<PAGE>
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[x] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
CHIREX 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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
ChiRex Inc.
[LOGO OF CHIREX]
NOTICE OF 2000 ANNUAL MEETING
AND
PROXY STATEMENT
April 18, 2000
<PAGE>
ChiRex Inc.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held April 18, 2000
To our Stockholders:
The Annual Meeting of Stockholders of ChiRex Inc., a Delaware corporation
("ChiRex"), will be held on April 18, 2000, at 9:00 A.M., Eastern Standard
Time, at the Company's corporate headquarters at 300 Atlantic Street, Suite
402, Stamford CT 06901, and at any adjournment thereof, for the purpose of
acting upon the following matters as well as such other business as may
properly come before the Annual Meeting or any adjournment thereof:
(1) the election of two Class I directors and one Class III director;
(2) the ratification of the appointment of Arthur Andersen LLP as
independent auditors for fiscal year 2000.
Only stockholders of record at the close of business on March 6, 2000 will
be entitled to vote at the Annual Meeting or any adjournment thereof.
Your vote is important. To support your Board, please mark, date and sign
the enclosed proxy card and return it promptly in the accompanying envelope.
Your proxy may be revoked by delivering written notice of revocation to the
Secretary of ChiRex prior to the time voting is declared closed, or by
attending the Annual Meeting and voting your shares in person.
By Order of the Board of Directors,
THOMAS I.H. DUBIN
Secretary
Stamford, Connecticut
March 13, 2000
<PAGE>
ChiRex Inc.
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
April 18, 2000
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of ChiRex Inc. ("ChiRex" or the "Company") of proxies to be
voted at the Annual Meeting of Stockholders to be held on April 18, 2000, at
9:00 A.M., Eastern Standard Time, at the Company's corporate headquarters at
300 Atlantic Street, Suite 402, Stamford CT 06901, and at any adjournment
thereof, for the purposes set forth in the accompanying Notice. This Proxy
Statement and the accompanying proxy card are first being sent to stockholders
on or about March 13, 2000.
Only holders of Common Stock of ChiRex, par value $.01 per share ("Common
Stock"), at the close of business on March 6, 2000 will be entitled to vote at
the Annual Meeting. At that date there were 15,179,540 shares of Common Stock
outstanding. Each stockholder is entitled to one vote for each share of Common
Stock held by him or her on the record date. The presence in person or by proxy
of stockholders holding a majority of the shares of Common Stock will
constitute a quorum for the transaction of business at the Annual Meeting.
Abstentions and broker non-votes will be included in the computation of the
number of shares of Common Stock that are present for purposes of determining
the presence of a quorum.
ChiRex's address is 300 Atlantic Street, Suite 402, Stamford, Connecticut
06901.
ITEM I. ELECTION OF DIRECTORS
The Board of Directors currently consists of 4 directors, divided into three
classes. At a meeting of the Board of Directors held on February 23, 2000, the
directors approved an increase in the number of directors to 5, divided into
three classes, effective as of the 2000 Annual Meeting. The additional director
position will be added as a Class III director.
At the 2000 Annual Meeting, two Class I directors are to be elected to hold
office until the 2003 Annual Meeting, or until their respective successors have
been duly elected and qualified, and one Class III director is to be elected to
hold office until the 2002 Annual Meeting, or until his successor has been duly
elected and qualified. The Board of Directors proposes for election as Class I
directors Michael A. Griffith, who is now Chairman of the Board of Directors
and Chief Executive Officer of the Company, and W. Dieter Zander, who is now a
director of the Company. The Board of Directors proposes for election as a
Class III director David K. Stevenson.
Stockholders voting at the Annual Meeting may not vote for more than the
number of nominees listed in this Proxy Statement. The three persons receiving
the votes of a plurality of the shares of Common Stock present, either in
person or by proxy, and voting at the Annual Meeting shall be elected a
director. The persons named in the enclosed proxy card (Thomas I.H. Dubin and
Jon E. Tropsa) have advised that unless otherwise instructed in any form of
proxy, they intend to vote FOR the election of the nominees. They also have
advised that in the event the nominees shall not be available for election,
they will vote for the election of such substitute nominees, if any, as the
Board of Directors may propose. However, the Board of Directors has no reason
to believe that the nominees will not be available for election as directors.
NOMINEE FOR CLASS I DIRECTOR
(Term expiring in 2003)
MICHAEL A. GRIFFITH
Mr. Griffith, 41, has served as Chairman of the Board since September 1,
1998, and Chief Executive Officer of the Company since July 7, 1998. Prior to
his appointment as Chief Executive Officer, Mr. Griffith
1
<PAGE>
served as Chief Financial Officer from April 10, 1996 and as Secretary from
September 5, 1996, to September 1, 1998. He has been a member of the Board of
Directors since October 17, 1996. From 1994 until April 1996, Mr. Griffith was
a Director at Credit Suisse First Boston. Mr. Griffith holds a Master of
Management in finance, marketing and international economics from the J.L.
Kellogg Graduate School of Management at Northwestern University and a Bachelor
of Science in Business Administration from the University of Kansas.
W. DIETER ZANDER
Mr. Zander, 84, was educated in Germany and Switzerland and founded Henley &
Co., Inc., a chemical pharmaceutical company with offices in the United States
and Canada. In 1980, Henley & Co., Inc. was sold to Boehringer Ingelheim GmbH.
