<PAGE>
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
Bone Care International, 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):
-------------------------------------------------------------------------
(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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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
Bone Care International, Inc.
One Science Court
Madison, Wisconsin 53711
(608) 236-2500
-----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The annual meeting of shareholders of Bone Care International, Inc. will be
held at One Science Court, Madison, Wisconsin, on Wednesday, November 15, 2000,
at 1:00 p.m., local time, for the following purposes:
(1) To elect two (2) Directors to serve until the 2002 annual meeting of
shareholders.
(2) To consider and vote on a proposal to approve an amendment to the
Bone Care International, Inc. 1996 Stock Option Plan to increase the number
of shares of common stock available under the Plan.
(3) To transact any other business as may properly come before the
meeting or any adjournments thereof.
Only shareholders of record at the close of business on October 6, 2000, the
record date for the meeting, will be entitled to notice of and to vote at the
meeting or any adjournments thereof.
IMPORTANT
To ensure your representation at the meeting, please sign and date the
enclosed proxy, and return it immediately in the enclosed stamped envelope.
Sending in your proxy will not prevent you from personally voting your shares
at the meeting, since you may revoke your proxy by attending the meeting and
voting in person or by advising our assistant secretary in writing (by later-
dated proxy which is voted at the meeting or otherwise) of such revocation at
any time before it is voted.
By Order of the Board of
Directors,
Charles W. Bishop, Ph.D.
President and Chief Executive
Officer
Madison, Wisconsin
October 20, 2000
<PAGE>
Bone Care International, Inc.
One Science Court
Madison, Wisconsin 53711
(608) 236-2500
-----------------
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of the
accompanying proxy by the Board of Directors of Bone Care International, Inc.
("Bone Care", "we", "our" or "us") for use at the annual meeting of
shareholders to be held at One Science Court, Madison, Wisconsin, Wednesday,
November 15, 2000, at 1:00 p.m., local time, and at any adjournments thereof.
At the meeting, shareholders will consider a proposal to (1) elect two (2)
Directors to serve until the 2003 annual meeting of shareholders, and (2)
approve an amendment to the Bone Care International, Inc. 1996 Stock Option
Plan to increase the number of shares of common stock available under the
plan. The Board of Directors does not know of any other matters to be brought
before the meeting; however, if other matters should properly come before the
meeting, it is intended that the persons named in the accompanying proxy will
vote on such matters at their discretion.
Shareholders who execute proxies retain the right to revoke them at any time
prior to the voting thereof by attending the meeting and voting in person or
by advising our Secretary of such revocation in writing (by later-dated proxy
which is voted at the meeting or otherwise).
PROXY SOLICITATION
Proxies will be solicited by mail. In addition to solicitation by mail,
certain of our officers and employees may solicit by telephone, telegraph, and
personally. The cost of the solicitation will be borne by Bone Care. The
notice of the meeting, this proxy statement, the accompanying form of proxy
and the annual report on Form 10-KA filed with the Securities and Exchange
Commission, including financial statements for the fiscal year ended June 30,
2000, were first mailed to shareholders on or about
October 20, 2000.
1
<PAGE>
SHAREHOLDERS ENTITLED TO VOTE
Only holders of record of the shares of our common stock at the close of
business on October 6, 2000, the record date for the meeting, are entitled to
notice of and to vote at the meeting and at any adjournments thereof.
Shareholders will be entitled to one vote for each full share held. On October
6, 2000, there were 11,457,468 shares of common stock outstanding.
VOTING INFORMATION
A shareholder may, with respect to the election of Directors, (i) vote for
the election of both nominees named below to serve until the 2003 annual
meeting of shareholders, (ii) withhold authority to vote for both nominees, or
(iii) vote for the election of one nominee and withhold authority to vote for
the other nominee by striking a line through the other nominee's name on the
proxy.
Proxies in the accompanying form, properly executed and received by us at or
prior to the meeting and not revoked, will be voted as directed therein on all
matters presented at the meeting. In the absence of a specific direction from
the shareholder as to a proposal, the shareholder's proxy will be voted "FOR"
the election of the Director nominees named in this proxy statement and "FOR"
approval of the amendment to Bone Care's stock option plan. If a proxy is
marked to indicate that all or a portion of the shares represented by the
proxy are not being voted with respect to a particular proposal, those non-
voted shares will not be considered present and entitled to vote on the
proposal.
