<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
RIBI IMMUNOCHEM RESEARCH, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
553 OLD CORVALLIS ROAD
[LOGO] HAMILTON, MONTANA
59840 USA
(406) 363-6214
FAX (406) 363-6129
<S> <C>
- -------------------------------------------------------------------------------------------
</TABLE>
March 12, 1999
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Ribi ImmunoChem Research, Inc., which will be held at 2:00 P.M. on April 26,
1999, at Hamilton City Hall/Community Center, 223 S. 2nd St., Hamilton, Montana.
Your Board of Directors looks forward to greeting personally those shareholders
able to attend.
At the meeting, you will be asked to elect seven directors. Whether or not
you plan to attend, it is important that your shares are represented at the
meeting. Accordingly, you are requested to promptly sign, date and mail the
enclosed proxy in the envelope provided.
Thank you for your consideration and continued support.
Sincerely,
[SIGNATURE]
Robert E. Ivy
Chief Executive Officer,
President and Chairman
<PAGE>
[LOGO]
553 OLD CORVALLIS ROAD
HAMILTON, MONTANA 59840
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 26, 1999
------------------------
The Annual Meeting of Shareholders of Ribi ImmunoChem Research, Inc., will
be held on Monday, April 26, 1999, at 2:00 P.M., Mountain Daylight Time, at
Hamilton City Hall/Community Center, 223 S. 2nd St., Hamilton, Montana, for the
following purposes:
1. To elect a board of seven directors to serve until the next Annual
Meeting of Shareholders or until their successors are duly elected and
qualified;
2. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Holders of common stock of record at the close of business on March 4, 1999,
will be entitled to notice of, and to vote at, the annual meeting or any
adjournment thereof.
All shareholders are invited to attend the annual meeting in person. Those
who do not expect to attend the annual meeting are urged to sign and date the
enclosed proxy and return it promptly in the enclosed stamped envelope. Your
proxy will not be used if you subsequently decide to attend the annual meeting
and to vote your shares in person.
BY ORDER OF THE BOARD OF DIRECTORS
Ronald H. Kullick
Secretary
Hamilton, Montana
March 12, 1999
<PAGE>
RIBI IMMUNOCHEM RESEARCH, INC.
553 OLD CORVALLIS ROAD
HAMILTON, MONTANA 59840
------------------------
PROXY STATEMENT
------------------------
This proxy statement is furnished in connection with the solicitation by the
Board of Directors of Ribi ImmunoChem Research, Inc. (the "Company"), of proxies
in the accompanying form to be voted at the Annual Meeting of Shareholders to be
held in Hamilton, Montana, on April 26, 1999, or any adjournment thereof, for
the purposes set forth in the preceding notice. This proxy statement and the
enclosed proxy are being mailed to shareholders on or about March 12, 1999.
Proxies will be voted in accordance with the directions specified thereon
and otherwise in accordance with the judgment of the persons designated as
proxies. Any proxy returned on which no direction is specified will be voted FOR
all items. A shareholder may revoke his or her proxy at any time prior to the
voting thereof by filing with the Secretary of the Company a later proxy or
written notice of revocation, or by attending the meeting and voting in person.
VOTING RIGHTS
Shareholders of record as of the close of business on March 4, 1999, will be
entitled to vote at the meeting. As of that date, there were 20,323,373 shares
of common stock outstanding and entitled to vote. Each share of common stock
entitles the holder to one vote on all matters presented at the meeting. A
majority of the shares entitled to vote, present in person or represented by
proxy, shall constitute a quorum. Abstentions and broker non-votes will be
treated as present at the meeting for purposes of determining a quorum. However,
broker non-votes are not counted for purposes of determining the number of votes
cast with respect to a particular proposal. In determining whether a proposal
has been approved, abstentions are counted as votes against the proposal and
broker non-votes are not counted as votes for or against the proposal. Directors
shall be elected by a plurality of the votes of the shares present in person or
represented by proxy at the meeting and entitled to vote thereon.
ITEM NO. 1
ELECTION OF DIRECTORS
A board of seven directors will be elected at the meeting, each director to
hold office until the next Annual Meeting of Shareholders or until his successor
is elected and qualified. Unless authority to vote is withheld, shares
represented by proxies will be voted in favor of the election, as directors, of
the nominees named below (or, in the event, which is not anticipated, that any
such nominees should become unavailable, a substitute nominee). The nominees are
all present members of the Board of Directors.
