<PAGE>
INFORMATION REQUIRED IN PROXY STATEMENT
------------------------
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
<TABLE>
<S> <C> <C> <C>
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy / / Confidential, For Use of
Statement the Commission Only (as
permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
IMMUNEX CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
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.
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
PER UNIT PRICE
OR OTHER
TITLE OF UNDERLYING
EACH CLASS AGGREGATE VALUE OF
OF NUMBER TRANSACTION
SECURITIES OF SECURITIES COMPUTED PROPOSED MAXIMUM
TO WHICH TO WHICH PURSUANT TO AGGREGATE VALUE
TRANSACTION TRANSACTION EXCHANGE OF TOTAL FEE
APPLIES APPLIES ACT RULE 0-11 TRANSACTION PAID
<S> <C> <C> <C> <C>
</TABLE>
/ / 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.
Amount previously paid:
--------------------------------------------------------------
Form, Schedule or Registration Statement no.:
--------------------------------------------------------------
Filing Party:
--------------------------------------------------------------
Date Filed:
--------------------------------------------------------------
<PAGE>
[LOGO]
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, APRIL 30, 1998
------------------------
To the Shareholders of Immunex Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of IMMUNEX
CORPORATION, a Washington corporation (the "Company"), will be held at the
Sheraton Seattle Hotel & Towers, 1400 6th Avenue, Seattle, Washington, on
Thursday, April 30, 1998, at 9:00 a.m. or at any adjournment or postponement
thereof (the "Annual Meeting") for the following purposes:
1. To elect nine directors to serve until the Annual Meeting of
Shareholders next ensuing after their election and until their respective
successors are elected and shall qualify and
2. To consider and transact such other business as may properly come before
the Annual Meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy Statement
accompanying this Notice.
The Company's Board of Directors has fixed the close of business on March
10, 1998 as the record date for the determination of shareholders entitled to
notice of, and to vote at, the Annual Meeting.
To ensure representation at the Annual Meeting, shareholders are urged to
mark, sign, date and return the enclosed Proxy as promptly as possible, even if
they plan to attend the Annual Meeting. A return envelope, which requires no
postage if mailed in the United States, is enclosed for this purpose. Any
shareholder attending the Annual Meeting may vote in person, even if such
shareholder has returned a Proxy, if the Proxy is revoked in the manner set
forth in the accompanying Proxy Statement.
BY ORDER OF THE BOARD OF DIRECTORS
Scott G. Hallquist
SECRETARY
Seattle, Washington
March 26, 1998
PLEASE NOTE THAT ATTENDANCE AT THE ANNUAL MEETING WILL BE LIMITED TO
SHAREHOLDERS OF THE COMPANY AS OF THE RECORD DATE (OR THEIR AUTHORIZED
REPRESENTATIVES) AND GUESTS OF THE COMPANY. TO OBTAIN AN ADMITTANCE TICKET,
PLEASE MARK THE APPROPRIATE BOX ON THE ENCLOSED PROXY AND AN ADMITTANCE TICKET
WILL BE SENT TO YOU. IF YOUR SHARES ARE HELD BY A BANK OR BROKER, YOU MAY OBTAIN
AN ADMITTANCE TICKET BY RETURNING THE REQUEST CARD PROVIDED TO YOU BY YOUR BANK
OR BROKER.
<PAGE>
[LOGO]
------------------------
PROXY STATEMENT
------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited by the Board of Directors (the "Board of
Directors") of Immunex Corporation ("Immunex" or the "Company") for use at the
Annual Meeting of Shareholders to be held on Thursday, April 30, 1998, at 9:00
a.m. or at any adjournment or postponement thereof (the "Annual Meeting") for
the purposes set forth herein and in the accompanying Notice of Annual Meeting
of Shareholders. The Annual Meeting will be held at the Sheraton Seattle Hotel &
Towers, 1400 6th Avenue, Seattle, Washington. The principal executive offices of
the Company are located at 51 University Street, Seattle, Washington 98101.
The Company intends to first give or mail to shareholders definitive copies
of this Proxy Statement and accompanying Proxy on or about March 26, 1998.
RECORD DATE AND OUTSTANDING SHARES
Only holders of record at the close of business on March 10, 1998 of shares
of common stock of the Company (the "Common Stock") will be entitled to notice
of, and to vote at, the Annual Meeting. At that date, there were 39,737,721
issued and outstanding shares of Common Stock.
REVOCABILITY OF PROXIES
Any shareholder giving a Proxy has the power to revoke it at any time before
it is exercised. A Proxy may be revoked either by (i) filing with the Secretary
of the Company prior to the Annual Meeting, at the Company's executive offices,
either a written revocation or a duly executed Proxy bearing a later date or
(ii) attending the Annual Meeting and voting in person, regardless of whether a
Proxy has previously been given. Presence at the Annual Meeting will not revoke
the shareholder's Proxy unless such shareholder votes in person.