The affirmative vote of a plurality of the votes cast by the shares present
in person or by proxy at the meeting and entitled to vote in the election of
Directors is required to elect Directors. Thus, if a quorum is present, the
two persons receiving the greatest number of votes will be elected to serve as
Directors. Accordingly, non-voted shares with respect to the election of
Directors will not affect the outcome of the election of Directors. In
addition, withholding authority to vote for a Director nominee will not
prevent such nominee from being elected. If a quorum is present, in order to
approve the amendment to Bone Care's stock option plan, the number of votes
cast favoring the proposal must exceed the number of votes cast opposing the
proposal. Accordingly, non-voted shares and abstentions with respect to the
proposal to approve the amendment to Bone Care's stock option plan will not
affect the determination of whether the proposal is approved or ratified.
2
<PAGE>
PURPOSE OF THE MEETING
Item 1--Election of Directors
Our by-laws authorize the Board of Directors to fix the number of Directors,
provided that the number shall not be less than five nor more than twelve.
Currently, the number is fixed at five. The by-laws stagger the Board of
Directors by dividing the number of Directors into three classes, with one
class being elected each year for a term of three years. For the 2000 annual
meeting, two Directors, Robert A. Beckman and Charles W. Bishop, Ph.D., are
nominees for election.
The table below sets forth certain information with respect to the nominees
for election as directors of Bone Care to serve until the 2003 annual meeting
of shareholders. Unless otherwise specified, the shares of common stock
represented by the proxies Bone Care is soliciting will be voted "FOR" the
election as a Director of the persons named below, who have been nominated by
the Board of Directors. If, at or prior to a person's election, either nominee
is unwilling or unable to serve, it is presently intended that the proxies
being solicited will be voted for a substitute nominee designated by the Board
of Directors. The Board of Directors has no reason to believe either nominee
will be unwilling or unable to serve.
<TABLE>
<CAPTION>
Principal Occupations
Name and Age Positions Held During Past 5 Years
------------------------ ------------------- ---------------------------------
<C> <C> <S>
To serve until the 2003 annual meeting of shareholders:
Robert A. Beckman Director Director since 1989; Vice
Age 46 President of Finance for the
period May, 1996 through November
14, 1996; Vice President of
Finance for Lunar Corporation
from 1987, through August 2000
when Lunar was sold. Lunar
developed and sold x-ray,
ultrasound densitometers for the
diagnosis and monitoring of
osteoporosis and other metabolic
bone diseases. Lunar also
developed and sold medical
imaging equipment used by
orthopedists and radiologists for
imaging extremities.
Charles W. Bishop, Ph.D. President and Chief Director since 1989; President
Age 49 Executive Officer and Chief Executive Officer since
February, 1996; Vice President
from March, 1990 to February,
1996.
</TABLE>
The Board of Directors recommends you vote FOR the nominees named above to
serve on the Board of Directors of Bone Care.
3
<PAGE>
The following table sets forth certain information about our Directors whose
terms of office will continue after the 2000 annual meeting.
<TABLE>
<CAPTION>
Principal Occupations
Name and Age Positions Held During Past 5 Years
-------------------------- --------------- -----------------------------------
<C> <C> <S>
Terms expiring at the 2002 annual meeting of shareholders:
Martin Barkin, M.D. Director Director since 1993; President and
Age 64 Chief Executive Officer of Draxis
Health, Inc. (A pharmaceutical
company) since 1992; Partner and
National Practice Leader for
HealthCare at KPMG Canada from 1991
to 1992; Deputy Minister of Health
for the Province of Ontario from
1987 to 1991; Director of Novopharm
Biotech (a biotech research and
development company).
Charles R. Klimkowski, CFA Director Director since March 1999; Director
Age: 65 of Theragenics Corp. from December
1992 to April 2000. Mr. Klimkowski
served as Chairman of Theragenics
from December 1994 to June 1997 and
Co-chairperson from June 1997 to
June 1998. Theragenics is a
publicly traded company producing
and selling implantable radiation
devices for the treatment of
cancer. Prior to his retirement in
August 1998, Mr. Klimkowski served
as Chief Operating Officer and
Director of Investments of ABN AMRO
Asset Management (USA) Inc.
Term expires at the 2001 annual meeting of shareholders:
Richard B. Mazess, Ph.D. Chairman of the Director since 1984; Founder of
Age 61 Board Bone Care; Chairman of the Board
since February 1996; President
since inception of Bone Care in
1984 through February, 1996;
President and Director of Lunar
Corporation from 1974 through
August 2000 when Lunar was sold.
