<PAGE> 1
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 Rule 14a-12
IGI, 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> 2
IGI, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 17, 2000
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of IGI,
Inc., a Delaware corporation (the "Company"), will be held on Wednesday, May 17,
2000 at 10:00 a.m. at the offices of Hale and Dorr LLP, 60 State Street, Boston,
Massachusetts (the "Meeting") for the purpose of considering and voting upon the
following matters:
1. To elect eight directors to serve until the next Annual
Meeting of Stockholders.
2. To ratify the appointment of PricewaterhouseCoopers LLP as
independent auditors of the Company for the current fiscal
year.
3. To transact such other business as may properly come before
the Meeting or any adjournment thereof.
The Board of Directors has no knowledge of any other business to be
transacted at the Meeting.
The Board of Directors has fixed the close of business on Monday, March
20, 2000 as the record date for the determination of stockholders entitled to
notice of and to vote at the Meeting and at any adjournments thereof.
A copy of the Company's Annual Report to Stockholders for the year
ended December 31, 1999, which contains financial statements and other
information of interest to stockholders, accompanies this Notice and the
enclosed Proxy Statement.
By order of the Board of Directors,
Robert E. McDaniel,
Secretary
April 18, 2000
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE PROMPTLY
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE.
NO POSTAGE NEEDS TO BE AFFIXED IF THE PROXY IS MAILED IN THE UNITED STATES.
<PAGE> 3
IGI, INC.
WHEAT ROAD AND LINCOLN AVENUE
BUENA, NEW JERSEY 08310
-------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 17, 2000
-------------------------
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of IGI, Inc. (the "Company") for use at the
Annual Meeting of Stockholders to be held on Wednesday, May 17, 2000 at 10:00
a.m. at the offices of Hale and Dorr LLP, 60 State Street, Boston,
Massachusetts, and at any adjournments thereof (the "Meeting").
All proxies will be voted in accordance with the instructions of the
stockholder. If no choice is specified, the proxies will be voted in favor of
the proposals set forth in the accompanying Notice of Meeting. Any proxy may be
revoked by a stockholder at any time before its exercise by delivery of a
written revocation to the Secretary of the Company. Attendance at the Meeting
will not itself be deemed to revoke a Proxy unless the stockholder gives
affirmative notice at the Meeting that the stockholder intends to revoke the
Proxy and vote in person.
Only the record holders of shares of common stock, $.01 par value per
share, of the Company (the "Common Stock") at the close of business on March 20,
2000 may vote at the Meeting. Each share entitles the record holder to one vote
on each of the matters to be voted upon at the Meeting. On March 20, 2000 there
were 10,268,636 shares of Common Stock outstanding.
The Notice of Meeting, Proxy Statement, the enclosed Proxy and the
Company's Annual Report for the year ended December 31, 1999 are being mailed to
stockholders on or about April 18, 2000.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth information as of March 20, 2000 with
respect to the beneficial ownership of shares of Common Stock by (i) each person
known to the Company to own beneficially more than 5% of the outstanding shares
of Common Stock, (ii) the directors of the Company, (iii) the Chief Executive
Officer and the executive officers of the Company listed in the "Summary
Compensation Table" below (collectively, the "Named Executive Officers"), and
(iv) the directors and executive officers of the Company as a group. Unless
otherwise noted, the persons named in the table have sole voting and investment
power with respect to all shares of Common Stock shown as beneficially owned by
them.
-1-
<PAGE> 4
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
NAME OF BENEFICIAL OWNER SHARES CLASS (1)
- ------------------------ ------ ---------
<S> <C> <C>
5% STOCKHOLDERS
Stephen J. Morris......................................... 2,325,798 (2) 22.6%
66 Navesink Avenue
Rumson, New Jersey
American Capital Strategies Ltd........................... 1,907,543 (3) 15.7%
3 Bethesda Metro Center, Suite 860
Bethesda, Maryland 20814
Edward B. Hager, M.D...................................... 1,546,010 (4) 14.5%
Pinnacle Mountain Farms
Lyndeboro, NH 03082
Jane E. Hager............................................. 1,175,322 (5) 11.3%
Pinnacle Mountain Farms
Lyndeboro, NH 03082
OTHER DIRECTORS AND EXECUTIVE OFFICERS
Terrence D. Daniels....................................... 63,099 (6) *
Constantine L. Hampers, M.D............................... 91,185 (7) *
Donald W. Joseph.......................................... 0 *
Rajiv Mathur.............................................. 53,500 (8) *
Robert E. McDaniel........................................ 113,992 (9) 1.1%
Terrence O'Donnell........................................ 105,583 (10) 1.0%
Paul D. Paganucci......................................... 64,839 (11) *
Paul Woitach.............................................. 205,112 (12) 2.0%
All executive officers and directors, as a group (12
Persons) ................................................. 5,129,625 (13) 44.9%
</TABLE>
* Less than 1% of the Common Stock outstanding.
(1) Percentage of beneficial ownership for each person listed is based on
10,268,636 shares of Common Stock outstanding as of March 20, 2000, and
includes the shares of Common Stock underlying options, or other
rights, held by such persons that are exercisable within 60 days after
March 20, 2000.
(2) Includes 816,300 shares which Mr. Morris owns jointly with his wife and
200 shares owned directly by his wife. Also includes 154,460 shares
which are held in an account on behalf of Mr. Morris' children, over
which Mr. Morris has voting and investment control, and 42,000 shares
held in a building fund on behalf of St. George Greek Orthodox Church
of Asbury Park, New Jersey, over which Mr. Morris has voting and
investment control.