Mr. Zander later joined Arnhold and S. Bleichroeder, Inc., a privately owned
investment bank, where he is currently a Managing Director in the International
Corporate Finance Department.
NOMINEE FOR CLASS III DIRECTOR
(Term expiring in 2002)
DAVID K. STEVENSON
Mr. Stevenson, 56, was a Tax Partner with Arthur Andersen from 1978 through
1998 in Boston, Massachusetts, specializing in international manufacturing and
technology companies. Mr. Stevenson is a Certified Public Accountant, and a
member of the AICPA and Massachusetts Society of CPAs. Mr. Stevenson currently
serves as a Trustee of the Deaconess Glover Hospital in Needham, Massachusetts.
He earned his B.A from Bowdoin College in 1965, and his M.B.A. in Professional
Accounting from Rutgers University in 1966. Mr. Stevenson is currently enrolled
at the Harvard Divinity School, with a concentration in practical ethics.
CONTINUING CLASS II DIRECTORS
(Term expiring in 2001)
DIRK H. DETERT, Ph.D.
Dr. Detert, 59, has 28 years of experience in the pharmaceutical industry.
Dr. Detert was formerly the General Manager of Wellcome GmbH with
responsibility for Central Europe and Germany, as a Managing Director. He is a
former Member of the Board of the German Pharmaceutical Association and the
German Chemical Association. Dr. Detert holds a Ph.D. in Chemistry from the
University of Alberta, Edmonton, Canada and a Bachelor of Science in chemistry
from the University of Kiel.
CONTINUING CLASS III DIRECTOR
(Term expiring in 2002)
ERIC N. JACOBSEN, Ph.D.
Professor Jacobsen, 40, is a Professor in the Department of Chemistry and
Chemical Biology at Harvard University. He is a member of the ChiRex Inc.
Scientific Advisory Board and, as of October 1, 1998, serves as the Scientific
Director of the Company's Boston facility on a consultancy basis. He also
currently serves as consultant to Merck & Co., Inc. and Versicor, Inc., where
he is co-founder and Chairman of the Scientific Advisory Board. Prior to
joining the faculty at Harvard, Professor Jacobsen served from 1988 to 1993 at
the University of Illinois at Urbana-Champaign, most recently as Associate
Professor. He received his B.S. in Chemistry from New York University, his
Ph.D. from the University of California, Berkeley, and has served as a National
Institute of Health Postdoctoral Fellow at the Massachusetts Institute of
Technology.
Except as otherwise indicated, the nominees and continuing directors have
held the principal occupations described above during the past five years.
2
<PAGE>
Committees of the Board of Directors
The standing committees of the Board of Directors are the Audit Committee
and Compensation Committee. There is no Nominating Committee. During 1999, 13
meetings of the Board of Directors were held. The Audit Committee met twice and
the Compensation Committee met twice during 1999. Each director attended at
least 90% of the total meetings of the Board of Directors and the committees on
which they served.
The Audit Committee reviews the results and scope of the audit and other
services provided by the Company's independent public accountants. Current
members of the Audit Committee are Mr. Zander and Dr. Detert. The Company
expects that Mr. Stevenson, if elected a director of the Company, will become a
member of the Audit Committee.
The Compensation Committee makes recommendations concerning salaries and
compensation for employees of the Company, and administers and grants stock
options and awards pursuant to the Company's equity incentive plans. Current
members of the Compensation Committee are Mr. Zander and Professor Jacobsen.
The Company expects that Mr. Stevenson, if elected a director of the Company,
will become a member of the Compensation Committee, in which case Professor
Jacobsen will resign from the Compensation Committee.
Compensation of Directors
The Company pays to its non-employee directors a $25,000 annual fee payable
at the Annual Meeting of Shareholders plus $1,500 per meeting of the Board
attended per day and reimburses directors for their out-of-pocket expenses
incurred in attending meetings. Directors who are members of any committee of
the Board also receive $1,000 per committee meeting attended. In addition, each
non-employee director participates in the Company's Amended and Restated 1995
Director Stock Option Plan, as described below.
The Amended and Restated 1995 Director Stock Option Plan (the "Director
Plan") was adopted by the Board of Directors in February 1997 and approved by
the stockholders of the Company at the 1997 Annual Meeting. Under the terms of
the Director Plan, members of the Board of Directors of the Company who are not
employees of the Company or any subsidiary of the Company are eligible to
receive non-statutory options to purchase shares of Common Stock. A total of
100,000 shares of Common Stock may be issued upon exercise of options granted
under the Director Plan. Each eligible member of the Board of Directors will be
granted an option to purchase 3,000 shares of Common Stock on the date of his
or her initial election to the Board of Directors (an "Initial Option").
Pursuant to an amendment to the Director Plan that was adopted by the Board of
Directors on February 9, 1999 and approved by the stockholders of the Company
at the 1999 Annual Meeting, each eligible member of the Board of Directors then
in office will receive an additional option (an "Annual Option") to purchase a
specified number of shares to be determined by the Board of Directors upon the
close of business on the date of each annual meeting of the stockholders. Each
eligible member of the Board of Directors received an Annual Option to purchase
10,000 shares following the 1999 Annual Meeting. Each Initial Option will
become exercisable on a cumulative basis as to one-fifth of the shares subject
to the option on each of the first, second, third, fourth and fifth
anniversaries of the date of grant of such option. Each Annual Option will
become exercisable in full immediately prior to the annual meeting of the
stockholders next following the date of grant. The exercise price of options
granted under the Director Plan will equal the closing price of the Common
Stock on the Nasdaq National Market on the date of grant. Except in cases of
death or disability, options granted under the Director Plan must be exercised
within 90 days after the date he or she ceases to be a member of the Board of
Directors of the Company. In addition, the options are personal and no rights
granted under the Director Plan may be transferred, assigned, pledged or
hypothecated in any way, except by will or by the laws of descent and
distribution. No option is exercisable after the expiration of seven years from
the date of grant.