QUORUM
A quorum for the Annual Meeting shall consist of the holders of a majority
of the outstanding shares of Common Stock entitled to vote at the Annual
Meeting, present in person or by proxy.
SOLICITATION OF PROXIES
The Company has retained MacKenzie Partners, Inc., 156 Fifth Avenue, New
York, New York, to aid in the solicitation of Proxies. It is estimated that the
cost of these services will be approximately $5,000, plus expenses. The cost of
soliciting Proxies will be borne by the Company. Proxies will be solicited by
personal interview, mail and telephone. In addition, the Company may reimburse
brokerage firms and other persons representing beneficial owners of shares of
Common Stock for their expenses in forwarding solicitation materials to such
beneficial owners. Proxies may also be solicited by certain of the Company's
directors, officers and regular employees, without additional compensation,
personally or by telephone or telefax.
VOTING
Each shareholder will be entitled to one vote for each share of Common Stock
held. Directors will be elected by a plurality of the shares of Common Stock
present by proxy or in person at the Annual Meeting. Holders of Common Stock are
not entitled to cumulate votes in the election of directors. Abstention from
voting on the election of directors will have no impact on the outcome of this
proposal since no vote has been cast in favor of any nominee. There can be no
broker nonvotes on the election of directors since brokers who hold shares for
the accounts of their clients have discretionary authority to vote such shares
with respect to this matter.
The Company is not aware, as of the date hereof, of any matters to be voted
upon at the Annual Meeting other than as stated in the accompanying Notice of
Annual Meeting of Shareholders. The enclosed Proxy gives discretionary authority
to the persons named therein to vote the shares in their best judgment if any
other matters are properly brought before the Annual Meeting.
<PAGE>
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth as of December 31, 1997, certain information
regarding all shareholders known by the Company to be the beneficial owners of
more than 5% of the outstanding voting securities of the Company, based on
publicly available information. To the Company's knowledge, the beneficial
owners listed below have sole voting and investment power with respect to the
shares shown as beneficially owned.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT OF
BENEFICIAL OWNER TITLE OF CLASS OWNERSHIP CLASS
- -------------------------------------------------------------- ------------------ ------------------ -----------
<S> <C> <C> <C>
American Cyanamid Company(1).................................. Common Stock 21,491,975 54.1%
One Cyanamid Plaza
Wayne, New Jersey 07470-1807
Wellington Management Company................................. Common Stock 2,841,380 7.16%
75 State Street
Boston, Massachusetts 02109
First Manhattan Capital Management Company.................... Common Stock 2,646,270 6.7%
437 Madison Avenue
New York, New York 10022-7001
</TABLE>
- ------------------------
(1) American Cyanamid Company is a wholly owned subsidiary of American Home
Products Corporation.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth as of March 10, 1998, the number of
outstanding voting securities of the Company beneficially owned by (i) each
director and each director nominee, (ii) each executive officer for whom
compensation is reported in this Proxy Statement, and (iii) all current
directors and executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER TITLE OF CLASS OWNERSHIP CLASS
- ---------------------------------------- -------------- --------------------- -----------
<S> <C> <C> <C>
Edward V. Fritzky....................... Common Stock 131,139(1) *
Scott G. Hallquist...................... Common Stock 93,392(2) *
Douglas G. Southern..................... Common Stock 58,294(3) *
Douglas E. Williams..................... Common Stock 34,500(4) *
Peggy V. Phillips....................... Common Stock 37,582(4) *
Kirby L. Cramer......................... Common Stock 11,000(5) *
Edith W. Martin......................... Common Stock 11,000(5) *
John E. Lyons........................... Common Stock 10,000(5) *
Richard L. Jackson...................... Common Stock 1,000 *
Joseph J. Carr.......................... Common Stock -- --
Joseph M. Mahady........................ Common Stock -- --
All current directors and executive
officers as a group (12 persons)....... Common Stock 412,817 *
</TABLE>
- ------------------------
* Less than 1% of the outstanding shares of Common Stock.
(1) Includes 123,500 shares that are issuable upon exercise of stock options
that are currently exercisable or are exercisable within 60 days.
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
2
<PAGE>
(FOOTNOTES CONTINUED FROM PRECEDING PAGE)
(2) Includes 68,630 shares that are issuable upon exercise of stock options that
are currently exercisable or are exercisable within 60 days.
(3) Includes 53,760 shares that are issuable upon exercise of stock options that
are currently exercisable or are exercisable within 60 days.