Lunar developed and sold x-ray,
ultrasound densitometers for the
diagnosis and monitoring of
osteoporosis and other metabolic
bone diseases. Lunar also developed
and sold medical imaging equipment
used by orthopedists and
radiologists for imaging
extremities. Professor Emeritus of
Medical Physics at the University
of Wisconsin--Madison since 1985.
</TABLE>
Directors do not receive cash compensation for serving as members of the
Board. Pursuant to the Bone Care International, Inc. 1996 Stock Option Plan,
annual awards of non-qualified stock options to purchase 9,000 shares of
common stock at the fair market value on the grant date have been granted to
non-employee Directors. These stock options expire ten years after their grant
date and become exercisable in equal one-third increments on the first three
anniversaries of the grant date. In March 1999, Mr. Klimkowski was granted
non-qualified stock options to purchase 37,500 shares of common stock at the
fair market value on
4
<PAGE>
the grant date. These stock options expire ten years after their grant date.
7,500 of these stock options became exercisable nine months after the grant
date, and 30,000 of these stock options become exercisable in equal one-third
annual increments on the first three anniversaries of the grant date.
During the year ended June 30, 2000, four meetings of the Board of Directors
were held. All of the Directors attended 100% of the meetings in person or by
telephone. The Board of Directors has an audit committee. The audit committee,
composed of non-employee Directors, oversees the audit of the corporate
accounts through independent public accountants whom it recommends for
selection by the Board of Directors. The committee reviews the scope of the
audit with such accountants and their related fees. The audit committee held
one meeting during the fiscal year ended June 30, 2000. Its members are Dr.
Mazess, Mr. Klimkowski and Mr. Beckman. The compensation committee, composed
of non-employee Directors, determines the compensation and benefits for
officers (other than grants of stock options), and makes recommendations to
the Board of Directors concerning compensation arrangements for the President
and Chief Executive Officer and Board of Directors. Mr. Klimkowski and Dr.
Mazess are members of the compensation committee. The compensation committee
did not hold any formal meetings during the fiscal year ended June 30, 2000.
Bone Care does not have a nominating committee of the Board of Directors.
However, our by-laws provide that the Board may establish additional
committees as it deems advisable.
Section 16(a) Beneficial Ownership Reporting Compliance
Our Directors and officers are required by Section 16 of the Securities
Exchange Act of 1934 to report to the Securities and Exchange Commission their
transactions in, and beneficial ownership of, our common stock, including
options to purchase common stock, including stock options. Reports received by
us indicate that all reports were filed on a timely basis, except that Dr.
Barkin reported one transaction after the due date for the report.
Item 2--Approval of Amendment to Bone Care's Stock Option Plan
Bone Care has used stock options as a significant part of its compensation
program for many years. Management believes that the grant of stock options is
critical in attracting and retaining officers, key employees, consultants and
non-employee directors who will contribute to the success and prosperity of
Bone Care. Other than Bone Care's 401K profit-sharing plan, stock options are
the only element of long-term compensation used by Bone Care.
As of October 6, 2000, the record date of the annual meeting of
shareholders, the number of shares of common stock available for issuance
under Bone Care's current stock option plan was 258,370. On October 13, 2000
an additional 133,000 options to purchase common stock were granted to
employees. As a result, 125,370 shares of common stock are currently available
under the plan. Bone Care adopted the stock option plan in 1996. Management is
seeking shareholder approval of an amendment to the plan which would increase
the number of shares available for future grants by 600,000.
Summary of the plan. Only nonqualified stock options may be granted under
the plan. The plan is administered by the Board of Directors. The committee
has the authority, subject to terms of the plan, to establish eligibility
guidelines, select officers, key employees, consultants, and non-employee
directors for participation in the plan and determine the number of shares of
common stock subject to a stock option,
5
<PAGE>
the exercise price for such shares of common stock, the time and conditions of
exercise, and all other terms and conditions of the stock options.
Approximately 65 persons are presently eligible to receive stock options under
the plan.
Other than to comply with applicable rules and regulations, the plan may be
amended by the Board of Directors in any respect, except that no amendment may
be made without shareholder approval if such amendment would increase the
maximum number of shares of common stock available under the plan (other than
certain adjustments for changes in the Company's capitalization) or would
otherwise require shareholder approval.