1
<PAGE>
Certain information concerning each nominee is set forth below:
<TABLE>
<CAPTION>
DIRECTOR
SINCE AGE
----------- -----------
<S> <C> <C>
John L. Cantrell, Ph.D............................................................................ 1981 60
Executive Vice President of the Company since 1981.
Philipp Gerhardt, Ph.D............................................................................ 1985 77
Professor (Emeritus since 1992), Department of Microbiology and Public Health, Michigan State
University, since 1965; Adjunct Senior Scientist, Michigan Biotechnology Institute, since 1985.
Paul Goddard, Ph.D................................................................................ 1996 49
President and Chief Executive Officer of Elan Pharmaceuticals, a division of Elan Corporation,
since 1998; Chief Executive Officer and Chairman of the Board of Directors of Neurex Corporation
from 1991 to 1998; member of the Board of Directors of Molecular Devices Corp. since 1995 and
ONYX Pharmaceuticals, Inc. since 1997; all are biotechnology companies which do not compete with
the Company.
Mark I. Greene, M.D., Ph.D., FRCP................................................................. 1995 50
Director of the Division of Immunology, Department of Pathology, and Professor of Pathology,
University of Pennsylvania School of Medicine, since 1986; Associate Director of the Division
for Fundamental Research, University of Pennsylvania Cancer Center, since 1987; appointed the
John Eckman Professor of Medical Science, University of Pennsylvania, in 1989; member of the
Board of Directors of Emisphere Technologies, Inc., a biotechnology company which does not
compete with the Company, since 1995.
Robert E. Ivy..................................................................................... 1987 65
President and Chief Executive Officer of the Company since 1987; Chairman of the Board of
Directors of the Company since 1989; member of the Board of Directors of The International Heart
Institute of Montana Foundation since 1995 and Sonus Pharmaceuticals, Inc., a biotechnology
company which does not compete with the Company, since February 1999.
Thomas N. McGowen, Jr., J.D....................................................................... 1984 73
Currently retired; director of various public and private companies for more than the past five
years; currently a member of the Board of Directors of Federal Signal Corporation and Energy
West Corporation.
Frederick B. Tossberg, M.B.A...................................................................... 1986 68
Currently retired; formerly involved in finance and investments in industry and state
government; director of various private entities for more than the past five years; currently
Vice Chairman, Marcus Daly Memorial Hospital Corporation, Hamilton, Montana.
</TABLE>
2
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and any persons who own more than 10% of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission and The Nasdaq Stock Market reports of ownership and
changes in ownership of common stock of the Company. Officers, directors and
greater than 10% shareholders are required to furnish the Company with copies of
all Section 16(a) forms they file. Based solely on review of the copies of such
reports furnished to the Company or written representations that no other
reports were required, the Company believes that during 1998, all filing
requirements applicable to its officers, directors and greater than 10%
beneficial owners, if any, were complied with, except that a report on Form 4
for Mr. Ivy was inadvertently filed late after the sale of shares by Mr. Ivy's
wife. Mr. Ivy disclaimed beneficial ownership of such shares.
COMMITTEES AND MEETINGS
The standing committees of the Board of Directors include an Audit Committee
and a Committee of Outside Directors. During 1998, the Board of Directors held
six meetings. Each incumbent director serving during 1998 attended more than 75%
of all such meetings of the board and all meetings of committees of which he was
a member, except that Dr. Greene attended 66% of the Board of Director meetings
and Dr. Goddard attended 50% of the Committee of Outside Directors meetings. The
Board of Directors does not have a nominating committee or any committee
performing similar functions.
The Audit Committee, which met twice in 1998, is comprised of Messrs.
McGowen and Tossberg, neither of whom is an employee of the Company. The
principal functions of the Audit Committee are to review the scope of the audit
conducted by the Company's independent auditors; to review recommendations
contained in any management letters from the Company's independent auditors and
the methods by which such recommendations are to be implemented; to review the
Company's internal accounting controls; to review any related-party transactions
on an ongoing basis to determine potential conflict-of-interest situations; and
to recommend to the Board of Directors the appointment of the Company's
independent auditors.