(4) Includes 34,500 shares that are issuable upon exercise of stock options that
are currently exercisable or are exercisable within 60 days.
(5) Includes 10,000 shares that are issuable upon exercise of stock options that
are currently exercisable or are exercisable within 60 days.
The following table sets forth as of March 10, 1998, the number of
outstanding voting securities of American Home Products Corporation ("American
Home Products" or "AHP") beneficially owned by (i) each director and each
director nominee, (ii) each executive officer for whom compensation is reported
in this Proxy Statement, and (iii) all current directors and executive officers
as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER TITLE OF CLASS OWNERSHIP CLASS
- ---------------------------------------- -------------- --------------------- -----------
<S> <C> <C> <C>
Edward V. Fritzky....................... Common Stock -- --
Scott G. Hallquist...................... Common Stock -- --
Douglas G. Southern..................... Common Stock -- --
Douglas E. Williams..................... Common Stock -- --
Peggy V. Phillips....................... Common Stock -- --
Kirby L. Cramer......................... Common Stock -- --
Edith W. Martin......................... Common Stock -- --
John E. Lyons........................... Common Stock -- --
Richard L. Jackson...................... Common Stock 48,100(1) *
Joseph J. Carr.......................... Common Stock 103,290(2) *
Joseph M. Mahady........................ Common Stock 16,218(3) *
All current directors and executive
officers as a group (12 persons)....... Common Stock 167,724 *
</TABLE>
- ------------------------
* Less than 1% of the outstanding shares of Common Stock.
(1) Includes 48,100 shares that are issuable upon exercise of stock options that
are currently exercisable or are exercisable within 60 days.
(2) Includes 53,200 shares that are issuable upon exercise of stock options that
are currently exercisable or are exercisable within 60 days.
(3) Includes 15,000 shares that are issuable upon exercise of stock options that
are currently exercisable or are exercisable within 60 days.
3
<PAGE>
ELECTION OF DIRECTORS
A Board of Directors consisting of nine directors will be elected at the
Annual Meeting to hold office for a term of one year or until their successors
are elected and shall qualify.
Pursuant to the Amended and Restated Governance Agreement dated as of
December 15, 1992 (the "Governance Agreement"), AHP is entitled to designate
three Investor Directors (as defined below) and one Independent Director (as
defined below) for election to the Board of Directors. AHP has not yet
designated a candidate to serve as an Independent Director, but may do so at any
time. See "RELATIONSHIP WITH AMERICAN HOME PRODUCTS CORPORATION AND AMERICAN
CYANAMID COMPANY -- Governance Agreement -- Designation of Candidates for Board
of Directors." Proxies may not be voted for a greater number of persons than the
number of nominees named.
The Board of Directors has approved the nominees named below, who were
designated in accordance with the Governance Agreement. Unless otherwise
instructed, it is the intention of the persons named in the accompanying Proxy
to vote shares represented by properly executed Proxies for such nominees.
Although the Board of Directors anticipates that all the nominees will be
available to serve as directors of the Company, should any one or more of them
not accept the nomination, or otherwise be unwilling or unable to serve, it is
intended that the Proxies will be voted for the election of such substitute
nominees as may be designated in accordance with the Governance Agreement.
The following table sets forth the name and age of each nominee for election
as a director, the positions and offices held by the nominee with the Company
and the period during which the nominee has served as a director of the Company:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITIONS AND OFFICES WITH THE COMPANY SINCE
- ------------------------ --- -------------------------------------------------------------- --------
<S> <C> <C> <C>
Edward V. Fritzky 47 Chief Executive Officer and Chairman of the Board 1994
Joseph J. Carr 55 Director 1995
Kirby L. Cramer 61 Director 1987
Richard L. Jackson 58 Director 1995
John E. Lyons 72 Director 1993
Joseph M. Mahady 45 Director 1998
Edith W. Martin 52 Director 1993
Peggy V. Phillips 44 Senior Vice President, Pharmaceutical Development; Director 1996
Douglas E. Williams 39 Senior Vice President, Discovery Research; Director 1996
</TABLE>
Mr. Fritzky has been the Company's Chief Executive Officer and Chairman of
the Board since January 1994. Mr. Fritzky served as President of Lederle
Laboratories ("Lederle"), a division of American Cyanamid Company ("Cyanamid"),
from 1992 to 1994 and as Vice President of Lederle from 1989 to 1992. Prior to
joining Lederle, Mr. Fritzky was an executive of Searle Pharmaceuticals, Inc.
("Searle"), a subsidiary of Monsanto Company. During his tenure at Searle, Mr.