In the event of a change in control of Bone Care, any stock option not
previously exercisable in full will become fully exercisable. As more fully
set forth in the plan, a change in control generally is the acquisition,
subject to certain exemptions, by any person of beneficial ownership of 50% or
more of the common stock, a change in the majority of the Board of Directors
and approval by the shareholders of a reorganization, merger, consolidation,
or sale of all or substantially all of the assets of Bone Care unless certain
conditions are satisfied. This provision could raise the cost to a potential
acquiror of engaging in a transaction that would constitute such a change in
control, and, therefore, could affect the willingness of an acquiror to
propose such a transaction.
Proposed Amendment. The first paragraph of Section 3 of the plan has been
amended, subject to shareholder approval, as follows to reflect the proposed
increase in the number of available shares.
"The maximum number of shares of Common Stock to be available to be
issued under this Plan pursuant to all grants of stock options hereunder
shall be 1,600,000, subject to adjustment in accordance with Section 5.
Shares of Common Stock subject to a stock option granted hereunder, which
are not issued by reason of the expiration, cancellation, or other
termination of such stock option, shall again be available for future
grants of stock options under this Plan; provided, however, that except for
appropriate adjustments made to give effect to any stock splits, stock
dividends or other relevant changes in the capitalization of the
Corporation, without the approval by a majority vote of the shareholders,
shares subject to an outstanding stock option that is replaced, canceled or
exchanged for a newly granted stock option with an option price per share
lower than the option price per share of the outstanding stock option shall
not be available for future grants."
The reason for amending the plan is to provide for an increase in the number
of shares of common stock available for future grants of stock options under
the plan. As noted above, stock options are a significant part of Bone Care's
compensation program. As of October 6, 2000, the record date of the annual
meeting of shareholders, the number of shares of common stock available under
the plan for the grant of stock options was 258,370. On October 13, 2000 an
additional 133,000 options to purchase common stock were granted to employees.
As a result, 125,370 shares of common stock are currently available under the
plan. The amendment would authorize the grant of an additional 600,000 shares
of common stock under the plan which, as of October 6, 2000, represents
approximately 5.2% of Bone Care's outstanding common stock.
Bone Care's Board of Directors understands that shareholders are often
concerned about the grant of replacement options with exercise prices lower
than the replaced options. As a result, the Board of Directors had previously
amended the plan to provide that shares subject to replaced options will not
be available for future stock option grants except to the extent Bone Care's
shareholders approve a grant of replacement options. Bone Care's Board
believes that this amendment should ease the concerns
6
<PAGE>
shareholders may have about replacement options, while also giving Bone Care
the ability to continue to utilize stock options as Bone Care's primary form
of long-term compensation.
Federal Tax Consequences. For federal income tax purposes, an optionee will
not realize taxable income upon the grant of the option, but will recognize
taxable income at the time of exercise in the amount of the difference between
the purchase price and the fair market value of the shares purchased on the
date of exercise. At that time, Bone Care will be entitled to a deduction as
compensation expense in an amount equal to the amount taxable to the
participant as income.
The following table sets forth the number of shares of common stock which
were subject to stock options granted to the indicated persons or groups under
the plan during fiscal year 2000. All of the stock options were granted at
100% of fair market value of the common stock on the date of grant. On
October 6, 2000, the closing price of the common stock as reported on the
Nasdaq Stock Market was $19.75 per share.
STOCK OPTION PLAN
<TABLE>
<CAPTION>
Name and Position Number of Shares
----------------- ----------------
<S> <C>
Richard B. Mazess, Ph.D................................. 0
Chairman of the Board
Charles W. Bishop, Ph.D................................. 10,000(/1/)
President and Chief Executive Officer
Robert A. Beckman....................................... 9,000
Director and Acting Vice President--Finance
Martin Barkin, M.D...................................... 9,000
Director
Charles R. Klimkowski................................... 9,000
Director
Dale W. Gutman.......................................... 10,000
Vice President--Finance
Paul V. Peterson........................................ 10,000
Vice President--Sales & Marketing
All executive officers as a group....................... 30,000
All non-employee directors as a group................... 27,000
All employees as a group................................ 48,750
</TABLE>
--------
(/1/) On October 13, 2000, options to purchase 100,000 shares of common stock
were granted to Charles W. Bishop, Ph.D.
Approval of the plan amendment will require that the number of votes cast
favoring approval exceeds the number of votes cast opposing approval. Unless
otherwise specified, the shares of common stock
represented by the proxies being solicited will be voted "FOR" the proposal to
approve the plan amendment.