Certain Transactions
Professor Jacobsen, a director of the Company and a member of the Company's
Scientific Advisory Board, entered into a new consulting agreement dated
October 1, 1998, with the Company and its wholly
3
<PAGE>
owned subsidiary, ChiRex Technology Center Inc. Such consulting agreement
supersedes the earlier agreement dated July 19, 1996. During 1999, the Company
paid Professor Jacobsen $180,000 for consulting services rendered pursuant to
his consulting agreement.
Executive Officers
The following table sets forth certain information, as of December 31, 1999,
with respect to the executive officers of the Company:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<C> <C> <S>
Michael A. Griffith(a)......... 41 Chief Executive Officer and Director
Ian D. Shott................... 42 President, Manufacturing Division
Bruce P. Shutts................ 46 President, Development Division
Frank J. Wright................ 52 Executive Vice President, Corporate
Development
Ian M. Brown................... 43 Vice President, Annan Operations
Thomas I.H. Dubin.............. 38 Vice President, General Counsel and
Secretary
Stuart E. Needleman............ 41 Vice President, Business Development
Roger B. Pettman, Ph.D. ....... 44 Vice President, Technology
Jon E. Tropsa.................. 44 Vice President, Finance
</TABLE>
- --------
(a) See "Item I. Election of Director--Nominee For Class I Director."
Ian D. Shott became Chief Operating Officer of the Company on September 1,
1998, and was appointed President, Manufacturing Division of the Company during
August, 1999. From 1993 until joining the Company, Mr. Shott served as an
executive at Lonza Fine Chemicals, a Swiss-based contract manufacturing firm.
At Lonza, he held the positions of General Manager, Exclusive Fine Chemicals,
and Head of International Supply Chain Management. Previously, he served at ICI
and then Zeneca Fine Chemicals for 15 years, culminating in the position of
Business General Manager. Mr. Shott holds a B.Sc. in Chemical Engineering from
the Imperial College in London.
Bruce P. Shutts became Vice President, Development Operations of the Company
on July 5, and was appointed President, Development Division of the Company
during August, 1999. Prior to joining ChiRex, Mr. Shutts spent 16 years in
positions of increasing responsibility at Schering Plough Corporation, most
recently as Vice President of Chemical Development, where he directed the
discovery, development and implementation of processes for the manufacture of
all new chemical drug candidates. Prior to Schering Plough, Mr. Shutts spent 7
years with Bristol Myers Squibb, most recently as the Department Head of
Chemical Intermediates Production. Mr. Shutts earned his B.S. in Chemical
Engineering from Cornell University in 1975 and his M.B.A. in Finance from
Syracuse University in 1981.
Frank J. Wright became Executive Vice President, Corporate Development, of
the Company on December 17, 1998. Mr. Wright joined the Company as Vice
President, Annan Operations, in November 1997, following the acquisition of
GlaxoWellcome's Annan facility by the Company. During the previous 16 years,
Mr. Wright served in senior positions at GlaxoWellcome in outsourcing and
procurement, manufacturing strategy and corporate development. Prior to
GlaxoWellcome, Mr. Wright spent 15 years at ICI, most recently as Project
Manager. He trained as a mechanical engineer and studied strategic business and
management development at Liverpool University and London Business School.
Ian M. Brown became Vice President, Annan Operations, of the Company on
September 1, 1998. Mr. Brown joined the Company in November 1997, following the
acquisition of GlaxoWellcome's Annan facility by the Company. During the
previous ten years, Mr. Brown served in various senior positions at Annan in
manufacturing. Mr. Brown holds a B.Sc. degree in chemistry from Heriot-Watt
University, Edinburgh, is a Member of the Royal Society of Chemistry and has a
general management qualification from Henley Business School.
4
<PAGE>
Thomas I.H. Dubin became Vice President, General Counsel and Secretary of
the Company on March 15, 1999. From 1992 through 1999, Mr. Dubin held positions
of increasing responsibility at Warner-Lambert Company, most recently as
Assistant General Counsel, Corporate Affairs. From 1987 through 1992, Mr. Dubin
was an attorney at the law firm of Cravath, Swaine & Moore. Mr. Dubin earned
his B.A. from Amherst College in 1984, and his J.D. from New York University in
1987.
Stuart E. Needleman became Vice President, Business Development of the
Company on February 1, 1999. Prior to joining ChiRex, Mr. Needleman served
since 1995 as Vice President of Business Development, North America, for Oxford
Asymmetry International, managing the company's sales and marketing programs
and establishing alliances and collaborations, concentrating on the life
sciences industry. Prior to his position with Oxford Asymmetry, Mr. Needleman
was employed by Cambrex Corporation for eight years, where he served as
Manager, Contract Manufacturing. He earned a B.S. degree in Chemical
Engineering in 1980, and an M.B.A. in 1981, both from Rensselaer Polytechnic
Institute.