Fritzky was Vice President, Marketing and later President and General Manager of
Searle Canada, Inc. and Lorex Pharmaceuticals, a joint venture company.
Mr. Carr has been a director of the Company since January 1995. He joined
American Home Products, a pharmaceutical, healthcare, animal health,
agricultural and food products company, in 1982, and served in various executive
capacities prior to being named Vice President in 1989. In April 1991, Mr. Carr
was appointed Group Vice President of AHP, and in May 1993, Senior Vice
4
<PAGE>
President. See "RELATIONSHIP WITH AMERICAN HOME PRODUCTS CORPORATION AND
AMERICAN CYANAMID COMPANY."
Mr. Cramer has been a director of the Company since 1987. Mr. Cramer is
Chairman Emeritus of Hazleton Laboratories Corporation and a Trustee Emeritus
and former President of the University of Virginia's Colgate Darden Graduate
School of Business Administration. Mr. Cramer is also past Chairman of the
Advisory Board of the School of Business Administration of the University of
Washington. He also serves on the board of directors of ATL Ultrasound, Inc.,
Commerce Bancorporation, Landec Corporation, Unilab, Inc., The Commerce Bank of
Washington, Northwestern Trust Company, Pharmaceutical Product Development, Inc.
and certain privately held companies. Mr. Cramer is the Chair of the
Compensation Committee and the Stock Option Plan Administration Committee. See
"RELATIONSHIP WITH AMERICAN HOME PRODUCTS CORPORATION AND AMERICAN CYANAMID
COMPANY."
Dr. Jackson has been a director of the Company since July 1995. He joined
American Home Products in 1993 as Vice President, Discovery Research of its
Wyeth-Ayerst Laboratories division. Prior to joining AHP, Dr. Jackson was
employed by the Marion Merrell Dow Research Institute for eight years, most
recently as Vice President, Research Sciences.
Mr. Lyons has been a director of the Company since 1993. Mr. Lyons retired
as Vice Chairman of the Board of Merck & Company ("Merck") in 1991. He joined
Merck in 1950 as a Research Chemist and held a number of senior marketing and
sales positions in the Merck, Sharp & Dohme division of Merck, serving as its
President from 1975 to 1985. He was appointed Corporate Senior Vice President of
Merck in 1982, Executive Vice President in 1985, and Vice Chairman of the Board
in 1988. Mr. Lyons also serves on the board of directors of Matrix
Pharmaceutical Company and Synaptic Pharmaceutical Company.
Mr. Mahady has been a director of the Company since February 1998. Mr.
Mahady has held various positions with American Home Products and its
Wyeth-Ayerst Laboratories division since 1979. He has been the President of
Wyeth-Ayerst North America since September 1997. Previously, he was President of
Wyeth-Ayerst Pharmaceutical Business Division from August 1995 through September
1997, having previously been promoted to Senior Vice President in February 1995
and Vice President in October 1991.
Dr. Martin has been a director of the Company since 1993. Dr. Martin was a
Vice President and Chief Information Officer of Eastman Kodak Company, a
position she held from January 1996 to December 1997. Between September 1994 and
February 1996, Dr. Martin was the Executive Vice President and Chief Technology
Officer of the Student Loan Marketing Association ("Sallie Mae"). Prior to
joining Sallie Mae, Dr. Martin had been Vice President and Chief Information
Officer of the International Telecommunications Satellite Organization
("INTELSAT") since 1992. Prior to joining INTELSAT, Dr. Martin was Vice
President, High Technology Center, The Boeing Company. Dr. Martin also serves on
the board of directors of Information Resources, Inc. and Pharmacopeia, Inc. Dr.
Martin is the Chair of the Audit Committee.
Ms. Phillips has been a director of the Company since July 1996. She joined
the Company in 1986, was named Senior Vice President, Pharmaceutical Development
in September 1994, and was elected an executive officer of the Company in July
1995. From 1991 until its dissolution in January 1995, Ms. Phillips was Senior
Vice President and Chief Operating Officer of Immunex Research and Development
Corporation, the Company's former wholly owned research and development
corporation. Ms. Phillips received an M.S. in microbiology from the University
of Idaho.
Dr. Williams has been a director of the Company since April 1996. He joined
the Company in 1988 and served as Vice President of Research and Development
from 1992 until September 1994, when he was appointed to his current position of
Senior Vice President, Discovery Research. Dr. Williams was
5
<PAGE>
elected an executive officer of the Company in July 1995. Dr. Williams received
a Ph.D. in physiology from the State University of New York at Buffalo, Roswell
Park Memorial Institute Division.