The Committee of Outside Directors was established to act upon all matters
concerning stock options for directors and officers pursuant to the Company's
1986 and 1996 Stock Option Plans (as amended and restated) as adopted by the
shareholders and to consider and make recommendations to the Board of Directors
regarding compensation of executive officers, as well as to matters in which
directors who are also Company employees may have a conflict of interest or be
otherwise involved personally. Members of the Committee of Outside Directors are
Messrs. Gerhardt, Goddard, Greene, McGowen and Tossberg. The Committee of
Outside Directors held two meetings during 1998.
3
<PAGE>
PRINCIPAL SHAREHOLDERS AND MANAGEMENT'S SHAREHOLDINGS
The following table sets forth the number of shares of the Company's
outstanding common stock which were owned beneficially, as of March 4, 1999, by
(i) each person known by the Company to own more than 5% of the Company's
outstanding common stock, (ii) each director of the Company, all of whom are
also the nominees for election as directors, (iii) the chief executive officer
of the Company, (iv) the four most highly compensated executive officers, other
than the chief executive officer, whose total annual salary and bonus exceeded
$100,000 in 1998, and (v) all directors and executive officers of the Company as
a group.
<TABLE>
<CAPTION>
AMOUNT
BENEFICIALLY PERCENT OF
NAME OR GROUP OWNED(1) CLASS(1)
- -------------------------------------------------- ------------ ----------
<S> <C> <C>
RGC International Investors, LDC.................. 3,999,820 (2) 16.4%
SmithKline Beecham plc............................ 1,754,056 (3) 8.4%
Amerindo Investment Advisors, Inc................. 1,245,000 (4) 6.1%
Robert E. Ivy..................................... 330,000 (5) 1.6%
Ronald H. Kullick, R.Ph., J.D..................... 91,000 (6) *
Frederick B. Tossberg, M.B.A...................... 83,121 (7) *
Gary T. Elliott, Pharm.D., Ph.D................... 67,900 (8) *
Thomas N. McGowen, Jr., J.D....................... 66,483 (9) *
Charles E. Richardson, Ph.D....................... 65,600 (10) *
John L. Cantrell, Ph.D............................ 65,000 (11) *
Kenneth B. Von Eschen, Ph.D....................... 62,700 (12) *
Paul Goddard, Ph.D................................ 53,658 (13) *
Philipp Gerhardt, Ph.D............................ 44,247 (14) *
Mark I. Greene, M.D., Ph.D., FRCP................. 32,875 (15) *
All directors and executive officers as a group
(12 persons).................................... 1,022,106 (16) 4.8%
</TABLE>
- ------------------------
* Less than 1% of the outstanding shares of the Company.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of common stock subject to warrants, options or convertible
preferred stock held by that person that are currently exercisable or
exercisable within 60 days of March 4, 1999, are deemed outstanding. Such
shares, however, are not deemed outstanding for purposes of computing the
percentage ownership of each other person. To the Company's knowledge,
except as set forth in the footnotes to this table and subject to
applicable community property laws, each person named in the table has sole
voting and investment power with respect to the shares set forth opposite
such person's name.
(2) RGC International Investors, LDC ("RGC"), c/o Rose Glen Capital Management,
L.P., 3 Bala Plaza East, Suite 200, 251 St. Asaphs Road, Bala Cynwyd, PA
19004, owns 8,240 shares of preferred stock which were convertible into
common stock of the Company on March 4, 1999. The conversion is based on
the average closing bid prices for any three consecutive trading days
during the 22 trading day period prior to notice of conversion. Based on
the common stock's market price on March 4, 1999, RGC could acquire up to
3,999,820 shares of common stock on conversion.
4
<PAGE>
(3) SmithKline Beecham Biologicals ("SBB"), Rue de l'Institut 89 B-1330,
Rixensart, Belgium, owns 1,103,448 shares and has warrants, which were
exercisable on March 4, 1999, to purchase 500,000 additional shares. S.R.
One, Limited, Bay Colony Executive Park, 565 E. Swedesford Road, Suite 315,
Wayne, PA 19087, owns 150,608 shares. Both companies are subsidiaries of
SmithKline Beecham plc.
(4) Based on a Schedule 13G dated February 12, 1999, Amerindo Investment
Advisors, Inc., a California corporation, whose principal executive offices
are located at One Embarcadero Center, Suite 2300, San Francisco, CA 94111,
("Amerindo") and Amerindo Investment Advisors, Inc., a Panama corporation,
whose principal executive offices are located at Edificio Sucre, Calle 48
Este, Bella Vista, Apartado 6277, Panama 5, Panama, ("Amerindo-Panama")
have shared voting and dispositive power with respect to 1,245,000 shares.
