event of any stock split, reverse
stock split, stock dividend, recapitalization, combination of shares,
reclassification of shares, spin-off or other similar change in capitalization
or event, or any distribution to holders of Common Stock other than a normal
cash dividend, (i) the number and class of securities available under this Plan,
(ii) the per-Participant limit set forth in Section 4(b), (iii) the number and
class of securities and exercise price per share subject to each outstanding
Option, (iv) the repurchase price per share subject to each outstanding
Restricted Stock Award, and (v) the terms of each other outstanding Award shall
be appropriately adjusted by the Company (or substituted Awards may be made, if
applicable) to the extent the Board shall determine, in good faith, that such an
adjustment (or substitution) is necessary and appropriate. If this Section 8(a)
applies and Section 8(c) also applies to any event, Section 8(c) shall be
applicable to such event, and this Section 8(a) shall not be applicable.
(b) LIQUIDATION OR DISSOLUTION. In the event of a proposed liquidation or
dissolution of the Company, the Board shall upon written notice to the
Participants provide that all then unexercised Options will (i) become
exercisable in full as of a specified time at least 10 business days prior to
the effective date of such liquidation or dissolution and (ii) terminate
effective upon such liquidation or dissolution, except to the extent exercised
before such effective date. The Board may specify the effect of a liquidation or
dissolution on any Restricted Stock Award or other Award granted under the Plan
at the time of the grant of such Award.
(c) ACQUISITION EVENTS
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MILLENNIUM PHARMACEUTICALS, INC.
2000 STOCK INCENTIVE PLAN
(1) Definition. An "Acquisition Event" shall mean: (a) any merger or
consolidation of the Company with or into another entity as a result of
which the Common Stock is converted into or exchanged for the right to
receive cash, securities or other property or (b) any exchange of shares of
the Company for cash, securities or other property pursuant to a statutory
share exchange transaction.
(2) Consequences of an Acquisition Event on Options. Upon the
occurrence of an Acquisition Event, or the execution by the Company of any
agreement with respect to an Acquisition Event, the Board shall provide that
all outstanding Options shall be assumed, or equivalent options shall be
substituted, by the acquiring or succeeding corporation (or an affiliate
thereof). For purposes hereof, an Option shall be considered to be assumed
if, following consummation of the Acquisition Event, the Option confers the
right to purchase, for each share of Common Stock subject to the Option
immediately prior to the consummation of the Acquisition Event, the
consideration (whether cash, securities or other property) received as a
result of the Acquisition Event by holders of Common Stock for each share of
Common Stock held immediately prior to the consummation of the Acquisition
Event (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding shares
of Common Stock); provided, however, that if the consideration received as a
result of the Acquisition Event is not solely common stock of the acquiring
or succeeding corporation (or an affiliate thereof), the Company may, with
the consent of the acquiring or succeeding corporation, provide for the
consideration to be received upon the exercise of Options to consist solely
of common stock of the acquiring or succeeding corporation (or an affiliate
thereof) equivalent in fair market value to the per share consideration
received by holders of outstanding shares of Common Stock as a result of the
Acquisition Event.
Notwithstanding the foregoing, if the acquiring or succeeding corporation
(or an affiliate thereof) does not agree to assume, or substitute for, such
Options, then the Board shall, upon written notice to the Participants,
provide that all then unexercised Options will become exercisable in full as
of a specified time prior to the Acquisition Event and will terminate
immediately prior to the consummation of such Acquisition Event, except to
the extent exercised by the Participants before the consummation of such
Acquisition Event; provided, however, that in the event of an Acquisition
Event under the terms of which holders of Common Stock will receive upon
consummation thereof a cash payment for each share of Common Stock
surrendered pursuant to such Acquisition Event (the "Acquisition Price"),
then the Board may instead provide that all outstanding Options shall
terminate upon consummation of such Acquisition Event and that each
Participant shall receive, in exchange therefor, a cash payment equal to the
amount (if any) by which (A) the Acquisition Price multiplied by the number
of shares of Common Stock subject to such outstanding Options (whether or
not then exercisable), exceeds (B) the aggregate exercise price of such
Options.
(3) Consequences of an Acquisition Event on Restricted Stock
Awards. Upon the occurrence of an Acquisition Event, the repurchase and
other rights of the Company under each outstanding Restricted Stock Award
shall inure to the benefit of the Company's successor and shall apply to the
cash, securities or other property which the Common Stock was converted into
or exchanged for pursuant to such Acquisition Event in the same manner and
to the same extent as they applied to the Common Stock subject to such
Restricted Stock Award.