Roger B. Pettman, Ph.D., became Vice President, Technology during August,
1999. Prior to this date, he served as General Manager ChiRex Technology Center
since September 1, 1998 and Vice President, Sales and Marketing, from March
1996. From 1992 until the March 1996, Dr. Pettman was Vice President, Sales and
Marketing of SepraChem Inc. He holds a B.Sc. degree and Ph.D. in chemistry from
Sheffield University and completed two years postdoctoral study at Stanford
University.
Jon E. Tropsa became Vice President, Finance, of the Company on September 1,
1998. He served as Vice President, Controller and Treasurer from July 1998 to
September 1998 and as Corporate Controller of the Company from September 1997
to July 1998. From April 1997 through September 1997, Mr. Tropsa was Corporate
Controller for Dynacast Inc., in Yorktown Heights, New York and from March 1990
through March 1997 Mr. Tropsa was Corporate Controller of Hargro Associates of
Stamford, Connecticut. Mr. Tropsa holds a B.S. in accounting from Babson
College and is a Certified Public Accountant.
5
<PAGE>
Stock Ownership of Certain Persons
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of December 31, 1999 by (i) each person or
entity known to the Company to beneficially own more than 5% of the Common
Stock, (ii) each of the Directors, (iii) each of the executive officers named
under "Executive Compensation" and (iv) all Directors and executive officers as
a group.
<TABLE>
<CAPTION>
Common stock
Beneficially
Owned
-----------------
Name Number Percent
---- --------- -------
<S> <C> <C>
Brown Capital Management, Inc. (1)..................... 1,059,600 8.1%
1201 N. Calvert Street
Baltimore, MD 21202
Mellon Financial Corporation (2)....................... 814,332 5.4%
One Mellon Center
Pittsburgh, PA 15258
Michael A. Griffith (3)................................ 160,000 1%
Dirk H. Detert (4)..................................... 10,800 *
Eric N. Jacobsen (3)................................... 37,317 *
W. Dieter Zander (5)................................... 18,635 *
Ian D. Shott (3)....................................... 40,000 *
Bruce P. Shutts ....................................... 5,000 *
Stuart E. Needleman (6) ............................... 11,550 *
Jon E. Tropsa (7)...................................... 33,000 *
Directors and executive officers as a group (twelve
persons)(8)........................................... 489,046 3.2%
</TABLE>
- --------
<TABLE>
<S> <C>
</TABLE>
* Less than one percent
(1) As reported on Schedule 13G filed with the Securities and Exchange
Commission ("SEC") for the year ended December 31, 1999. According to the
Schedule 13G, Brown Capital Management, Inc. has sole voting power for
965,1000 shares and sole dispositive power for 1,059,600.
(2) As reported on Schedule 13G filed with the SEC for the year ended December
31, 1999. According to the Schedule 13G, Mellon Financial Corporation has
sole voting power for 601,832 shares, shared voting power for 37,000
shares, sole dispositive power for 711,932 shares and shared dispositive
power for 102,400 shares.
(3) Represents shares subject to vested options.
(4) Includes 7,800 shares subject to vested options.
(5) Includes 8,635 shares subject to vested options.
(6) Includes 10,000 shares subject to vested options.
(7) Includes 32,000 shares subject to vested options.
(8) Includes an aggregate of 439,109 shares subject to vested options.
6
<PAGE>
Executive Compensation
The following table sets forth the compensation for the years ended December
31, 1997, 1998 and 1999 for the Company's Chief Executive Officer, and its four
other most highly compensated executive officers who were serving as executive
officers as of December 31, 1999 (the Chief Executive Officer and such other
executive officers are hereinafter referred to as the "Named Executive
Officers"):
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation
--------------------
Securities
Underlying
Long-Term
Salary Bonus Compensation All Other
Name and Principal Position Year ($) ($) Awards Compensation
- --------------------------- ---- ------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Michael A. Griffith (1)......... 1999 300,000 225,000 200,000 (2)
Chairman and Chief Executive
Officer 1998 266,667 150,000 175,000
1997 180,000 69,009 200,000
Ian D. Shott (3)................ 1999 240,000 144,000 75,000 106,042(2)
President, Manufacturing
Division 1998 77,937 49,800 100,000 38,894(2)
Bruce P. Shutts (7)............. 1999 97,849 50,000 50,000 30,000(7)
President, Development Division
Jon E. Tropsa (5)............... 1999 127,500 100,000 50,000 (2)
Vice President, Finance 1998 118,750 25,000 90,000
Stuart E. Needleman (6)......... 1999 142,083 75,000 65,000 37,500(6)
Vice President, Business
Development
</TABLE>
- --------
(1) Pursuant to his employment agreement, Mr. Griffith's current annual salary
as Chief Executive Officer and Chairman is $300,000 plus a guaranteed
annual minimum bonus of $150,000.
(2) Mr. Griffith, Mr. Tropsa, Mr. Needleman and Mr. Shutts participate in a
Company sponsored 401(k) program. The incremental cost of such perquisite
in 1999 was not in excess of the lesser of (a) $50,000 and (b) 10% of the
amounts reported as Salary and Bonus for 1999 in the Summary Compensation
Table.