(3) On February 11, 2000, American Capital Strategies Ltd. ("ACS") filed a
Schedule 13G with the Securities and Exchange Commission reporting
beneficial ownership of a total of 1,907,543 shares, all of which are
issuable upon the exercise of warrants held by ACS. ACS reported that
it has sole voting and dispositive power over all 1,907,543 shares.
-2-
<PAGE> 5
(4) Includes 425,000 shares which Dr. Hager may acquire pursuant to stock
options exercisable within 60 days after March 20, 2000, and 639,815
shares beneficially owned by Dr. and Mrs. Hager as co-trustees of the
Hager Family Trust, who share voting and investment power.
(5) Includes 639,815 shares beneficially owned by Dr. and Mrs. Hager, as
co-trustees of the Hager Family Trust, who share voting and investment
power. Includes 90,000 shares which Mrs. Hager may acquire pursuant to
stock options exercisable within 60 days after March 20, 2000.
(6) Includes 50,000 shares which may be acquired pursuant to stock options
exercisable within 60 days after March 20, 2000.
(7) Includes 70,000 shares which may be acquired pursuant to stock options
exercisable within 60 days after March 20, 2000.
(8) Consists of 53,500 shares which may be acquired pursuant to stock
options exercisable within 60 days after March 20, 2000.
(9) Includes 110,000 shares which may be acquired pursuant to stock options
exercisable within 60 days after March 20, 2000.
(10) Includes 80,000 shares which may be acquired pursuant to stock options
exercisable within 60 days after March 20, 2000.
(11) Includes 50,000 shares which may be acquired pursuant to stock options
exercisable within 60 days after March 20, 2000 and 12,774 shares
beneficially owned by Mr. Paganucci as trustee of the Paul D. Paganucci
Revocable Trust.
(12) Includes 200,000 shares which may be acquired pursuant to stock options
exercisable within 60 days after March 20, 2000.
(13) Includes 1,128,500 shares which may be acquired pursuant to stock
options exercisable within 60 days after March 20, 2000 included in
Notes (3) - (11) above and 25,000 shares which may be acquired pursuant
to stock options exercisable within 60 days after March 20, 2000 held
by one other executive officer of the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, executive officers and
holders of more than 10% of the Company's Common Stock ("Reporting Persons") to
file with the Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Based
solely on its review of copies of reports filed by Reporting Persons furnished
to the Company, the Company believes that during 1999 its officers, directors
and holders of more than 10% of the Company's Common Stock complied with all
Section 16(a) filing requirements.
-3-
<PAGE> 6
VOTES REQUIRED
The holders of a majority of the shares of Common Stock outstanding
shall constitute a quorum for the transaction of business at the Meeting. Shares
of Common Stock present in person or represented by proxy (including shares
which abstain or do not vote with respect to one or more of the matters
presented for stockholder approval) will be counted for purposes of determining
whether a quorum exists at the Meeting.
The affirmative vote of the holders of a plurality of the shares of
Common Stock voted at the Meeting is required for the election of directors
(Proposal 1). The affirmative vote of the holders of a majority of the shares of
Common Stock voted at the Meeting is required to ratify the appointment of
PricewaterhouseCoopers LLP as independent auditors of the Company (Proposal 2).
Shares which abstain from voting as to a particular matter, and shares
held in "street name" by brokers or nominees who indicate on their proxies that
they do not have discretionary authority to vote such shares as to a particular
matter, will not be counted as votes cast in favor of such matter, and also will
not be counted as shares voting on such matter. Accordingly, abstentions and
"broker non-votes" will have no effect on the voting on a matter that requires
the affirmative vote of the holders of a certain percentage of the shares of
Common Stock voting on a matter.
PROPOSAL 1 - ELECTION OF DIRECTORS
NOMINEES FOR ELECTION AS DIRECTORS
The persons named as proxies in the accompanying Proxy intend (unless
authority to vote therefor is specifically withheld) to vote for the election of
the persons named below as directors to hold office until the next Annual
Meeting of Stockholders and until their respective successors are elected and
qualified. Each nominee has consented to being named in this Proxy Statement and
to serve if elected. If any of the nominees becomes unavailable to serve as a
director, the persons named as proxies in the accompanying Proxy may vote the
Proxy for substitute nominees. The Board of Directors has no reason to believe
that any of the nominees will be unable to serve if elected. The following table
sets forth certain information with respect to the nominees:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION,
OTHER BUSINESS
EXPERIENCE DURING
DIRECTOR PAST FIVE YEARS AND
NAME AGE SINCE OTHER DIRECTORSHIPS
---- --- ----- -------------------
<S> <C> <C> <C>
Edward B. Hager, M.D............ 68 1977 Chairman of the Board of Directors of the Company
since 1977; Chief Executive Officer of the Company
from 1977 to February 2000; Chairman of the Board of
Directors and Chief Executive Officer of Novavax,
Inc., a biopharmaceutical company, from 1987 to June
1996; Chairman of the Board of Directors of Novavax,
Inc. from February 1997 to March 1998; Dr. Hager is
the husband of Jane E. Hager.