The Board of Directors unanimously recommends a vote FOR approval of the
proposed amendment to the Plan.
7
<PAGE>
SECURITIES BENEFICIALLY OWNED BY PRINCIPAL SHAREHOLDERS,
DIRECTORS AND EXECUTIVE OFFICERS
The following table lists all institutions and individuals known by us to
beneficially own more than 5% of Bone Care's common stock as of October 6,
2000. The table also summarizes information for our Directors and executive
officers, individually and as a group.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. Beneficial ownership generally includes
voting or investment power with respect to securities. Common stock subject to
an option that is exercisable within 60 days of October 6, 1999 is deemed to
be beneficially owned by the person holding the option when computing
ownership, but is not treated as outstanding when computing the ownership of
any other person. We have determined each beneficial owner's percentage
ownership by assuming that stock options held by such person which are
exercisable within 60 days of October 6, 2000, have been exercised. Except as
indicated by the footnotes to the table below, we believe, based on
information provided to us, that the persons and entities named in the table
below have sole voting and investment power with respect to all shares of
common stock shown as beneficially owned by them. Applicable percentage of
beneficial ownership is based on 11,457,468 shares of common stock outstanding
as of October 6, 2000.
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name of Beneficial Owner Beneficial Ownership Class
------------------------ -------------------- ----------
<S> <C> <C>
Richard B. Mazess, Ph.D. (1)............. 3,110,710 27.2%
313 West Beltline Highway
Madison, WI 53713
State of Wisconsin Investment Board (2).. 2,148,000 18.7
Lake Terrace
121 E. Wilson Street
Madison, WI 53707
T. Rowe Price Associates, Inc. (3)....... 1,037,000 9.1
100 E. Pratt Street
Baltimore, MD 21202
Martin Barkin, M.D. (4).................. 18,000 *
Robert A. Beckman (5).................... 75,146 *
Charles W. Bishop, Ph.D. (6)............. 148,627 1.3
Dale W. Gutman (7)....................... 15,000 *
Charles R. Klimkowski, CFA (8)........... 50,500 *
Paul V. Peterson (9)..................... 14,000 *
All Directors and Executive Officers as a
Group (7 persons) (10).................. 3,431,983 29.3
</TABLE>
--------
* Less than 1 percent (1%)
8
<PAGE>
(1) Includes 1,601,950 shares of common stock held by Dr. Mazess in joint
tenancy with his wife and 587,500 shares of common stock held by Dr.
Mazess as custodian for his daughters.
(2) Based on Amendment No. 2 to Schedule 13G dated February 10, 2000,
furnished to us, the State of Wisconsin Investment Board had sole voting
power with respect to 2,148,000 shares of common stock and sole
dispositive power with respect to 2,148,000 shares of common stock. The
State of Wisconsin Investment Board's address is P.O. Box 7842, Madison,
Wisconsin 53707.
(3) Based on Amendment No. 1 to Schedule 13G dated February 12, 1999,
furnished to us, T. Rowe Price Associates, Inc., an investment adviser
registered under Section 203 of the Investment Advisers Act of 1940, had
voting power with respect to no shares of common stock and had
dispositive power with respect to 885,200 shares of common stock, and T.
Rowe Price Small Cap Value Fund, Inc., an investment company registered
under Section 8 of the Investment Company Act of 1940, had sole voting
power with respect to 885,200 shares of common stock and sole dispositive
power with respect to no shares of common stock.
(4) Includes 18,000 shares of common stock issuable within 60 days upon
exercise of stock options.
(5) Includes 62,800 shares of common stock issuable within 60 days upon
exercise of stock options.
(6) Includes 120,000 shares of common stock issuable within 60 days upon
exercise of stock options and 2,800 shares of common stock held by Dr.
Bishop as custodian for his children.
(7) Includes 12,000 shares of common stock issuable within 60 days upon
exercise of stock options.
(8) Includes 20,500 shares of common stock issuable within 60 days upon
exercise of stock options.
(9) Includes 14,000 shares of common stock issuable within 60 days upon
exercise of stock options.
(10) Includes 247,300 shares of common stock issuable within 60 days upon
exercise of stock options.
9
<PAGE>
EXECUTIVE COMPENSATION
Board of Directors Report on Executive Compensation
The following is a report submitted by the Board of Directors addressing our
compensation policy as it related to the President and Chief Executive Officer
for fiscal year 2000. With respect to the other executive officers, Richard B.