(3) Mr. Shott became an employee as of September 1, 1998. Accordingly, his
compensation for 1998 reflects compensation from September 1, 1998 to
December 31, 1998. Pursuant to his employment agreement, Mr. Shott's
current annual salary is (Pounds)150,000 ($240,000)
(4) All other compensation for Mr. Shott of $38,894 and $106,042 in 1998 and
1999, respectively, represents compensation for relocation-related expenses
including rent and living allowance, and the cost of a Company leased
automobile.
(5) Mr. Tropsa was elected Vice President, Finance, as of September 1, 1998.
Accordingly, his compensation for 1998 includes compensation as Vice
President, Finance, only from the effective date.
(6) Mr. Needleman became an employee as of February 1, 1999. Accordingly, his
compensation for 1999 includes compensation only from that date. All other
compensation of $37,500 for Mr. Needleman in 1999 represents a signing
bonus received upon joining the Company. Pursuant to his employment
agreement, Mr. Needleman's current annual salary is $155,000.
(7) Mr. Shutts became an employee as of July 6, 1999. Accordingly, his
compensation for 1999 includes compensation only from that date. All other
compensation of $30,000 for Mr. Shutts in 1999 represents a signing bonus
received upon joining the Company. Pursuant to his employment agreement,
Mr. Shutt's current annual salary is $200,000.
7
<PAGE>
Stock Option Grants
The following table sets forth certain information concerning stock options
granted in fiscal year 1999 to the Named Executive Officers.
<TABLE>
<CAPTION>
Individual Option Grants in Last Fiscal Year
-----------------------------------------------------------------------------
Potential
Realizable Value at
Assumed Annual
Rates
Number of Percent of of Stock Price
Securities Total Options Appreciation for
Name Underlying Granted to Exercise or Option Term(1)
---- Options Employees in Base Price ($ Expiration -------------------
Granted(#) Fiscal Year per Share) Date 5% ($) 10% ($)
---------- ------------- ------------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael A. Griffith..... 200,000 22.2% 32.375 07/25/06 2,635,975 6,142,943
Ian D. Shott............ 75,000 8.3% 32.375 07/25/06 988,491 2,303,604
Bruce P. Shutts......... 50,000 5.5% 31.060 07/05/06 632,227 1,473,358
Jon E. Tropsa........... 50,000 5.5% 32.375 07/25/06 658,994 1,535,736
Stuart E. Needleman
(2).................... 65,000 7.2% 21.060-32.375 01/31 and 07/25/06 626,375 1,459,720
</TABLE>
- --------
(1) 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 appreciation of 5% and 10% compounded
annually from the date the respective options were granted to their
expiration 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.
(2) Mr. Needleman received two option grants in 1999. The first was granted on
February 1, 1999 for 50,000 shares at an exercise price of $21.06. The
second was granted on July 26, 1999 for 15,000 shares at an exercise price
of $32.375. The grants have been consolidated for the table above.
8
<PAGE>
Stock Option Exercises
Aggregate Option Exercises In Last Fiscal Year and Fiscal Year-End Option
Values
<TABLE>
<CAPTION>
Number of
Securities Underlying Value of Unexercised
Shares Unexercised Options In-the-Money Options
Acquired on at Fiscal Year-End at Fiscal Year-End
Exercise Value ------------------------- -------------------------
Name (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
---- ----------- ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
Michael A. Griffith..... 30,000 704,220 160,000/435,000 510,688/764,625
Ian D. Shott............ -- -- 40,000/135,000 15,625/62,500
Bruce P. Shutts......... -- -- -0- /50,000 -0- / -0-
Jon E. Tropsa........... -- -- 30,000/120,000 40,063/142,750
Stuart E. Needleman..... -- -- -0- /65,000 -0- / -0-
</TABLE>
Retirement Benefits
Employees of the Company who are domiciled in the U.K. are entitled to
participate in the ChiRex Pension Plan (the "Pension Plan"). Mr. Shott
currently participates in the Pension Plan.
Currently, the Company is required to make a contribution equal to 9% of
each participant's annual salary and each participant is required to make a
contribution equal to 3% of his or her annual salary. The funding of the
Pension Plan has been designed to provide sufficient assets to satisfy the
pension liabilities of all participants on a going forward basis. In order to
satisfy the past service liabilities of Pension Plan participants who had
previously participated in the pension plan maintained by Sanofi Winthrop,
assets valued at approximately (Pounds)31 million were transferred from Sanofi
Winthrop to the trust maintained for the Pension Plan. The amount of the asset
transfer was calculated by the Company's actuary and is sufficient to satisfy
the past service liabilities under the Sanofi Winthrop plan that were assumed
by the Company.
Upon reaching age 65, a vested participant in the Pension Plan is entitled
to receive a basic benefit equal to the product of (i) 1/60th, multiplied by
(ii) years of continuous service (up to a maximum of 40 years), multiplied by
(iii) final average basic earnings in excess of the state basic pension. For
purposes of the Pension Plan, final average basic earnings is defined as a
participant's highest average 12 months of basic salary in the past 5 years,
plus such participant's average additional compensation defined as the average
of the highest 3 consecutive years of additional earnings in the past ten years
(excluding the value of any stock options).
Vesting occurs under the Pension Plan after the completion of two years of
service. The Pension Plan provides for annual pension increases for
participant's pay status equal to the lesser of (i) 5% a year or (ii) the
increase in the Retail Price Index. The Pension Plan also provides for early
retirement, ill health retirement and death in service benefits.