</TABLE>
-4-
<PAGE> 7
<TABLE>
<S> <C> <C> <C>
Jane E. Hager................... 54 1977 President of Prescott Investment Corp., a real estate
development company, Lyndeboro, NH since 1991; former
Treasurer of IGI, Inc.; Director of Fleet Bank-NH,
Nashua, NH from 1986 to 1998; Trustee and Treasurer
of the University System of New Hampshire; Overseer
of Dartmouth Mary Hitchcock Hospital; Incorporator of
New Hampshire Charitable Fund, Concord, NH; Trustee
of the Derryfield School in Manchester, New
Hampshire; Director of Novavax, Inc. from February
1997 to March 1998; Director of Centrix Bank and
Trust; Mrs. Hager is the wife of Edward B. Hager.
Terrence O'Donnell.............. 56 1993 Executive Vice President and General Counsel, Textron
Inc., a producer of aircraft, automotive products and
industrial products, since March 2000; Member of law
firm of Williams & Connolly, Washington, D.C. since
March 1992 and from March 1977 to October 1989;
General Counsel of Department of Defense from October
1989 to March 1992; Special Assistant to President
Ford from August 1974 to January 1977; Deputy Special
Assistant to President Nixon from May 1972 to August
1974; Director of ePlus, Inc. (formerly MLC Holdings).
Constantine L. Hampers, M.D..... 67 1994 Chief Executive Officer of MDL Consulting Associates
since 1996; Chairman of the Board of Directors and
Chief Executive Officer of National Medical Care,
Inc., a provider of in-center and home kidney
dialysis services and products, from 1968 to 1996;
Executive Vice President and Director of W.R. Grace &
Co., a supplier of specialty chemical, construction
and container products, from 1986 to 1996; Director
of Artificial Kidney Services at Peter Bent Brigham
Hospital and Assistant Professor of Medicine at
Harvard University School of Medicine prior to 1968
and for several years thereafter.
Terrence D. Daniels............. 57 1996 President of Quad-C, a structured investment firm,
since November 1989; Vice Chairman of W.R. Grace &
Co. from 1986 to 1989; Director of Collins & Aikman
Floorcoverings and numerous private companies.
</TABLE>
-5-
<PAGE> 8
<TABLE>
<S> <C> <C> <C>
Stephen J. Morris............... 67 1999 Co-founder and General Manager of John Morris &
Sons, Inc., a hotel and restaurant enterprise,
which Mr. Morris owned and managed from July 1958
to December 1998; Co-founder and Advisor of
International Scientific Communications, a
scientific publishing company.
Paul Woitach.................... 41 Director Chief Executive Officer of the Company since
Nominee February 2000; President and Chief Operating
Officer of the Company since May 1998; General
Manager, Laboratory Division of Mettler Toledo
North America, a producer of weighing and
measurement systems, from December 1997 to January
1998; Vice President, Marketing and Sales, Balances
and Instrument Division of Mettler Toledo
International from October 1996 to December 1997;
Vice President and Executive Director from October
1995 to October 1996, and Director of Marketing
Channels from November 1993 to September 1995 of
the Health Imaging Division of Eastman Kodak
Company, which produces diagnostic imaging
products.
Donald W. Joseph................ 62 Director Group Vice President of Baxter International Inc.,
Nominee a medical products and services company, since
November 1993; President, Renal Business of Baxter
International Inc. from October 1981 to November
1993; Director of Sales and Marketing for the renal
division of Baxter International Inc. from December
1972 to October 1981; Joined Baxter International
Inc. as Sales Representative in July 1966, where
Mr. Joseph held various sales management positions
from July 1996 to December 1972.
</TABLE>
For information relating to shares of the Company owned by each of the
directors, see "Beneficial Ownership of Common Stock."
BOARD AND COMMITTEE MEETINGS
The Board of Directors met eleven times during 1999. Except for Messrs.
Daniels and Paganucci each of the current directors attended at least 75% of the
meetings of the Board of Directors and the committees on which he or she served.
The Board of Directors has an Executive Committee, an Audit Committee, an
Independent Committee of Outside Directors, a Compensation and Stock Option
Committee and a Governance Committee.
The Executive Committee, whose members are Drs. Hager (Chairman) and
Hampers and Ms. Hager, has the authority to exercise the powers of the Board of
Directors between Board meetings. The Audit Committee, whose members are Messrs.
O'Donnell (Chairman), Morris and Paganucci and
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<PAGE> 9
Ms. Hager, reviews the audit of the Company's accounts, monitors the
effectiveness of the audit and evaluates the scope of the audit. The Independent
Committee of Outside Directors, whose members are Dr. Hampers (Chairman) and
Messrs. O'Donnell, Daniels and Paganucci, reviews and approves transactions
between management and the Company. The Compensation and Stock Option Committee,
whose members are Dr. Hampers (Chairman) and Messrs. Daniels and Morris, reviews
and recommends salaries and other compensatory benefits for the principal
officers of the Company and grants stock options to key employees of the Company
and its subsidiaries. The Governance Committee, whose members are Dr. Hampers
(Chairman) and Messrs. Daniels, O'Donnell and Paganucci, ensures that principles
of appropriate corporate governance are developed and maintained. The Governance
Committee also serves as the nominating body for the Board of Directors. The
Governance Committee will consider nominees recommended by security holders.
During 1999, the Audit Committee met three times, the Compensation and
Stock Option Committee met twice and the Governance Committee met once. The
Executive Committee and the Independent Committee of Outside Directors did not
meet during 1999.
DIRECTOR COMPENSATION AND STOCK OPTIONS
Director Options. In September 1999, the Board of Directors adopted the
1999 Director Stock Plan (the "1999 Plan"). On September 15, 1999, each
non-employee director of the Company received an option under the 1999 Plan to
purchase 50,000 shares of Common Stock at an exercise price of $1.75 per share.