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MILLENNIUM PHARMACEUTICALS, INC.
2000 STOCK INCENTIVE PLAN
(4) Consequences of an Acquisition Event on Other Awards. The Board
shall specify the effect of an Acquisition Event on any other Award granted
under the Plan at the time of the grant of such Award.
9. GENERAL PROVISIONS APPLICABLE TO AWARDS
(a) TRANSFERABILITY OF AWARDS. Except as the Board may otherwise determine
or provide in an Award, Awards shall not be sold, assigned, transferred, pledged
or otherwise encumbered by the person to whom they are granted, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution, and, during the life of the Participant, shall be exercisable only
by the Participant. References to a Participant, to the extent relevant in the
context, shall include references to authorized transferees.
(b) DOCUMENTATION. Each Award shall be evidenced by a written instrument
in such form as the Board shall determine. Each Award may contain terms and
conditions in addition to those set forth in the Plan.
(c) BOARD DISCRETION. Except as otherwise provided by the Plan, each Award
may be made alone or in addition or in relation to any other Award. The terms of
each Award need not be identical, and the Board need not treat Participants
uniformly.
(d) TERMINATION OF STATUS. The Board shall determine the effect on an
Award of the disability, death, retirement, authorized leave of absence or other
change in the employment or other status of a Participant and the extent to
which, and the period during which, the Participant, the Participant's legal
representative, conservator, guardian or Designated Beneficiary may exercise
rights under the Award.
(e) WITHHOLDING. Each Participant shall pay to the Company, or make
provision satisfactory to the Board for payment of, any taxes required by law to
be withheld in connection with Awards to such Participant no later than the date
of the event creating the tax liability. Except as the Board may otherwise
provide in an Award, when the Common Stock is registered under the Exchange Act,
Participants may, to the extent then permitted under applicable law, satisfy
such tax obligations in whole or in part by delivery of shares of Common Stock,
including shares retained from the Award creating the tax obligation, valued at
their Fair Market Value. The Company may, to the extent permitted by law, deduct
any such tax obligations from any payment of any kind otherwise due to a
Participant.
(f) AMENDMENT OF AWARD; PROHIBITION ON REPRICING. The Board may amend,
modify or terminate any outstanding Award, including but not limited to,
substituting therefor another Award of the same or a different type, changing
the date of exercise or realization, and converting an Incentive Stock Option to
a Nonstatutory Stock Option, PROVIDED THAT the Participant's consent to such
action shall be required unless the Board determines that the action, taking
into account any related action, would not materially and adversely affect the
Participant, and FURTHER PROVIDED, that the Board may not amend, modify,
substitute or otherwise change any outstanding Award in order to effect a
decrease in the exercise price thereof.
(g) CONDITIONS ON DELIVERY OF STOCK. The Company will not be obligated to
deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and
32
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MILLENNIUM PHARMACEUTICALS, INC.
2000 STOCK INCENTIVE PLAN
delivery of such shares have been satisfied, including any applicable securities
laws and any applicable stock exchange or stock market rules and regulations,
and (iii) the Participant has executed and delivered to the Company such
representations or agreements as the Company may consider appropriate to satisfy
the requirements of any applicable laws, rules or regulations.
(h) ACCELERATION. The Board may at any time provide that any Options shall
become immediately exercisable in full or in part, that any Restricted Stock
Awards shall be free of restrictions in full or in part or that any other Awards
may become exercisable in full or in part or free of some or all restrictions or
conditions, or otherwise realizable in full or in part, as the case may be.
10. MISCELLANEOUS
(a) NO RIGHT TO EMPLOYMENT OR OTHER STATUS. No person shall have any claim
or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan, except as expressly provided in the
applicable Award.
(b) NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed with
respect to an Award until becoming the record holder of such shares.
Notwithstanding the foregoing, in the event the Company effects a split of the
Common Stock by means of a stock dividend and the exercise price of and the
number of shares subject to such Option are adjusted as of the date of the
distribution of the dividend (rather than as of the record date for such
dividend), then an optionee who exercises an Option between the record date and
the distribution date for such stock dividend shall be entitled to receive, on
the distribution date, the stock dividend with respect to the shares of Common
Stock acquired upon such Option exercise, notwithstanding the fact that such
shares were not outstanding as of the close of business on the record date for
such stock dividend.