9
<PAGE>
The following table provides estimates of annual retirement benefits payable
under the Pension Plan:
Pension Plan Table
<TABLE>
<CAPTION>
Years of Service
Final Average --------------------------------------------------------------
Compensation(1) 10 20 30 40 or more
--------------- ------- ------- ------- ----------
<S> <C> <C> <C> <C>
$ 80,000 $12,900 $25,800 $38,700 $ 51,600
100,000 16,250 32,500 48,750 65,000
120,000 19,580 39,160 58,740 78,320
140,000 22,900 45,800 68,700 91,600
160,000 26,250 52,500 78,750 105,000
180,000 29,580 59,160 88,740 118,320
</TABLE>
- --------
(1) Compensation and annual retirement benefits for all employees covered under
the Pension Plan are paid in Great Britain pounds sterling and amounts
shown were translated from Great Britain pounds sterling into U.S. Dollars
at the rate of $1.66 per (Pounds)1.00.
The Pension Plan defines "compensation" generally to include all
remuneration to an employee for services rendered, including base pay, bonuses
and special forms of pay. The definition of "covered compensation" under the
Pension Plan, is not substantially different than the amount reflected in the
Annual Compensation column of the Summary Compensation Table set forth above.
Executive Employment Agreements
The Company is party to employment agreements with each of the Named
Executive Officers. Under each agreement, such executive is entitled to receive
an annual base salary and, in certain cases, an annual bonus that is guaranteed
and/or based on the Company's performance. The agreements also entitle the
executives to participate in certain retirement benefit programs maintained by
the Company. The Company shall have the right to terminate each executive's
employment immediately upon the occurrence of certain for "cause" events. Each
executive's employment may also be terminated by the Company without cause;
provided, however, that the Company pays to the executive a specified
percentage of his salary and other compensation and certain expenses in
connection with such termination.
Compensation Committee Report on Executive Compensation
Overview And Philosophy
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for developing and making recommendations to the Board of Directors
with respect to the Company's executive compensation policies. In addition, the
Committee, pursuant to authority delegated by the Board of Directors,
recommends on an annual basis the compensation to be paid to the Company's
Chief Executive Officer and each of the other executive officers of the
Company.
The Committee has adopted the following objectives as guidelines for its
compensation decisions:
. Provide a competitive total compensation package that enables the
Company to attract and retain key executives;
. Integrate all compensation programs with the Company's short-term
and long-term business objectives and strategic goals; and
. Ensure that compensation is meaningfully related to the value
created for stockholders.
10
<PAGE>
Executive Officer Compensation Program Components
The Committee reviews the Company's compensation program to ensure that
salary levels and incentive opportunities are competitive and reflect the
performance of the Company. The Company's compensation program for executive
officers consists of base salary, annual incentive compensation and long-term
compensation in the form of stock options. In addition, Mr. Shott is provided
pension benefits.
Base Salary
Base salary levels for the Company's executive officers are determined, in
part, through comparisons with companies in the biopharmaceutical,
pharmaceutical outsourcing and pharmaceutical fine chemical industries against
which the Company competes for personnel in both the United Kingdom and United
States. In addition, the Committee also evaluates individual experience and
performance and specific issues particular to the Company, such as success in
developing new customer relationships, delivering revenue and earnings growth,
furthering the Company's proprietary technology position, creation of
stockholder value and achievement of other specific Company objectives. The
Committee reviews each executive's salary once a year and may increase each
executive's salary at that time based on: (i) the individual's increased
contribution to the Company over the prior 12 months; (ii) the individual's
increased responsibilities over the prior 12 months; and (iii) any increase in
competitive pay levels. Individual contributions are measured with respect to
specific individual accomplishments established for each executive.
Annual Incentive Compensation
The Company's officers are eligible to receive annual cash and/or stock
incentive compensation based on achieving defined specific goals and objectives
during the 12 months prior to review. The Compensation Committee believes that
annual bonus awards should reflect the performance of the individual and the
performance of the Company, and those awards should be set in a range
consistent with the compensation offered by comparable companies. In setting
bonus awards for 1999, the Compensation Committee considered the contributions
of key executives who delivered financial and operating performance
significantly in excess of budget. The Committee noted that in achieving above-
budget performance, the management significantly reduced the expense profile of
the Company, including significant reduction of fixed head count, continuous
improvement of right-first-time production and quality, and improvement in the
quality of asset utilization as reflected by the balance sheet at December 31,
1999. In setting bonus awards for the top five officers of the Company, the
Committee relied on comparable compensation data for the Biopharmaceutical
Industry compiled by Top Five Data Services, Inc. of Fremont, CA. The Committee
believes that compensation for named executives is consistent with compensation
paid by companies of a similar size that compete to recruit similar executives.
Such companies are not necessarily included in the indices used to compare
shareholder returns in the Total Return Performance Graph.
Stock Option Program
The stock option program is the Company's long-term incentive plan for
executive officers and, to a lesser degree, all other employees. The Committee
strongly believes that by providing those persons who have substantial
responsibility for the management and growth of the Company with an opportunity
to increase their ownership of Common Stock, the best interest of shareholders
and executives will be more closely aligned.
Generally, stock options are granted once every year with exercise prices
equal to the prevailing market value of the Common Stock on the date of grant,
have seven year terms and have vesting periods of five years. Awards are made
at a level calculated to be competitive within both the industry, and a broader
group of service manufacturing and high technology companies of comparable size
and complexity.