Under the 1999 Plan, on January 2 of each year, beginning with January 2000 (i)
each non-employee director is granted a stock option for 15,000 shares, and (ii)
each of the Chairmen of the Audit Committee and Stock Option and Compensation
Committee is granted additional stock options for 15,000 and 10,000 shares,
respectively. Additionally, under the 1999 Plan, each newly elected director
will receive a stock option grant of 15,000 shares at the time of his/her
election and annually thereafter on the anniversary date of his/her election.
All of such options will be granted at an exercise price equal to the closing
price of the Common Stock on the American Stock Exchange on the date of grant.
All options granted under the 1999 Plan become 100% vested twelve months after
the date of grant.
Pursuant to the 1999 Plan, Ms. Hager, Dr. Hampers and Messrs. Daniels,
O'Donnell, Morris and Paganucci each received options to purchase 50,000 shares
of Common Stock of the Company during 1999. Additionally, on January 2, 2000,
Ms. Hager, Dr. Hampers and Messrs. Daniels, O'Donnell, Morris and Paganucci each
received options to purchase the following number of shares of Common Stock of
the Company: 15,000, 25,000, 15,000, 30,000, 15,000 and 15,000, respectively.
Director Fees. The Board of Directors adopted the 1998 Directors Stock
Plan (the "1998 Plan") in October 1998 to provide each outside director with the
right to receive shares of the Company's Common Stock as director compensation
in lieu of cash payments of director fees, thereby encouraging ownership in the
Company by the directors. Each non-employee director receives $2,000 in value of
Common Stock for each meeting of the Board he or she attends in person, $1,000
in value of Common Stock for each telephonic meeting of the Board attended, $500
in value of Common Stock for each Committee meeting attended which is held on
the same day as a Board meeting, $1,000 in value of Common Stock for each
Committee meeting attended which is not held on the same day as the Board
meeting, and up to $5,000 in value of Common Stock annually for the Chairman of
certain of the Board Committees. The fees are payable quarterly and the number
of shares of Common Stock issued to each director is determined by dividing the
fees payable for the quarter by the closing price of the Company's Common Stock
on the American Stock Exchange on the last business day of the applicable
quarter.
Pursuant to the 1998 Plan, Ms. Hager, Dr. Hampers and Messrs. Daniels,
O'Donnell, Morris and Paganucci each received the following number of shares,
respectively, of Common Stock of the
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<PAGE> 10
Company, as compensation for 1999: 10,684, 10,112, 7,317, 11,018, 6,398 and
7,541, respectively. These shares represented a total value at the time of
issuance of $110,500.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1999, Company personnel and advisors traveled at various times
on Company business on an airplane owned by a company which is wholly-owned by
Jane E. Hager, a director of the Company and spouse of Edward B. Hager, M.D.
Total charges to the Company for its use of the airplane in 1999 were $54,564.
The Board of Directors authorized the use of the aircraft for business travel
only, provided that (i) the air travel rate billed to the Company for use of the
airplane be at least as favorable as the rate charged by private aircraft owners
unaffiliated with the Company, and (ii) use of the airplane be limited to 100
hours at $1,350 per hour. Notwithstanding these criteria, the Company was billed
for such use of the aircraft at rates not exceeding those for first class
commercial airfare.
American Capital Strategies, Ltd. ("ACS") owns warrants (the
"Warrants") to purchase 1,907,543 shares of Common Stock, representing 15.7% of
the outstanding capital stock of the Company. The Warrants were issued on
October 29, 1999, in connection with a financing arrangement, pursuant to which
the Company entered into a $7 million subordinated debt agreement ("Subordinated
Debt Agreement") with ACS. Borrowings under the Subordinated Debt Agreement bear
interest at the rate of 12.5% per annum plus an additional interest component at
the rate of 2.25% through March 2001, and 2% thereafter, which is payable at the
Company's election in cash or Company Common Stock. The Subordinated Debt
Agreement matures in October 2006.
In connection with the Subordinated Debt Agreement, the Company issued
to ACS the Warrants to purchase 1,907,543 shares of Common Stock at an exercise
price of $.01 per share. The Warrants are fully vested and can be exercised by
ACS at any time up to October 29, 2009. On April 12, 2000, the Subordinated Debt
Agreement was amended whereby a "put" provision, in which ACS had the right to
require the Company to repurchase the Warrants under certain circumstances, was
replaced with a "make-whole" feature. This feature requires the Company to
compensate ACS, in either Common Stock or cash, at the option of the Company, in
the event that ACS ultimately realizes proceeds from the sale of its Common
Stock obtained upon exercise of the Warrants that are less than the fair value
of the Common Stock upon exercise of such Warrants, multiplied by the number of
shares obtained upon exercise. ACS must exercise reasonable effort to sell or
place its shares in the marketplace over a 180-day period before it can invoke
the make-whole provision.
The Subordinated Debt Agreement also contains financial and other
covenants and restrictions, which, if breached by the Company, would allow ACS
to demand prompt repayment of all outstanding indebtedness. In addition, to
secure all of its obligations under the Subordinated Debt Agreement, the Company
has granted ACS a subordinate security interest in all of the assets and
properties of the Company and its subsidiaries. Pursuant to the Subordinated
Debt Agreement, ACS has the right to designate for election to the Company's
Board of Directors that number of directors that bears the same ratio to the
total number of directors as the number of shares of Common Stock owned by ACS
plus the number of shares issuable upon exercise of the Warrants bear to the
total number of outstanding shares of Common Stock on a fully-diluted basis,
provided that so long as it owns at least 5% of the outstanding Common Stock or
any of its loans are outstanding, ACS shall have the right to designate for
election at least one director. ACS has not nominated a director for the
election of directors to be held at the Meeting.