INFORMATION ON COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS
During the last fiscal year there were five meetings of the Board of
Directors. All incumbent directors attended at least 75% of the Board of
Directors meetings held. All incumbent directors except Mr. Lyons attended at
least 75% of the meetings held by all committees on which they served.
In accordance with the Governance Agreement, the Board of Directors
maintains an Audit Committee, a Compensation Committee, a Nominating Committee
and a Stock Option Plan Administration Committee.
The Audit Committee, currently composed of Messrs. Cramer and Lyons and Dr.
Martin, is responsible, among other things, for recommending the selection of
certified public accountants to the Board of Directors, reviewing the scope and
results of the audits and reviewing the Company's accounting policies and
procedures and system of internal controls. During the past year, there were two
Audit Committee meetings.
The Compensation Committee, currently composed of Messrs. Carr, Cramer and
Lyons and Dr. Martin, is responsible, among other things, for recommending to
the Board of Directors the adoption and amendment of all employee benefit plans
and arrangements and the engagement of, and terms of any employment agreements
and arrangements with, and terminations of, all corporate officers of the
Company. During the past year, there were two Compensation Committee meetings.
The Nominating Committee, currently composed of Mr. Carr and Dr. Williams,
is responsible for the nomination of directors and the solicitation of
shareholder proxies. Under the Governance Agreement, designation of directors
for nomination is to be made exclusively by Immunex and AHP. During the past
year, there were no Nominating Committee meetings.
The Stock Option Plan Administration Committee, currently composed of
Messrs. Carr, Cramer, Lyons and Mahady (who replaced Robert A. Essner in
February 1998) and Drs. Jackson and Martin, is responsible, among other things,
for recommending to the Board of Directors the adoption and amendment of all
stock option plans of the Company and for administering such plans. During the
past year, there were four Stock Option Plan Administration Committee meetings.
COMPENSATION OF DIRECTORS
Each Independent Director is entitled to receive $6,000 per quarter and also
$1,000 per quarter for serving as the Chair of a committee. In addition, each
Independent Director is entitled to receive $1,000 for each Board of Directors
and each committee meeting attended in person and $500 for each such meeting
attended telephonically. Management Directors (as defined below) and Investor
Directors receive no additional compensation for attending Board of Directors or
committee meetings.
Under the Company's Stock Option Plan for Nonemployee Directors, each
Independent Director receives a one-time grant of an option to purchase 10,000
shares of Common Stock on the day such director is initially elected or
appointed to the Board of Directors. Each Independent Director receives an
annual grant of an option to purchase 5,000 shares of Common Stock immediately
following each year's Annual Meeting of Shareholders. Such options vest at a
rate of 20% per year over a five-year period.
6
<PAGE>
RELATIONSHIP WITH AMERICAN HOME PRODUCTS CORPORATION AND
AMERICAN CYANAMID COMPANY
BACKGROUND
On June 1, 1993, the Company's predecessor ("Predecessor Immunex") was
merged (the "Merger") into Lederle Oncology Corporation, a previously
nondistinct operating unit of Cyanamid, pursuant to an Amended and Restated
Agreement and Plan of Merger dated as of December 15, 1992 among Predecessor
Immunex, Cyanamid and certain other parties thereto (the "Merger Agreement").
Cyanamid received 53.5% of the Common Stock outstanding immediately following
the effective time of the Merger (the "Effective Time"), on a fully diluted
basis.
Simultaneously with entering into the Merger Agreement, Predecessor Immunex
and Cyanamid entered into the Governance Agreement, which sets forth, among
other things, certain agreements of the parties relating to (i) the corporate
governance of the Company, including the composition of its Board of Directors,
(ii) rights of Cyanamid to purchase additional shares of the Common Stock from
the Company upon the occurrence of certain events, (iii) future acquisitions and
dispositions of the Company's securities by Cyanamid, (iv) rights of members of
the Board of Directors designated by Cyanamid to approve certain corporate
actions, (v) the requirement that a supermajority of the members of the Board of
Directors approve certain corporate actions, and (vi) payments to be made by
Cyanamid to the Company in the event that the products of the Lederle Oncology
Business (as defined below) and certain other new products of Immunex do not
achieve specified revenue targets. In addition, pursuant to the Merger
Agreement, Immunex, Cyanamid and certain of their respective subsidiaries
entered into certain agreements at the closing of the Merger relating to
cooperation in research and development, supply and manufacture of certain
products, and other matters.
In November 1994, all the outstanding shares of common stock of Cyanamid
were acquired by AHP. Cyanamid is currently a wholly owned subsidiary of AHP.