Amerindo is registered as an investment adviser under Section 203 of the
Investment Advisers Act of 1940, as amended. Messrs. Alberto W. Vilar and
Gary A. Tanaka are sole shareholders and directors of each of the entities.
Each person expressly disaffirms membership in any group under Rule 13d-5
under the Securities Exchange Act of 1934, as amended, or otherwise. The
shares are held for the discretionary accounts of certain clients.
Amerindo, Amerindo-Panama and Messrs. Vilar and Tanaka disclaim beneficial
ownership of all such shares.
(5) Represents 330,000 shares for which options were exercisable on March 4,
1999, or within 60 days thereafter.
(6) Includes 90,000 shares for which options were exercisable on March 4, 1999,
or within 60 days thereafter.
(7) Includes 71,753 shares for which options were exercisable on March 4, 1999,
or within 60 days thereafter.
(8) Represents 67,900 shares for which options were exercisable on March 4,
1999, or within 60 days thereafter.
(9) Includes 56,226 shares for which options were exercisable on March 4, 1999,
or within 60 days thereafter.
(10) Includes 64,000 shares for which options were exercisable on March 4,
1999, or within 60 days thereafter.
(11) Includes 55,000 shares for which options were exercisable on March 4,
1999, or within 60 days thereafter.
(12) Represents 62,700 shares for which options were exercisable on March 4,
1999, or within 60 days thereafter.
(13) Includes 51,658 shares for which options were exercisable on March 4,
1999, or within 60 days thereafter.
(14) Represents 44,247 shares for which options were exercisable on March 4,
1999, or within 60 days thereafter. Does not include 5,982 shares owned by
Dr. Gerhardt's wife. Dr. Gerhardt disclaims beneficial ownership of such
shares.
(15) Includes 30,875 shares for which options were exercisable on March 4,
1999, or within 60 days thereafter.
(16) Includes 983,859 shares for which options were exercisable on March 4,
1999, or within 60 days thereafter.
5
<PAGE>
EXECUTIVE COMPENSATION
The following tables set forth information regarding executive compensation
for the Company's Chief Executive Officer, President and Chairman and its four
most highly compensated executive officers who earned more than $100,000 in
salary and bonus in 1998. The compensation is for services performed in all
capacities for the Company ("the Named Executive Officers").
SUMMARY COMPENSATION TABLE
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
-------------
ANNUAL COMPENSATION SECURITIES
--------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(#) COMPENSATION
- ---------------------------------------------------- --------- ---------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Robert E. Ivy(1).................................... 1998 $ 266,500 $ 40,000 15,000 $ 9,559(2)
Chief Executive Officer, President and 1997 258,777 25,000 -- 9,341
Chairman 1996 251,500 25,000 65,000 9,424
Gary T. Elliott, Pharm.D., Ph.D..................... 1998 127,965 -- 25,000 1,996(3)
Vice President--Pharmaceutical 1997 104,694 -- 15,000 932
Development 1996 103,083 -- 20,000 1,856
Ronald H. Kullick, R.Ph., J.D....................... 1998 124,097 -- 10,000 1,861(3)
Vice President--Legal Counsel 1997 118,718 -- 15,000 1,781
and Secretary 1996 111,626 -- 15,000 1,674
Charles E. Richardson, Ph.D......................... 1998 123,624 -- 25,000 2,225(3)
Vice President--Pharmaceutical 1997 116,005 -- 15,000 2,088
Discovery 1996 111,049 -- -- 1,999
Kenneth B. Von Eschen, Ph.D......................... 1998 113,338 -- 20,000 2,040(3)
Vice President--Clinical 1997 107,773 -- 10,000 1,940
and Regulatory Affairs 1996 101,796 -- 20,000 1,832
</TABLE>
- ------------------------
(1) The Company has an employment contract with Mr. Ivy which currently provides
for an annual salary of $275,000 with associated executive benefits. The
agreement may be terminated by the Company by giving notice one year prior
to the expiration of the contract, which otherwise automatically extends for
one-year periods. If the agreement is terminated by the Company other than
for "cause," or by Mr. Ivy following his failure to be elected as a director
of the Company or his removal as Chief Executive Officer, President and
Chairman, Mr. Ivy will continue to receive his salary until the expiration
of the agreement. The Board of Directors reviews Mr. Ivy's salary annually
and may adjust it.