-8-
<PAGE> 11
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and noncash compensation for
each of the last three fiscal years awarded to or earned by the Chief Executive
Officer of the Company and the three most highly compensated executive officers
of the Company who received compensation in excess of $100,000 during 1999 and
who were serving as executive officers at the end of 1999.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------- ------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION OPTIONS COMPENSATION
POSITION (1) YEAR ($) ($) ($)(2) (#)(3) ($)(4)
------------ ---- --- --- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Edward B. Hager(5) 1999 $460,000 $ ------ $------ 100,000 $8,046
Chief Executive Officer 1998 380,000 ------ ------ 225,000 11,775
1997 303,480 ------ ------ ------ 11,944
Paul Woitach 1999 200,000 40,000 7,200 200,000 9,296
President and Chief 1998 151,442 ------ 4,200 100,000 2,848
Operating Officer
Robert E. McDaniel 1999 185,000 ------ 7,200 140,000 8,002
Executive Vice 1998 106,920 ------ 3,000 60,000 2,963
President, General
Counsel and Secretary
Rajiv Mathur 1999 150,000 ------ 6,000 40,000 9,978
Senior Vice President
</TABLE>
- ------------------
(1) Lists the principal position with the Company as of December 31, 1999.
(2) The amounts shown in this column represent automobile allowances.
(3) The Company has never granted any stock appreciation rights.
(4) The amounts shown in this column represent premiums for group life
insurance and medical insurance paid by the Company and the Company's
contributions under its 401(k) plan. In 1999, the Company paid $605,
$605, $561 and $454 in group life insurance premiums for Dr. Hager and
Messrs. Woitach, McDaniel and Mathur, respectively; $7,441 in medical
insurance premiums for each of Dr. Hager and Messrs. Woitach, McDaniel
and Mathur; and $1,250 and $2,083 in 401(k) plan contributions for
Messrs. Woitach and Mathur, respectively.
(5) Dr. Hager elected to defer payment of his salary in 1998 and for part
of 1999. Dr. Hager's salary for 1998, which amounted to $380,000, was
accrued to expense in 1998. In lieu of cash compensation, Dr. Hager was
granted 417,744 shares of Common Stock on November 29, 1999,
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<PAGE> 12
representing accrued and unpaid salary of $725,000 earned from January
1998 through September 1999 and 63,448 shares of Common Stock on
January 12, 2000 representing accrued and unpaid salary of $115,000
earned from October 1, 1999 through December 31, 1999.
STOCK OPTIONS
The following tables set forth certain information concerning option
grants during the fiscal year ended December 31, 1999 to the Named Executive
Officers and the number and the value of the options held by such persons on
December 31, 1999. No options were exercised by Named Executive Officers during
1999.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
-----------------
Number of Percent of Potential Realizable Value
Securities Total Options At Assumed Annual Rates
Underlying Granted to Exercise or of Stock Price Appreciation
Options Employees in Base Price Per Expiration for Option Term (1)
Name Granted (#) Fiscal Year Share ($/sh) Date 5% 10%
---- ----------- ----------- ------------ ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Edward B. Hager 100,000 (2) 10.2% $2.06 01/05/09 $10,000 $20,000
Paul Woitach 100,000 (3) 10.2 2.06 01/05/09 10,000 20,000
100,000 (3) 10.2 1.56 12/09/09 7,800 15,600
Robert E. McDaniel 50,000 (4) 5.1 1.75 05/13/09 4,375 8,750
90,000 (4) 9.2 1.56 12/09/09 7,020 14,040
Rajiv Mathur 30,000 (5) 3.1 1.94 03/16/09 2,910 5,820
10,000 (5) 1.0 1.56 12/09/09 780 1,560
</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 price 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. No gain to the optionees
is possible without an appreciation in stock price, which will benefit
all stockholders commensurately.
(2) 100% of the shares covered by the options vested immediately upon
grant.
(3) 100% of the shares covered by the options vested four months after the
date of grant.
(4) 50% of the shares covered by the options vest six months after the date
of grant and the remaining 50% of the shares vest one year after the
date of grant.
(5) 25% of the shares covered by the options vest on the first anniversary
of the option grant date and an additional 25% of the shares vest on
each successive anniversary date, with full vesting occurring on the
fourth anniversary date.
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<PAGE> 13
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at Fiscal Year-End at Fiscal Year-End
NAME Exercisable/Unexercisable Exercisable/Unexercisable(1)
----- ------------------------- ----------------------------
<S> <C> <C>
Edward B. Hager 425,000/0 $0/$0
Paul Woitach 200,000/100,000 0/37,800
Robert E. McDaniel 85,000/115,000 4,700/38,720
Rajiv Mathur 43,500/50,000 0/3,780
</TABLE>
- -----------
(1) Value based on market value of the Company's Common Stock at the end of
fiscal 1999 ($1.938 per share) minus the exercise price.