Pursuant to an agreement dated September 20, 1994 between the Company and AHP,
AHP agreed not to take any action to cause Cyanamid or its subsidiaries to
violate any of their obligations to the Company. AHP also agreed that if it
causes the separate existence of Cyanamid or any of Cyanamid's subsidiaries
having obligations to the Company to cease, or causes such entity to transfer
all or substantially all of its assets, AHP will make appropriate provision so
that any successor to such entity or transferee of such assets that is an
affiliate of AHP will be bound by and required to perform its obligations to the
Company. In addition, AHP agreed it will not take any action to cause Cyanamid
or its subsidiaries to violate their obligations to Immunex. AHP also agreed,
among other things, to be bound by the Standstill Provisions of the Governance
Agreement to the extent such provisions apply to Cyanamid. See " -- Governance
Agreement -- Standstill Provisions." All references to AHP in this Proxy
Statement include AHP and its subsidiaries, divisions or affiliates that have
assumed the obligations of Cyanamid.
GOVERNANCE AGREEMENT
DESIGNATION OF CANDIDATES FOR BOARD OF DIRECTORS
The Board of Directors following the Annual Meeting will consist of nine
directors. Pursuant to the Governance Agreement, three directors are designated
for election by the Company (the "Management Directors"), three are designated
for election by AHP (the "Investor Directors"), three independent directors are
designated for election by agreement of the Company and AHP, and AHP has the
right to designate a fourth independent director for election (the "Independent
Directors").
At all times during the term of the Governance Agreement, the number of
directors that AHP and the management of Immunex have the right to designate
will be determined by the percentage interest of Immunex beneficially owned by
AHP. If AHP's interest is (i) below 20%, AHP will have no right to designate any
directors, and the management of Immunex will have the right to designate six
7
<PAGE>
Management Directors; (ii) 20% or above but less than 35%, AHP will have the
right to designate one Investor Director, and the management of Immunex will
have the right to designate five Management Directors; (iii) 35% or above but
less than 45%, AHP will have the right to designate two Investor Directors, and
the management of Immunex will have the right to designate four Management
Directors; (iv) 45% or above but less than 65%, AHP will have the right to
designate three Investor Directors, and the management of Immunex will have the
right to designate three Management Directors; and (v) 65% or above, AHP will
have the right to designate four Investor Directors, by adding an additional
Investor Director to the Board of Directors, and the management of Immunex will
have the right to designate three Management Directors.
In the event that AHP's interest is such that there are more Investor
Directors or Management Directors on the Board of Directors than AHP or the
management of Immunex, as the case may be, has the right to designate, AHP or
the management of Immunex, as the case may be, will promptly cause to resign,
and take all other action reasonably necessary to cause the prompt removal of,
that number of Investor Directors or Management Directors, as the case may be,
as required to make the remaining number of Investor Directors or Management
Directors conform with the formula described in the preceding paragraph.
With certain exceptions, AHP and the Management Directors will have the
right to designate replacements for directors designated pursuant to the
Governance Agreement by AHP or the Management Directors, respectively, at the
termination of such director's term or upon death, resignation, retirement,
disqualification, removal from office or other cause. The Board of Directors
will elect each person so designated upon nomination by the Nominating
Committee, which consists of an equal number of directors designated by each of
Immunex and AHP. No individual who is an officer, director, partner or principal
shareholder of any competitor of Immunex or any of its subsidiaries (other than
AHP and its affiliates) may be designated to serve as a director of Immunex.
In any election of directors or any meeting of the shareholders of Immunex
called expressly for the removal of directors, AHP and its affiliates will vote
their shares of Common Stock for all nominees in proportion to the votes cast by
the other shareholders of Immunex, except that AHP and its affiliates may cast
any or all of their votes, in their sole discretion, (i) in favor of any nominee
designated by AHP pursuant to the Governance Agreement and (ii) in connection
with any election contest to which Rule 14a-11 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), applies. With certain limited
exceptions, in all other matters submitted to a vote of shareholders of Immunex,
AHP may vote any or all of its shares in its sole discretion.