11
<PAGE>
CEO Compensation
In September 1998, the Committee established the terms of Mr. Griffith's
employment contract as the Company's Chairman of the Board and Chief Executive
Officer. Under the employment agreement, Mr. Griffith is entitled to receive a
base salary and annual bonus. The agreement also entitles Mr. Griffith to
participate in certain U.S. benefit programs maintained by the Company. The
agreement has an initial term expiring on December 31, 2001 and may be
automatically extended from year to year thereafter. The agreement may be
terminated by the Company at any time. If the termination is without cause, the
Company is required to pay Mr. Griffith 250% of his then current base salary in
a lump sum payment. The agreement also provides for the payment of salary and
bonus, vesting of certain deferred compensation, stock option and similar
benefits if a change in control of the Company occurs. In establishing the
terms of compensation for Mr. Griffith, the Committee sought to attract and
retain a key executive officer while continuing to tie a significant percentage
of such compensation to Company performance and stock price appreciation. With
respect to Mr. Griffith's base salary, it remains the Committee's intent to
provide him with a level of stability and certainty each year and not have this
particular component of compensation affected to any significant degree by
Company performance factors.
It is the Committee's objective to have an increasing percentage of Mr.
Griffith's total compensation each year tied to stock-based compensation,
consistent with the interests of shareholders.
Summary
After its review of all existing programs, the Committee continues to
believe that the Company's compensation program for its executive officers is
competitive with the compensation programs provided by other companies with
which the Company competes. The committee intends that any amounts to be paid
under the annual incentive plan will be appropriately related to corporate and
individual performance, yielding awards that are directly linked to the
achievement of Company goals and annual financial and operational results.
We conclude our report with the acknowledgment that no member of the
Committee is a former or current officer or employee of the Company or any of
its subsidiaries.
Compensation Committee
W. Dieter Zander
Eric N. Jacobsen
12
<PAGE>
Total Return Performance Graph
The following graph, and the table which follows, compares the total return
of the Common Stock to the total return of the Nasdaq Composite Index and a
group of Company peers that consists of Lonza AG, DSM Andeno B.V., Oxford
Asymmetry plc. Quintiles Transnational Corp., Catalytica Inc. and Applied
Analytical Industries Inc. The graph assumes an investment of $100 at the close
of business on December 31, 1998 in each of the Common Stock, the Nasdaq
Composite Index and the peer group.
COMPARISON OF TOTAL RETURN
COMPANY, PEER GROUP AND NASDAQ COMPOSITE INDEX
[LINE GRAPH]
12/31/1998 03/31/1999 06/30/1999 09/30/1999 12/31/1999
---------- ---------- ---------- ---------- ----------
ChiRex $100 $115 $150 $121 $68
Nasdaq $100 $112 $123 $125 $186
Peer Group $100 $78 $93 $70 $71
13
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
The Company believes that during fiscal year 1999 its executive officers and
directors have complied with Section 16(a) of the Securities Exchange Act of
1934, and the rules and regulations adopted thereunder.
ITEM II. RATIFICATION OF AUDITORS
The Board of Directors has, subject to stockholder ratification, appointed
Arthur Andersen LLP to audit the accounts of ChiRex and its subsidiaries for
fiscal 2000.
The following resolution concerning the appointment of independent auditors
will be offered at the meeting:
"RESOLVED, that the appointment by the Board of Directors of the Company of
Arthur Andersen LLP to audit the accounts of the Company and its subsidiaries
for the fiscal year 2000 is hereby ratified."
Representatives of Arthur Andersen LLP will be present at the Annual Meeting
with the opportunity to make a statement and to respond to appropriate
questions. Submission of the appointment to stockholders is not required.
However, the Board of Directors will reconsider the appointment if it is not
approved by the stockholders. The appointment will be deemed ratified if a
majority of the shares of Common Stock present, either in person or by proxy,
and voting on the matter vote in favor of the proposal.
SOLICITATION OF PROXIES
The expenses of solicitation of proxies for the Annual Meeting, including
the cost of preparing and mailing this Proxy Statement and the accompanying
material, will be paid by ChiRex. Such expenses may also include the charges
and expenses of banks, brokerage houses and other custodians, nominees or
fiduciaries for forwarding proxies and proxy material to beneficial owners of
shares. Solicitation may be made by mail, telephone, telegraph and personal
interview, and by regularly engaged officers and employees of ChiRex, who will
not be additionally compensated therefor. ChiRex has arranged for the services
of Corporate Investor Communications, Inc. ("CIC") to assist in the
solicitation of proxies. The fees of CIC, estimated at $4,000 excluding out-of-
pocket expenses, will be paid by ChiRex.
MISCELLANEOUS
The Board of Directors knows of no other matters to be voted upon at the
Annual Meeting. If any other matters properly come before the Annual Meeting,
it is the intention of the persons named in the enclosed proxy card (Messrs.
Dubin and Tropsa) to vote on such matters in accordance with their judgment.
Any stockholder who executes a proxy card may revoke it by giving written
notice to the Secretary of ChiRex or by giving to the Secretary a duly executed
form of proxy bearing a date later than the proxy card being revoked, at any
time before such proxy is voted. Attendance at the meeting shall not have the
effect of revoking a proxy unless the stockholder so attending shall, in
writing, so notify the Secretary of the meeting prior to the voting of the
proxy.