EMPLOYMENT AGREEMENTS
Pursuant to his Employment Agreement, Dr. Hager was entitled to an
annual increase of 10% of his prior year's salary each year through December 31,
1999, the expiration date of the Employment Agreement. Dr. Hager waived the 10%
increase for 1998, and chose to defer the payment of his entire annual salary as
of January 1, 1998, to preserve funds for the Company's cash needs. Therefore,
the Company accrued, but did not pay, Dr. Hager's 1998 salary of $380,000. The
Company also accrued, but did not pay, Dr. Hager's 1999 salary of $460,000. On
November 29, 1999, the Company issued 348,571 shares of Common Stock, valued at
$1.75 per share, in payment of accrued but unpaid salary of $610,000 earned by
Dr. Hager from January 1, 1998 to June 30, 1999, and 69,173 shares of Common
Stock, valued at $1.66 per share, in payment of his accrued and unpaid salary of
$115,000 earned by Dr. Hager from July 1, 1999 through September 30, 1999. On
January 12, 2000, the Company issued 63,448 shares of Common Stock, valued at
$1.81 per share, in payment of accrued but unpaid salary of $115,000 earned by
Dr. Hager from October 1, 1999 through December 31, 1999.
Dr. Hager resigned as the Company's Chief Executive Officer on February
1, 2000. The Company presently pays Dr. Hager a monthly salary of $16,667 for
services he performs in an advisory role, as Chairman of the Board of Directors
and as the Chairman of the Executive Committee.
Dr. Hager is bound by certain non-compete and non-solicitation
obligations for five years after termination of employment or such longer period
during which he receives severance payments under the Employment Agreement.
Effective May 1, 1998, the Company entered into an employment agreement
with Paul Woitach, President and Chief Operating Officer of the Company, which
terminates April 30, 2001. Under the terms of the agreement, Mr. Woitach
receives a base salary of $200,000, which is reviewed for merit increases not
less than annually. The agreement provides that Mr. Woitach was to receive a
bonus of 20% of his base salary for fiscal years 1998 and 1999 and that he is
eligible for additional bonuses based upon the Company's management performance
bonus plan for 1998 and each subsequent year.
Pursuant to the agreement, Mr. Woitach received a grant of an option to
purchase 100,000 shares of the Company's Common Stock, which vested fully on
November 1, 1998, and an additional option grant of 100,000 shares of Common
Stock on January 5, 1999, which vested fully on May 1, 1999. All equity-based
awards received by Mr. Woitach fully vest upon a change of control. In the event
Mr. Woitach's employment is terminated by the Company with cause or by Mr.
Woitach without cause, Mr.
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<PAGE> 14
Woitach will receive his base salary, bonus and all other benefits which have
accrued as of the date of termination. In the event Mr. Woitach's employment is
terminated by the Company without cause or by Mr. Woitach with cause, Mr.
Woitach is entitled to continuation of his annual salary, bonus and benefits for
18 months, and all of his unvested options will fully vest and become
exercisable for a period of at least two years after the date of termination.
Mr. Woitach assumed the position of Chief Executive Officer of the Company when
Dr. Hager retired, on February 1, 2000.
Effective September 1, 1999, the Company entered into an employment
agreement with Mr. Robert E. McDaniel, Executive Vice President and General
Counsel of the Company. The agreement provides for employment through April 30,
2001, unless either party provides written notice to the other on or before
August 31, 2000, that the term will not be extended. Under the terms of the
agreement, Mr. McDaniel receives a base salary of $185,000, which is reviewed
for merit increases not less than annually. All equity-based awards received by
Mr. McDaniel will vest fully upon a change of control.
In the event Mr. McDaniel's employment is terminated by the Company
with cause or Mr. McDaniel resigns, Mr. McDaniel will receive his base salary,
bonus and all other benefits which have accrued as of the date of termination.
In the event Mr. McDaniel's employment is terminated by the Company without
cause, Mr. McDaniel is entitled to continuation of his annual salary and
benefits for 12 months, and all of his unvested options will fully vest and
become exercisable for a period of at least two years after the date of
termination.
On February 18, 1999, the Company entered into an employment agreement
with Mr. Rajiv Mathur, Senior Vice President of the Company. The agreement
provides for employment for one year terms, with yearly renewals at the option
of the Company. If the Company elects not to renew the agreement, Mr. Mathur
will receive continuation of his salary and benefits for eighteen months.
Pursuant to the agreement, Mr. Mathur received an option to purchase 30,000
shares of Common Stock of the Company in March 1999 and an option to purchase an
additional 40,000 shares of Common Stock of the Company, to be granted over a
two-year period. Upon a change of control of the Company, 100% of Mr. Mathur's
options will vest. Mr. Mathur is eligible to participate in the incentive
compensation plan for executives, which provides that Mr. Mathur may earn up to
20% of his target salary as an additional bonus, based upon company and
individual performance.
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE
OVERVIEW AND PHILOSOPHY
The Compensation and Stock Option Committee of the Board of Directors
(the "Committee") consists of three non-employee directors and is responsible
for the development and administration of the Company's executive compensation
policies and programs, subject to the review and approval by the full Board. The
Committee reviews and recommends to the Board for its approval the salaries and
incentive compensation for the executive officers of the Company and grants
stock options to executives and other key employees of the Company and its
subsidiaries.
The objectives of the Company's executive compensation program are to:
- Support the achievement of strategic goals and objectives of
the Company.
- Attract and retain key executives critical to the long-term
success of the Company.
- Align the executive officers' interests with the success of
the Company.
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<PAGE> 15
COMPENSATION PROGRAM
The Company's executive compensation program consists of three
principal elements - base salary, annual cash incentive compensation and
long-term incentive compensation in the form of stock options.