CERTAIN APPROVAL RIGHTS
So long as AHP has the right to designate at least two Investor Directors,
the approval of at least one of the Investor Directors will be required for the
Board of Directors to approve and authorize certain corporate actions. Such
actions include, without limitation: (i) the entry by Immunex or any of its
subsidiaries into any merger or consolidation or the acquisition by Immunex or
any of its subsidiaries of any business or assets that would constitute more
than 10% of the fair market value of the total assets of Immunex and its
subsidiaries; (ii) the sale, lease, pledge, grant of security interest in,
license, transfer or other disposal by Immunex or any of its subsidiaries of
more than 10% of the fair market value of the total assets of Immunex and its
subsidiaries; (iii) with certain exceptions, the issuance of any debt or equity
securities or other capital stock of Immunex or any of its subsidiaries; (iv) a
reclassification, split, redemption or other acquisition of any of the debt or
equity securities of Immunex or any of its subsidiaries (subject to certain
exceptions); (v) any amendment to Immunex's Articles of Incorporation or Bylaws
or any change in the size or composition of the Board of Directors or a
committee thereof, except in accordance with the Governance Agreement; (vi) the
establishment of any committee of the Board of Directors not specifically
described in the Governance Agreement; (vii) any change in accounting policies
or procedures of Immunex or any of its subsidiaries; (viii) the
8
<PAGE>
payment or discharge of any claim, liability or obligation other than in the
ordinary course of business, except where such claim, liability or obligation
does not exceed $350,000; (ix) the commencement or termination of any suit,
litigation or proceeding with respect to patent rights, and any other suit,
litigation or proceeding that involves a claim, liability or obligation in
excess of $350,000 or that is material to Immunex's business or assets; (x) any
(a) incurrence of indebtedness for borrowed money other than as provided for in
Immunex's annual operating plans (the "Annual Operating Plans") provided to AHP
or its affiliates from time to time or (b) capital expenditure by Immunex or any
of its subsidiaries that is greater than both (1) $350,000 and (2) the amount
provided for such expenditure in the Annual Operating Plans; (xi) the
institution by Immunex or any of its subsidiaries of any shareholder rights plan
or similar plan or device; (xii) the acquisition by Immunex or any of its
subsidiaries of technology or products under any license or similar arrangement
if the payments under all such licenses that are not contingent on sales of
licensed technology or products would exceed $500,000 during any year; or (xiii)
the dissolution of Immunex or any of its subsidiaries, the adoption of a plan of
liquidation for Immunex or any of its subsidiaries or any action by Immunex or
any of its subsidiaries to commence any bankruptcy or similar proceeding.
The approval of seven directors (or, if the Board of Directors consists of
more than nine persons, that number of directors that represents 70% of the
total number of directors, rounded up to the nearest whole number), including,
in the case of clause (iv) below, two Independent Directors, will be required
for the Board of Directors to approve any of the following: (i) the employment
of the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer
or Chief Scientific Officer of Immunex (each, a "Senior Officer"); (ii) Annual
Operating Plans for Immunex and its subsidiaries, which shall include all
material capital expenditures and borrowing plans applicable to the year in
question; (iii) Immunex's five-year product development and facility plans; and
(iv) amendment of the Governance Agreement or provisions of Immunex's Articles
of Incorporation or Bylaws implementing the provisions of the Governance
Agreement.
The approval of six directors, which six directors must include each of the
Independent Directors, will be required to authorize and approve the termination
of any Senior Officer.
SUBSCRIPTION RIGHTS OF AMERICAN HOME PRODUCTS
So long as AHP has the right to designate at least one Investor Director,
AHP must be offered the right to purchase a pro rata share of new securities
prior to any issuance of securities by Immunex. The foregoing right does not
apply, however, to securities issued upon exercise of outstanding options or
warrants and to certain other issuances specified in the Governance Agreement.
So long as AHP has the right to designate at least one Investor Director,
AHP has the option to purchase from Immunex on a quarterly basis additional
shares of Common Stock or other voting stock of Immunex to the extent necessary
to permit AHP to maintain the percentage of shares of Common Stock or other
voting stock of Immunex, as the case may be, owned by AHP and its affiliates as
of the immediately preceding quarter. The per share purchase price of such
shares of Common Stock or other voting stock of Immunex, as the case may be,
will be equal to the fair market value of such shares, as determined in
accordance with the Governance Agreement, on the date of AHP's purchase.
STANDSTILL PROVISIONS
AHP has agreed, until June 1, 1998 (the "Standstill Period"), subject to
certain exceptions, not to directly or indirectly purchase or otherwise acquire,
or propose or offer to purchase or otherwise acquire, any equity securities of
Immunex, whether by tender offer, market purchase, private negotiated purchase,
Business Combination (as defined in the Governance Agreement and described
below) or otherwise if, immediately after such purchase or acquisition, AHP's
beneficial interest in Immunex would exceed 53.5% on a fully diluted basis.
9
<PAGE>
The prohibitions on AHP's acquisition of equity securities of Immunex do not
apply during any period in which AHP or any of its affiliates beneficially owns,
in the aggregate, less than 5% of the then-outstanding shares of Common Stock
(assuming exercise or conversion of any rights, options or warrants to purchase
Common Stock held by AHP and its affiliates, but assuming no other exercise or
conversion of outstanding rights, options or warrants to purchase Common Stock).