(2) During 1998 the Company provided supplemental long-term disability insurance
for Mr. Ivy at a cost of $3,997 and a term life insurance policy on which
the Company is not a beneficiary at a cost of $2,562. The Company also
contributed $3,000 for Mr. Ivy's account in a 401(k) savings plan.
(3) During 1998 the Company contributed $1,996, $1,861, $2,225 and $2,040 for
the account of Messrs. Elliott, Kullick, Richardson and Von Eschen,
respectively, in a 401(k) savings plan.
6
<PAGE>
STOCK OPTION GRANTS
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS(1) VALUE AT ASSUMED
------------------------------------------------------ ANNUAL RATES OF STOCK
NUMBER OF % OF TOTAL PRICE APPRECIATION
SECURITIES STOCK OPTIONS FOR 10 YEAR OPTION
UNDERLYING GRANTED TO EXERCISE TERM(2)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ---------------------
NAME GRANTED FISCAL YEAR SHARE DATE 5% 10%
- ---------------------------------------- ----------- --------------- ----------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert E. Ivy........................... 15,000 7.9 $ 5.75 4-24-08 $ 54,242 $ 137,460
Gary T. Elliott......................... 25,000 13.1 5.75 4-24-08 90,404 229,100
Ronald H. Kullick....................... 10,000 5.3 5.75 4-24-08 36,161 91,640
Charles E. Richardson................... 25,000 13.1 5.75 4-24-08 90,404 229,100
Kenneth B. Von Eschen................... 20,000 10.5 5.75 4-24-08 72,323 183,280
</TABLE>
- ------------------------
(1) Of the stock options reported above, 20% are exercisable on the grant date
and an additional 20% are exercisable on each anniversary of the grant date
such that 100% are exercisable four years from the grant date. The exercise
price is equal to the market value of the stock on the grant date.
(2) The potential realizable value is calculated based on the term of the option
at its time of grant (ten years). It is calculated by assuming that the
stock price on the date of grant appreciates at the indicated annual rate,
compounded annually for the entire term of the option, and that the option
is exercised and sold on the last day of its term for the appreciated stock
price. Such values do not include consideration of income tax consequences.
AGGREGATED STOCK OPTION EXERCISES
AND YEAR END STOCK OPTION VALUES
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-
NUMBER OF SHARES UNEXERCISED OPTIONS MONEY OPTIONS(1)(2)
ACQUIRED ON VALUE -------------------------- --------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------- ------------------- ------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert E. Ivy.................. -- -- 301,000 51,000 $ -- $ --
Gary T. Elliott................ -- -- 58,900 37,000 -- --
Ronald H. Kullick.............. -- -- 85,000 23,000 -- --
Charles E. Richardson.......... -- -- 56,000 29,000 -- --
Kenneth B. Von Eschen.......... -- -- 55,700 30,000 -- --
</TABLE>
- ------------------------
(1) Value is based on the closing price of the Company's stock on December 31,
1998, which was $2.31, less the option exercise price.
(2) The values presented do not include income tax consequences.
7
<PAGE>
REPORT BY THE COMMITTEE OF OUTSIDE DIRECTORS
ON EXECUTIVE COMPENSATION
The philosophy of the Company with respect to executive compensation is to
offer competitive compensation opportunities which are based upon an
individual's performance and contribution toward the attainment of Company
goals.
At the present time, the Company's executive officers receive compensation
in the form of base salary and long-term incentive compensation through the
grant of stock options. Occasionally, they may receive cash bonuses for unusual
or extraordinary accomplishments. They are also eligible to participate in an
employee savings plan under Section 401(k) of the Internal Revenue Code. This
plan covers substantially all full-time employees. The Company matches 30% of
employee contributions up to 6% of compensation. In addition, the Company
provides health, term life and disability insurance for employees who are
actively employed.
The Committee of Outside Directors (the "Committee") of the Board of
Directors is responsible for administering executive officer compensation. The
Committee is comprised of non-employee directors who are not eligible to
participate in any of the compensation plans it administers. The Committee
reviews compensation annually, usually during the first quarter of the fiscal
year for executives other than the Chief Executive Officer. The Committee
reviews with the Chief Executive Officer a compensation proposal prepared by the
Chief Executive Officer with the assistance of the Company's Human Resources
staff. The compensation proposal is based upon an objective performance
evaluation measuring past performance as well as defined expected future
contributions. Other factors taken into account include compensation information
of peer group companies, national surveys and the financial condition of the
Company. The proposal is then submitted to the full Board of Directors for
ratification. Stock option grants, if any, are administered solely by the
Committee.