Mazess, Chairman of Bone Care, received no direct compensation. Bone Care paid
Lunar Corporation fees aggregating $18,000 during fiscal year 2000 pursuant to
a Transition Agreement for substantially all the services that Dr. Mazess and
Lunar provided to Bone Care.
This report by the Board of Directors and the performance graph contained in
this proxy statement should not be deemed to be incorporated by reference by
any general statement which incorporates by reference this proxy statement
into any filing under the Securities Act of 1933 or the Securities Exchange
Act of 1934, and they shall not otherwise be deemed filed under such Acts.
The goal of Bone Care's executive compensation policy is to ensure that an
appropriate relationship exists between executive pay and the creation of
shareholder value, while also retaining and motivating executive officers and
other key employees. Bone Care's executive compensation program integrates
annual base salary with cash bonuses and stock options based upon corporate
performance, employee initiatives and performance overall.
In determining the appropriate kinds and levels of compensation of the Chief
Executive Officer and other executive officers, the Board of Directors
considered that prior to the fiscal year ended June 30, 2000 Bone Care had
been primarily a research and development company with nominal revenues. The
Board believes that annual base salaries should be designed to attract and
retain qualified executives and has granted stock options periodically to
ensure those executives have a motivating and continuing stake in Bone Care's
long-term success. Further, the Board views stock options as an effective
incentive for executives to create value for shareholders, since the value of
a stock is directly related to stock price.
The compensation of the Chief Executive Officer is more heavily weighted
toward stock options than base salary and cash bonuses. In 1996, when Bone
Care became a publicly traded company, the Board of Directors granted an
option to purchase 140,000 shares of common stock to the Chief Executive
Officer. The Board granted the Chief Executive Officer options to purchase an
additional 10,000 shares of common stock both in 1997 and 1999, as well as
options to purchase 100,000 shares of stock on October 13, 2000. Since joining
Bone Care, the Chief Executive Officer has been granted options to purchase
183,691 shares of common stock. The Chief Executive Officer's salary for the
fiscal years ended 2000 and 1999 remained unchanged at $150,000. A cash bonus
was not received by the Chief Executive Officer for fiscal 2000.
The Board evaluates the compensation of the other executive officers
annually and adjusts overall compensation packages based on performance toward
achieving Bone Care's short-term and long-term objectives. The Board of
Directors does not use a fixed formula for determining base salary, bonuses,
or long-term compensation.
10
<PAGE>
The Board of Directors believes that linking executive compensation to
corporate performance results in a better alignment of compensation with Bone
Care's goals and shareholder interests. The Board of Directors believes that
compensation levels during fiscal year 2000 adequately reflect Bone Care's
compensation goals and policies.
Respectfully submitted,
Martin Barkin, M.D.
Robert A. Beckman
Charles W. Bishop, Ph.D.
Charles R. Klimkowski, CFA
Richard B. Mazess, Ph.D.
11
<PAGE>
Summary Compensation Table
The following table summarizes information regarding compensation during the
fiscal years ended June 30, 2000, 1999, and 1998, for our President and Chief
Executive Officer and two other executive officers.
<TABLE>
<CAPTION>
Annual Long-Term
Compensation Compensation
--------------- --------------------------
Securities
Name and Principal Fiscal Underlying All Other
Position Year Salary Bonus Options(#) Compensation(1)
------------------ ------ -------- ------ ---------- ---------------
<S> <C> <C> <C> <C> <C>
Charles W. Bishop,
Ph.D................... 2000 $150,000 $ -- 10,000 $2,331
President, and Chief 1999 150,000 6,900 -- 2,301
Executive Officer 1998 150,000 4,225 -- 2,290
Paul V. Peterson........ 2000 160,000 -- 10,000 2,400
Vice President--Sales 1999 151,538 7,000 -- --
and Marketing 1998 31,731 -- 30,000 --
Dale W. Gutman.......... 2000 66,730 -- 10,000 1,511
Vice President--Finance 1999 93,531 9,825 -- 1,595
1998 61,000 9,906 13,000 1,604
</TABLE>
--------
(1) Amounts shown consist of Bone Care contributions to a 401(K) plan.