A proxy card which is properly signed, dated and not revoked will be voted
in accordance with the instructions contained thereon. If no instructions are
given, the persons named on the proxy card solicited by the Board of Directors
intend to vote: (i) FOR the election of the nominees for director and (ii) FOR
the ratification of the appointment of Arthur Andersen LLP as the Company's
independent auditors for the 2000 fiscal year.
Any stockholder may strike out the names of the proxies designated by the
Board of Directors on the proxy card and may write in and substitute the name
of any other person and may deliver the revised proxy card to such other person
whom the stockholder may wish to designate as proxy for the purpose of
representing such stockholder at the meeting.
14
<PAGE>
Voting Information: Under Delaware General Corporate law and the Company's
Amended and Restated By-Laws, the presence of a quorum is required to transact
business at the 2000 Annual Meeting of Stockholders. A quorum is defined as the
presence, either in person or by proxy, of a majority of the shares of Common
Stock issued and outstanding and entitled to vote at the meeting. Abstentions
and broker non-votes will be included in the computation of the number of
shares of Common Stock that are present for purposes of determining the
presence of a quorum.
Each stockholder shall have one vote for each share of Common Stock entitled
to vote and a proportionate vote for each fractional share so held, if any.
Votes cast, in person or by proxy, at the Annual Meeting will be tabulated
by representatives of Boston EquiServe, the persons appointed by the Board of
Directors to act as inspectors of election for the Annual Meeting. The
inspectors of election will determine the number of shares outstanding, the
shares represented at the Annual Meeting, the existence of a quorum and the
authenticity, validity and effect of proxies; receive votes or ballots; hear
and determine all challenges and questions in any way arising in connection
with the right to vote; determine when the polls will close; and determine the
results of the election.
Assuming the presence of a quorum, (i) each of the three nominees receiving
the votes of a plurality of the shares present, either in person or by proxy,
at the Annual Meeting shall be elected a director and (ii) the affirmative vote
of a majority of the shares present, either in person or by proxy, and voting
at the Annual Meeting is required for ratification of the independent auditors.
Stockholder Proposals: Proposals which are the proper subject for inclusion
in the proxy statement and for consideration at an annual meeting may be
presented by stockholders. Under current SEC rules, to be included in ChiRex's
proxy statement and proxy card, any proposal by a stockholder intended to be
presented at the 2001 Annual Meeting of Stockholders must be received by
ChiRex, subject to certain exceptions, no later than November 13, 2000. Under
the Company's Amended and Restated By-Laws, notice of any stockholder proposal
intended to be presented at the 2001 Annual Meeting (whether or not included in
the Company's proxy statement) must be received by the Secretary of ChiRex,
subject to certain exceptions, no later than February 7, 2001, but not earlier
than January 18, 2001. Any such notice shall set forth as to each proposal (i)
a brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting;
(ii) the name and address of the stockholder proposing such business; (iii) the
class and number of shares beneficially owned by such stockholder; (iv) any
material interest of the stockholder in such business; and (iv) if applicable,
a representation that the stockholder intends to solicit proxies in support of
such proposal.
Please fill in, sign and date the enclosed form of proxy and return it in
the accompanying addressed envelope which requires no further postage if mailed
in the United States. If you attend the Annual Meeting and wish to vote your
shares in person, you may do so. Your cooperation in giving this matter your
prompt attention will be appreciated.
Stamford, Connecticut
March 13, 2000
15
<PAGE>
1492-PS00
<PAGE>
[LETTERHEAD OF CHIREX INC.]
Dear Stockholder:
Please take note of the important information enclosed with this Proxy.
Your vote counts and you are strongly encouraged to exercise your right to vote
your shares.
Please mark the boxes on the proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy in the enclosed
postage paid envelope.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
ChiRex Inc.
CHX44A DETACH HERE
[X] Please mark
votes as in
this example.
1 Election of Directors
Nominees: (01) Michael A. Griffith (02) W Dieter Zander
(03) David K. Stevenson
FOR WITHHELD
[ ] [ ]
[ ]
-----------------------------------------
For all nominees except as noted above
2 Ratify the appointment of Arthur Andersen LLP as independent auditors.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3 In their discretion, the proxies are authorized to vote upon such other
business that may properly come before the meeting.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
PLEASE VOTE, SIGN, DATE, DETACH AND RETURN THE ABOVE PROXY PROMPTLY USING THE
ENCLOSED ENVELOPE.
Please sign exactly as your name appears hereon. Joint owners should each sign.
Executors, administrators, trustees, guardians or other fiduciaries should give
full title as such. If signing for a corporation, please sign in full corporate
name by a duly authorized officer.
Signature_______________ Date________ Signature______________ Date_______
<PAGE>
CHX44B DETACH HERE
PROXY
CHIREX INC.
300 Atlantic Street
Suite 402
Stamford, Connecticut 06901
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints Thomas I. H. Dubin and Jon E. Tropsa, jointly
and severally, with full power of substitution, and hereby authorizes them to
represent and to vote, as designated on the reverse side, all shares of Common
Stock of ChiRex Inc. (the "Company") held of record by the undersigned on March
6, 2000 at the Annual Meeting of Stockholders to be held on April 18, 2000 and
any adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS
GIVEN WITH RESPECT TO A PARTICULAR PROPOSAL, THIS PROXY WILL BE VOTED FOR SUCH
PROPOSAL.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY, USING THE ENCLOSED
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE SIDE SEE REVERSE SIDE