The Committee also assesses the performance of the Chief Executive Officer,
usually in the second quarter of the fiscal year, against previously set goals
and objectives and reviews with him his future goals and objectives. Based upon
this evaluation, and further considering peer group and national survey
compensation data, as well as the financial status of the Company, the Committee
determines what it believes to be appropriate compensation and submits its
proposal for ratification by the Board of Directors. Stock option grants, if
any, are administered solely by the Committee.
Mr. Ivy's annual base salary was set at $275,000 effective July 1, 1998.
Effective April 24, 1998, Mr. Ivy was awarded a cash bonus of $40,000 and stock
options to purchase 15,000 shares in recognition of his substantial progress
toward accomplishing goals set for the period, as well as advancing the Company
toward potential profitability. Special achievements were noted in completing
regulatory filings for MELACINE melanoma theraccine, settlement of certain
proprietary rights matters, development of novel synthetic adjuvants and
advancement of investor relations.
In addition to his salary, pursuant to the Company's employment agreement
with Mr. Ivy, he received an automobile allowance of $5,400, a term life
insurance policy at a cost of $2,562 and a supplemental long-term disability
insurance policy at a cost of $3,997. The Company is not a beneficiary on either
insurance policy.
The Company is required to disclose its policy regarding qualifying
executive compensation for deductibility under Section 162(m) of the Internal
Revenue Code of 1986, as amended, which provides that, for purposes of the
regular income tax and the alternative minimum tax, the otherwise allowable
8
<PAGE>
deduction for compensation paid or accrued with respect to a covered employee of
a publicly owned corporation is limited to no more than $1 million per year. It
is not expected that the compensation to be paid to the Company's executive
officers for fiscal 1999 will exceed the $1 million limit per officer. The
Company's 1996 Stock Option Plan (the "Plan") is structured so that any
compensation deemed paid to an executive officer when he exercises an
outstanding option under the Plan, with an exercise price equal to the fair
market value of the option shares on the grant date, will qualify as
performance-based compensation which will not be subject to the $1 million
limitation.
The Committee of Outside Directors
April 1998
Frederick B. Tossberg, Chairman and
Secretary
Philipp Gerhardt
Paul Goddard
Mark I. Greene
Thomas N. McGowen, Jr.
9
<PAGE>
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a five-year line graph comparing the yearly percentage
change in the cumulative total shareholder return on the Company's common stock
with the cumulative total return for The Nasdaq Stock Market (U.S. Companies)
and the Nasdaq Pharmaceutical Stocks. The graph assumes that the value of the
investment in the Company's common stock and each index was $100 on December 31,
1993, and all dividends, if any, were reinvested.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DOLLARS
<S> <C> <C> <C>
Year Ribi Stock Nasdaq Total Ret (U.S.) Nasdaq Pharma Stocks
1993 $100.00 $100.00 $100.00
1994 45.33 97.75 75.26
1995 64.67 138.26 138.40
1996 41.33 170.01 138.47
1997 39.33 208.30 142.98
1998 24.67 293.52 182.77
</TABLE>
DIRECTORS' COMPENSATION
In 1998 each director who is not an employee of the Company was paid $6,000
per year plus $500 for each day on which the director attended meetings and was
reimbursed for travel expenses incurred when attending meetings. Additionally,
directors who perform extraordinary services are entitled to compensation at the
rate of $125 per hour. Mr. Tossberg was paid $500 during 1998 for extraordinary
services.
The Company's 1996 Stock Option Plan provides for the issuance of discounted
stock options to certain directors. This plan allows for the issuance of
nonqualified stock options with an exercise price which is 20% below the market
price of the Company's common stock on the grant date. The discounted stock
options may be awarded to directors who are not employees of the Company and who
elect to receive the discounted stock options rather than cash for all or a
portion of their director fees. The directors are required to make the voluntary
election at least six months prior to the beginning of each calendar year. The
number of options to be granted is determined by dividing the amount of the
foregone
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cash compensation by the amount of the per share price discount on the grant
date. Such options are granted at the end of each calendar quarter and are fully
vested on the grant date. The options, which expire if not exercised within ten
years from the grant date, are exercisable after a six-month period following
the grant date. For the year 1998 in lieu of cash compensation, Messrs. Gerhardt
and Goddard were granted options to purchase 13,372 and 12,878 shares,
respectively, at an average price of $3.22 per share.