Fiscal Year-End Option Values
The following table sets forth information on the value of unexercised stock
options as of June 30, 2000 held by the individuals named in the summary
compensation table. None of the named officers exercised stock options during
the year ended June 30, 2000. The value of unexercised stock options was based
upon the closing price of our common stock of $23.5625 on June 30, 2000, as
reported by the Nasdaq National Market, minus the exercise price.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Stock Options at Fiscal Stock Options at Fiscal
Year End(#) Year End($)
------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Charles W. Bishop, Ph.D..... 118,000 32,000 $2,509,555 $671,920
Paul V. Peterson............ 12,000 18,000 177,750 266,625
Dale W. Gutman.............. 9,200 11,800 154,775 196,537
</TABLE>
Compensation Committee Interlocks and Insider Participation
During the fiscal year ended June 30, 2000, Dr. Mazess served on the
compensation committee of the Board of Directors. Dr. Mazess was President of
Bone Care since its inception in 1984 through February 1996.
12
<PAGE>
PERFORMANCE GRAPH
The following line graph compares the cumulative total shareholder return on
our common stock for the five-year period commencing May 9, 1996 and ending
June 30, 2000, with the cumulative total shareholder return of Standard &
Poor's 500 Stock Index (the "S&P 500") and Standard & Poor's Bio Technology--
Small Cap Index (the "S&P BioTechnology--Small Cap").
[Bone Care Performance Graph]
<TABLE>
<CAPTION>
5/9/96 06/30/96 06/30/97 06/30/98 06/30/99 06/30/00
------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Bone Care International,
Inc....................... $100 $111 $221 $298 $336 $802
S&P 500 Index.............. $100 $108 $145 $189 $232 $249
S&P BioTechnology--Small
Cap....................... $100 $ 94 $ 80 $ 74 $ 79 $244
</TABLE>
The performance graph assumes $100 dollars was invested on May 9, 1996, in
each of our common stock, the S&P 500 Index, and the S&P Biotechnology--Small
Cap Index. The graph also assumes the reinvestment of dividends.
13
<PAGE>
CERTAIN TRANSACTIONS
Relationship with Lunar
Dr. Mazess, the Chairman of the Board of Bone Care, was also the Chairman of
the Board, President and Chief Executive Officer of Lunar and was the
beneficial owner of approximately 33% of the outstanding common stock of Lunar
prior to its sale in August 2000. Mr. Beckman, a member of our Board of
Directors, was also Vice President of Finance of Lunar prior to its sale.
Under an agreement with Lunar, employees of Lunar provided 401(k) plan
administration and other services to us. As compensation for the services, we
paid Lunar a monthly fee of $1,500 during the year ended June 30, 2000.
Payments made by us to Lunar during fiscal year 2000 were $18,000 in the
aggregate.
1998 Sale of Common Stock
On July 24, 1998, we completed a directed public offering of 1,326,000
shares of our common stock at a price of $8.00 per share. The price per share
represented an approximate 5% discount from the average closing bid price of
the previous 5 days. We sold shares of common stock in the offering to the
following Directors and principal shareholders:
<TABLE>
<CAPTION>
Number of shares purchased
Name in 1998 common stock offering
---- -----------------------------
<S> <C>
Richard B. Mazess, Ph.D.................... 170,000
Chairman
Charles W. Bishop, Ph.D.................... 6,000
President, Chief Executive Officer and
Director
John Kapoor, Ph.D.......................... 100,000
Director at time of offering
T. Rowe Price Associates, Inc.............. 100,000
Dresdner RCM Global Investors LLC.......... 250,000
State of Wisconsin Investment Board........ 600,000
</TABLE>
1999 Sale of Common Stock
On October 12, 1999, we completed a directed public offering of 1,229,058
shares of common stock to the State of Wisconsin Investment Board, a principal
shareholders of Bone Care, at a price of $9.02 per share. The price per share
represents an approximate 7.5% discount for the average closing price of the
previous 20 days.
SHAREHOLDER PROPOSALS
In order to be considered for inclusion in our proxy materials for the 2001
annual meeting of shareholders, written notice of any shareholder proposal
must be delivered or mailed to and received at our new principal executive
offices by June 30, 2001, which will be located at 8401 Greenway Boulevard,
Middleton, Wisconsin 53562.
14
<PAGE>
In addition, our by-laws establish an advance notice procedure for
shareholder proposals to be brought before any meeting of shareholders,
including proposed nominations of persons for election to the Board of
Directors. Shareholders at the 2000 annual meeting may consider shareholder
proposals or nominations brought by a shareholder of record on September 16,
2000, who is entitled to vote at the annual meeting and who has given our
Secretary timely written notice, in proper form, of the shareholder's proposal
or nomination. A shareholder proposal or nomination intended to be brought
before the 2000 annual meeting must have been received by the Secretary on or
after August 17, 2000, and on or prior to September 16, 2000. The 2001 annual
meeting is expected to be held on November 14, 2001. Accordingly, a shareholder
proposal or nomination intended to be brought before the 2001 annual meeting
must be received by the assistant secretary on or after August 16, 2001, and on
or prior to September 15, 2001.