The base salaries of Dr. Hager and Messrs. Woitach and McDaniel were
established pursuant to the terms of their respective employment agreement with
the Company. See "Employment Agreements." Base salary levels for the Company's
executive officers are generally based on a review of compensation for
competitive positions in the market, the executives' job skills and experience
and judgments as to past and future contributions of the executives to the
Company's success. Due to the mix of the types of businesses in which the
Company is engaged, consumer products, petcare products and poultry vaccines, it
is difficult to find similar companies with which meaningful comparisons can be
made. The Committee seeks to set the annual base salaries of its executives at
levels competitive with those paid to executives in these businesses. It seeks,
however, to provide its executives with opportunities for substantially higher
compensation through annual incentive awards and stock options.
The Company made cash incentive payments in 1999 to Mr. Woitach. The
annual cash incentive compensation program was designed to tie annual awards to
Company and individual executive performance. The Committee considers a number
of factors in determining whether annual incentive awards should be paid,
including (i) achievement by the Company and/or specific business units of
approved budgets, new product introductions, progress in development of new
products and operating income and cash flow goals and (ii) achievement by the
executives of their assigned objectives. In considering individual performance,
as contrasted to Company performance, the Committee relies more on subjective
evaluations of executive performance than on quantitative data or objective
criteria. Further, the Company has implemented a variable compensation plan for
its top executives. The purpose of the plan is to directly link management
compensation to Company performance. Present plans include expanding the
application of the variable compensation plan to more upper level managers.
Long-term incentives for executive officers and key managers are
provided through stock options. The objectives of this program are to align
executive and stockholder long-term interests by creating a strong and direct
link between executive compensation and stockholder return, and to enable
executives to develop and maintain a significant, long-term stock ownership
position in the Company's Common Stock.
Stock options are granted at an option price equal to the fair market
value of the Company's Common Stock on the date of grant and will only have
value if the Company's stock price increases. In selecting executives eligible
to receive option grants and determining the amount of such grants, the
Committee evaluates a variety of factors including (i) the job level of the
executive, (ii) option grants awarded by competitors to executives at a
comparable job level, and (iii) past, current and prospective service to the
Company rendered, or to be rendered, by the executive. It has been the Company's
practice to fix the exercise price of option grants at 100% of the fair market
value per share on the date of grant.
CHIEF EXECUTIVE OFFICER'S 1999 COMPENSATION
Dr. Edward B. Hager, Chairman of the Board and former Chief Executive
Officer of the Company, was eligible to participate in the same executive
compensation plans available to the other Company executives. In addition to his
duties as Chief Executive Officer and Chairman of the Board, Dr. Hager served as
Chief Scientific Officer of the Company. The Committee set Dr. Hager's total
annual compensation, including annual incentive awards and potential additional
compensation derived from the
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<PAGE> 16
Company's stock option program, at a level it believed was competitive with
other comparable companies.
Dr. Hager's annual compensation was governed by the terms of his
employment agreement with the Company. Pursuant to his employment agreement, Dr.
Hager was entitled to an annual increase of 10% of his prior year's salary each
year through December 31, 1999, the expiration date of the employment agreement.
However, Dr. Hager waived the 10% increase for 1998 and chose to defer the
payment of his annual salary from 1998 and 1999 to preserve funds for the
Company's cash needs. On November 29, 1999, the Company issued 348,571 shares of
Common Stock, valued at $1.75 per share, in payment of his accrued and unpaid
salary of $610,000 earned by Dr. Hager from January 1998 through June 1999, and
69,173 shares of Common Stock, valued at $1.66 per share, in payment of his
accrued and unpaid salary of $115,000 earned by Dr. Hager from July 1999 through
September 1999. On January 12, 2000, the Company issued 63,448 shares of Common
Stock to Dr. Hager, representing accrued and unpaid salary of $115,000 earned
from October 1, 1999 through December 31, 1999.
The Committee awarded Dr. Hager an option grant on January 5, 1999 to
purchase 100,000 shares of Common Stock, which option vested fully on the date
of grant.
TAX CONSIDERATIONS
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), generally disallows a tax deduction to public companies for
compensation in excess of one million dollars paid to its chief executive
officer and its other four highest compensated officers. Qualified
performance-based compensation will not be subject to the deduction limit if
certain requirements are met. While the Committee does not currently intend to
qualify its annual cash incentive compensation as qualified performance-based
compensation, it will continue to monitor the impact of Section 162(m) on the
Company. Based on the compensation received by Dr. Hager and the other Named
Executive Officers, it does not appear that the Section 162(m) limitation will
have a significant impact on the Company in the near term.
Compensation and Stock Option Committee
Constantine L. Hampers, M.D., Chairman
Terrence D. Daniels
Stephen J. Morris
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation and Stock Option Committee was, during
fiscal year 1999, an officer or employee of the Company or any of its
subsidiaries, or was formerly an officer of the Company or any of its
subsidiaries. During fiscal year 1999, no executive officer of the Company
served as a director or member of the compensation committee (or other board
committee performing equivalent functions, or in the absence of such committee,
the entire board of directors) of another entity, one of whose executive
officers served as a member of the Compensation and Stock Option Committee, or
as a director, of the Company.