(c) EFFECTIVE DATE AND TERM OF PLAN. The Plan shall become effective on
the date on which it is adopted by the Board, but no Award granted to a
Participant that is intended to comply with Section 162(m) shall become
exercisable, vested or realizable, as applicable to such Award, unless and until
the Plan has been approved by the Company's stockholders to the extent
stockholder approval is required by Section 162(m) in the manner required under
Section 162(m) (including the vote required under Section 162(m)). No Awards
shall be granted under the Plan after the completion of ten years from the
earlier of (i) the date on which the Plan was adopted by the Board or (ii) the
date the Plan was approved by the Company's stockholders, but Awards previously
granted may extend beyond that date.
(d) AMENDMENT OF PLAN. The Board may amend, suspend or terminate the Plan
or any portion thereof at any time, provided that to the extent required by
Section 162(m), no Award granted to a Participant that is intended to comply
with Section 162(m) after the date of such amendment shall become exercisable,
realizable or vested, as applicable to such Award, unless and until such
amendment shall have been approved by the Company's stockholders as required by
Section 162(m) (including the vote required under Section 162(m)).
33
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MILLENNIUM PHARMACEUTICALS, INC.
2000 STOCK INCENTIVE PLAN
(e) GOVERNING LAW. The provisions of the Plan and all Awards made
hereunder shall be governed by and interpreted in accordance with the laws of
the State of Delaware, without regard to any applicable conflicts of law.
34
<PAGE>
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
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MILLENNIUM PHARMACEUTICALS, INC.
- --------------------------------------------------------------------------------
Mark box at right if an address change or comment has been noted on [ ]
the reverse side of this card.
CONTROL NUMBER:
RECORD DATE SHARES:
-------------------------
Please be sure to sign and date this Proxy. Date
- --------------------------------------------------------------------------------
- -----Stockholder sign here----------------------------Co-owner sign here-------
A VOTE FOR THE DIRECTOR NOMINEES AND FOR PROPOSAL NUMBERS 2 AND 3 IS
RECOMMENDED BY THE BOARD OF DIRECTORS.
1. Election of Class I Directors. Nominees: FOR ALL WITH- FOR ALL
NOMINEES HOLD EXCEPT
CHRISTOPHER K. MIRABELLI, PH.D.
STEVEN C. WHEELWRIGHT, PH.D. [ ] [ ] [ ]
NOTE: IF you do not wish your shares voted "For" a particular nominee, mark the
"For All Except" box and strike a line through the nominee(s) name(s). Your
shares will be voted "For" the remaining nominee(s).
FOR AGAINST ABSTAIN
2. Approval of an amendment to the Company's
Restated Certificate of Incorporation increasing [ ] [ ] [ ]
the number of shares of Common Stock authorized
for issuance from 100,000,000 to 500,000,000.
FOR AGAINST ABSTAIN
3. Approval of the Company's 2000 Stock Incentive
Plan. [ ] [ ] [ ]
DETACH CARD DETACH CARD
<PAGE>
MILLENNIUM PHARMACEUTICALS, INC.
Dear Stockholder:
Please take note of the important information enclosed with this Proxy. There
are a number of issues related to the management and operation of your Company
that require your immediate attention and approval. These are discussed in
detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.
Please mark the boxes on this proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.
Your vote must be received prior to the Annual Meeting of Stockholders to be
held on April 12, 2000.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Millennium Pharmaceuticals, Inc.
MILLENNIUM PHARMACEUTICALS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS - APRIL 12, 2000
Those signing on the reverse side, revoking any prior proxies, hereby appoint(s)
Mark J. Levin, Steven H. Holtzman and John B. Douglas III or each or any of them
with full power of substitution, as proxies for those signing on the reverse
side to act and vote at the 2000 Annual Meeting of Stockholders of Millennium
Pharmaceuticals, Inc. and at any adjournments thereof as indicated upon all
matters referred to on the reverse side and described in the Proxy Statement for
the Meeting, and, in their discretion, upon any other matters which may properly
come before the Meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED STOCKHOLDER(S). IF NO OTHER INDICATION IS MADE, THE PROXIES SHALL
VOTE "FOR" PROPOSAL NUMBERS 1, 2 AND 3.
- --------------------------------------------------------------------------------
PLEASE VOTE, DATE, AND SIGN ON REVERSE SIDE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please sign this proxy exactly as your name(s) appear(s) hereon. Joint owners
should each sign personally. Trustees and other fiduciaries should indicate the
capacity in which they sign. If a corporation or partnership, this signature
should be that of an authorized officer who should state his or her title.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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