FINANCIAL STATEMENTS
A copy of our annual report on Form 10-KA filed with the Securities and
Exchange Commission, containing audited consolidated financial statements for
the fiscal year ended June 30, 2000, is enclosed herewith.
OTHER
Arthur Andersen LLP served as our independent accountants for the year ended
June 30, 2000. A decision regarding the selection of independent accountants to
audit our consolidated financial statements for the year ending June 30, 2001,
has not yet been made. It is expected that a representative of Arthur Andersen
LLP will attend the 2000 annual meeting, with the opportunity to make a
statement if they should desire, and will be available to respond to
appropriate questions.
By Order of the Board of
Directors,
Charles W. Bishop, Ph.D.
President and Chief Executive
Officer
Madison, Wisconsin
October 20, 2000
A COPY OF OUR ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION ON FORM
10-KA FOR THE FISCAL YEAR ENDED JUNE 30, 2000, (OTHER THAN EXHIBITS NOT
SPECIFICALLY INCORPORATED BY REFERENCE THEREIN) WILL BE PROVIDED WITHOUT CHARGE
TO EACH RECORD OR BENEFICIAL OWNER OF OUR COMMON STOCK AS OF OCTOBER 6, 2000,
ON THE WRITTEN OR ORAL REQUEST OF SUCH PERSON DIRECTED TO: BONE CARE
INTERNATIONAL, INC., ONE SCIENCE COURT, MADISON, WISCONSIN 53711, ATTENTION:
DALE W. GUTMAN AT (608) 236-2590.
15
<PAGE>
[LETTERHEAD OF BONE CARE INTERNATIONAL]
BONE CARE INTERNATIONAL, INC.
ANNUAL MEETING OF SHAREHOLDERS
One Science Court
Madison, Wisconsin
Wednesday, November 15, 2000
1:00 p.m.
--------------------------------------------------------------------------------
Bone Care International, Inc.
One Science Court
Madison, Wisconsin 53711 proxy
------------------------------------------------------------------------------
The undersigned, a shareholder of Bone Care International, Inc. (the
"Company"), hereby appoints Charles R. Klimkowski, CFA and Dale W. Gutman, and
each of them as proxies, with full power of substitution, to vote on behalf of
the undersigned the number of shares which the undersigned is then entitled to
vote, at the Annual Meeting of the Shareholders of Bone Care International, Inc.
to be held at One Science Court, Madison, Wisconsin, on Wednesday, November 15,
2000, at 1:00 p.m., and any adjournments or postponements thereof, upon the
matters set forth on the reverse side, with all the powers which the undersigned
would possess if personally present.
The undersigned hereby revokes all previous proxies relating to the shares
covered hereby and acknowledges receipt of the Notice and Proxy Statement
relating to the Annual Meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. It will be voted on
the matters set forth on the reverse side of this form as directed by the
shareholder, but if no direction is made in the space provided, it will be voted
FOR proposals 1 and 2.
See reverse for voting instructions.
<PAGE>
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
provided or return it to Bone Care International, Inc., c/o Shareowner
Services/SM/, P.O. Box 64873, St. Paul, MN 55164-0873.
. Please detach here .
The Board of Directors Recommends a Vote FOR Items 1 and 2.
1. Election of directors: 01 Robert A. Beckman 02 Charles W. Bishop, Ph.D.
[_] Vote FOR [_] Vote WITHHELD
all nominees from all nominees
(except as marked)
(Instructions: To withhold authority [___________________________________]
to vote for any indicated nominee, [_] For [_] Against [_] Abstain
write the number(s) of the nominee(s)
in the box provided to the right.)
2. Amendment to the Bone Care International, Inc. 1996 Stock Option Plan.
3. Upon such other business as may properly come before the meeting and any
adjournments or postponements thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
Address Change? Mark Box [_] Date ___________________________
Indicate changes below:
-----------------------------------
-----------------------------------
Signature(s) in Box
Stockholder must sign exactly as
the name appears at left. When
signed as a corporate officer,
executor, administrator, trustee,
guardian, etc., please give full
title as such. Both joint tenants
must sign.