Additionally, the Company has a 1996 Directors' Stock Option Plan
("Directors' Plan"), which was approved by shareholders in 1997, for directors
who are not employees of the Company. This Plan provides for the grant of
nonqualified options to purchase a maximum of 210,000 shares of common stock.
Each director who is not an employee was granted options to purchase 30,000
shares on the later of the date the Directors' Plan was adopted or on the date
they first became a director. In addition, immediately following each annual
meeting of the Company's shareholders, each director who is not an employee who
continues as an outside director after the meeting is granted options to
purchase 500 common shares. The exercise price of the options is the market
price on the date of grant. The options vest and can be exercised at the rate of
50% on the date of grant and 25% on each anniversary of the grant date. The
options expire if not exercised within ten years of the grant date. During 1998,
options to purchase 2,500 shares were granted under the Directors' Plan with an
average exercise price of $5.75 per share.
The Company has a consulting agreement with Dr. Mark Greene, one of its
directors. The agreement may be renewed annually and currently expires on
February 28, 2000. Pursuant to the agreement, Dr. Greene consults with Company
personnel, when requested by the Company, regarding a variety of scientific
matters relating to the development of the Company's products. During 1998, Dr.
Greene received $24,000 for such services.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
KPMG LLP, the Company's independent auditors since October 1981, has not yet
been selected by the Board of Directors to serve in that capacity in 1999,
pending recommendation from the Company's Audit Committee. No change is
anticipated in the Company's independent auditors. The report of KPMG LLP with
respect to the Company's financial statements appears in the Company's annual
report for the year ended December 31, 1998. Representatives of KPMG LLP will be
present at the annual meeting and will have the opportunity to make a statement
if they so desire. They will also be available to respond to appropriate
questions.
SHAREHOLDER PROPOSALS
In accordance with the bylaws of the Company, for business to be brought by
a shareholder before the annual meeting of shareholders to be held in 2000, the
shareholder must give notice thereof in writing to the Secretary of the Company
between December 20, 1999, and January 19, 2000. The notice must contain
specified information about the proposed business the shareholder intends to
bring before the meeting, the name and record address of the shareholder
proposing such business, the class and number of shares of the Company that are
beneficially owned by the shareholder, and any material interest of the
shareholder in such business.
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OTHER MATTERS
The Company's annual report for the fiscal year ended December 31, 1998, is
enclosed with this proxy statement.
The Company knows of no other business which will come before the annual
meeting. If any other business is properly presented to the annual meeting, the
persons named in the proxy will vote thereon in accordance with their best
judgment.
COST OF PROXY SOLICITATION
The cost of solicitation of the enclosed proxy will be borne by the Company.
In addition to solicitation by mail, solicitations may be made by directors,
officers, employees and consultants of the Company personally or by telephone or
other means of communication. The Company will reimburse brokers, custodians,
nominees and fiduciaries for their reasonable out-of-pocket expenses in sending
proxy material to beneficial owners.
BY ORDER OF THE BOARD OF DIRECTORS
Ronald H. Kullick
Secretary
March 12, 1999
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PROXY
RIBI IMMUNOCHEM RESEARCH, INC.
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 26, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert E. Ivy and Ronald H. Kullick as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated on the reverse side, all the shares
of common stock of Ribi ImmunoChem Research, Inc., held of record by the
undersigned on March 4, 1999, at the Annual Meeting of Shareholders to be held
on April 26, 1999, or any adjournment thereof.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this proxy will
be voted FOR Proposal 1.
<TABLE>
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS / / FOR all nominees listed below / / WITHHOLD AUTHORITY
(except as marked to the contrary) to vote for all nominees listed
Nominees: J. Cantrell, P. Gerhardt, P. Goddard, M. Greene, R. Ivy, T. McGowen, F. Tossberg
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THAT NOMINEE'S NAME IN THE SPACE
PROVIDED BELOW.)
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2. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the
meeting.
</TABLE>
(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE)
<PAGE>
PLEASE SIGN EXACTLY AS NAME APPEARS ON THIS PROXY. WHEN SHARES ARE HELD BY
JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
Dated ______________________, 1999
__________________________________
Signature
__________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