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<PAGE> 17
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total stockholder return on the
Common Stock of the Company for the last five fiscal years with the cumulative
total return on the AMEX Composite Index and a peer group over the same period
(assuming the investment of $100 in the Company's Common Stock, the AMEX
Composite Index and the peer group on December 31, 1994, and reinvestment of all
dividends). The peer group consists of the Company, The Liposome Company, Inc.,
Sequus Pharmaceuticals (formerly Liposome Technology, Inc.), Nexstar
Pharmaceuticals (formerly Vestar, Inc.) and Advanced Polymer Systems, Inc. The
Company's Common Stock was suspended from trading on the American Stock Exchange
from March 31, 1998 to September 7, 1998 due to delays in filing periodic
reports under the Securities Exchange Act of 1934, as amended, and resumed
trading on September 8, 1998.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
<S> <C> <C> <C> <C> <C> <C>
IGI, Inc. 100 68 55 32 15 15
AMEX Market Value 100 126 134 163 165 214
Peer Group 100 169 168 61 126 97
</TABLE>
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<PAGE> 18
PROPOSAL 2 - RATIFICATION OF THE APPOINTMENT OF AUDITORS
The Board of Directors has selected PricewaterhouseCoopers LLP as
auditors of the Company for the fiscal year ending December 31, 2000, subject to
ratification by stockholders at the Meeting. If this proposal is not approved at
the Meeting, the Board of Directors will reconsider this selection. A
representative of PricewaterhouseCoopers LLP is expected to be present at the
Meeting to respond to appropriate questions, and to make a statement if he or
she so desires.
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Any proposal that a stockholder intends to present at the 2001 Annual
Meeting of Stockholders must be submitted to the Secretary of the Company at its
offices, Wheat Road and Lincoln Avenue, Buena, New Jersey 08310, no later than
December 15, 2000, in order to be considered for inclusion in the Proxy
Statement relating to that meeting.
If a stockholder of the Company wishes to present a proposal before the
2001 Annual Meeting and the Company has not received notice of such matter prior
to February 28, 2001, the Company shall have discretionary authority to vote on
such matter, if the Company includes a specific statement in the proxy statement
or form of proxy to the effect that it has not received such notice in a timely
fashion.
OTHER MATTERS
The Board of Directors knows of no other business which will be
presented for consideration at the Meeting other than that described above.
However, if any other business should come before the Meeting, it is the
intention of the persons named in the enclosed Proxy to vote, or otherwise act,
in accordance with their best judgment on such matters.
The Company will bear the costs of soliciting proxies. In addition to
solicitations by mail, the Company's directors, officers and regular employees
may, without additional remuneration, solicit proxies by telephone, telegraph,
facsimile and personal interviews. The Company will also request brokerage
houses, custodians, nominees and fiduciaries to forward copies of the proxy
material to those persons for whom they hold shares and request instructions for
voting the Proxies. The Company will reimburse such brokerage houses and other
persons for their reasonable expenses in connection with this distribution.
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. PROMPT RESPONSE WILL
GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION IS
APPRECIATED. STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR STOCK PERSONALLY
EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
By Order of the Board of Directors,
Robert E. McDaniel,
Secretary
April 18, 2000
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<PAGE> 19
IGI, INC,
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 17, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
COMPANY
The undersigned, having received notice of the meeting and management's
proxy statement therefor, and revoking all prior proxies, hereby appoint(s)
Edward B. Hager, Robert E. McDaniel and Manfred Hanuschek, and each of them
singly, attorneys or attorney of the undersigned (with full power of
substitution in them and each of them) for and in the name(s) of the undersigned
to attend the Annual Meeting of Stockholders of IGI, Inc. (the "Company") to be
held on Wednesday, May 17, 2000 at 10:00 a.m. at the offices of Hale and Dorr
LLP, 60 State Street, Boston, Massachusetts, and at any adjourned sessions
thereof, and there to vote and act upon the following matters in respect of all
shares of stock of the Company which the undersigned will be entitled to vote or
act upon, with all the powers the undersigned would possess if personally
present.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY
THE UNDERSIGNED. IF NO DIRECTION IS GIVEN WITH RESPECT TO ANY
PROPOSAL, THIS PROXY WILL BE VOTED FOR SUCH PROPOSAL.
PLEASE VOTE, DATE, AND SIGN ON REVERSE SIDE AND
RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
Please sign this proxy exactly as your name appears on the books of the
Company. Joint owners should each sign personally. Trustees and other
fiduciaries should indicate the capacity in which they sign, and where more than
one name appears, a majority must sign. If a corporation, this signature should
be that of an authorized officer who should state his or her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
[ X ] PLEASE MARK VOTES AS IN THIS EXAMPLE
(1) Election of Directors
[ ] For All Nominees
[ ] Withhold
[ ] For all Except
Edward B. Hager, M.D., Jane E. Hager, Terrence O'Donnell, Constantine
L. Hampers, M.D., Terrence D. Daniels, Stephen J. Morris, Paul Woitach and
Donald W. Joseph.
NOTE: If you do not wish your shares voted "For" a particular nominee,
mark the "For All Except" box and strike a line through the name(s) of the
nominee(s). Your shares voted will be voted for the remaining nominee(s).
(2) To ratify the appointment of PricewaterhouseCoopers LLP as the
Company's independent auditors for the current fiscal year.
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<PAGE> 20
For [ ] Against [ ] Abstain [ ]
(3) IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT
THEREOF.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED IN
PROPOSAL 1 AND "FOR" PROPOSAL 2.
Please be sure to sign and date this Proxy Date:________________________
__________________________________________ _____________________________
Stockholder sign here Co-owner sign here
Mark box at right if an
address change or comment has
been noted on the reverse
side of this card. |_|
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