In addition, such prohibitions do not apply with respect to: (i) any Permitted
Acquisition Transaction (as defined in the Governance Agreement and described
below) that is disclosed to the Board of Directors promptly after the decision
has been made to propose such transaction; (ii) any issuance of securities
pursuant to AHP's subscription rights set forth in the Governance Agreement;
(iii) any open-market purchases made by AHP from time to time of equity
securities of Immunex if (a) immediately after any such market purchases, AHP's
beneficial interest in Immunex would not exceed 70% and (b) AHP's intention to
make such market purchases is disclosed to the Board of Directors and
shareholders of Immunex at least two trading days prior to any such purchases
and such purchases are completed within 30 days of such notice; and (iv) any
cash tender offer by AHP or any affiliate of AHP if, immediately after such
tender offer, AHP's beneficial interest in Immunex would not exceed 70%.
AHP has agreed that, during the Standstill Period, it will not, and will not
permit its subsidiaries to (i) after submitting a definitive proposal for a
Permitted Acquisition Transaction to the Board of Directors, make any public
announcement with respect to such transaction without the prior approval of the
Board of Directors, except as required by law; (ii) make or participate in any
"solicitation" of "proxies" (as such terms are used in the proxy rules of the
Securities and Exchange Commission (the "Commission")) to vote or seek to
advise, encourage or influence any person or entity with respect to the voting
of any shares of capital stock of Immunex; or (iii) deposit any shares of Common
Stock into a voting trust or subject any shares of Common Stock to any
arrangement or agreement with respect to the voting of such securities or form,
join or in any way participate in any "group" (within the meaning of Section
13(d)(3) of the Exchange Act) with respect to any shares of Common Stock.
A "Permitted Acquisition Transaction," as defined in the Governance
Agreement, means either (i) a cash tender offer for all outstanding Common Stock
that is conditioned on approval by at least a majority of the shareholders of
Immunex other than AHP and its affiliates (the "Unaffiliated Shareholders") or
(ii) a Business Combination that is conditioned on approval by at least a
majority of the Unaffiliated Shareholders, and that, in both cases, satisfies
all the following conditions: (a) the Board of Directors receives an opinion
from a nationally recognized independent investment banking firm selected by the
Board of Directors (excluding the Investor Directors) that the price and other
financial terms of the transaction are fair from a financial point of view to
the Unaffiliated Shareholders; (b) the Board of Directors, in accordance with
the Governance Agreement, concludes that the price and other terms of the
transaction are fair to and in the best interests of the Unaffiliated
Shareholders and recommends that the Unaffiliated Shareholders accept the tender
offer or otherwise approve the transaction; and (c) neither such investment
banking firm's opinion nor such recommendation of the Board of Directors is
withdrawn prior to the consummation of the transaction. In addition, a merger
following the consummation of a tender offer described in clause (i) of this
paragraph that offers the same consideration as such tender offer is deemed to
be a Permitted Acquisition Transaction.
The term "Business Combination," as defined in the Governance Agreement,
means any one of the following transactions: (i) any merger or consolidation of
Immunex or any subsidiary of Immunex with (a) AHP or (b) any corporation (other
than Immunex) that is, or after such merger or consolidation would be, an
affiliate or associate of AHP; (ii) any tender or exchange offer by AHP or any
affiliate or associate of AHP for any equity securities of Immunex or any of its
subsidiaries; (iii) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition by Immunex (in one transaction or a series of transactions) to
or with AHP or any affiliate or associate of AHP (other than Immunex) of more
than 10% of the fair market value of the total assets of Immunex and its
subsidiaries; (iv) the issuance,
10
<PAGE>
exchange or transfer, other than pursuant to AHP's subscription rights under the
Governance Agreement, by Immunex or any of its subsidiaries (in one transaction
or a series of transactions) of any securities of Immunex or any subsidiary
thereof to AHP or any affiliate or associate of AHP (other than Immunex) in
exchange for cash, securities or other consideration (or a combination thereof)
having an aggregate fair market value equal to or in excess of 10% of the fair
market value of the total assets of Immunex and its subsidiaries; (v) the
adoption of any plan or proposal for the liquidation or dissolution of Immunex
proposed by or on behalf of AHP or any affiliate or associate of AHP (other than
Immunex); or (vi) any reclassification of securities (including any reverse
stock split), any recapitalization of Immunex, any merger or consolidation of
Immunex with any subsidiary thereof, or any other transaction to which Immunex
is a party (whether or not with or into or otherwise involving AHP or any
affiliate or associate of AHP) that has the effect, directly or indirectly, of
increasing the proportionate share of the outstanding shares of any class of
equity or convertible securities of Immunex or any subsidiary thereof that is
directly or indirectly owned by AHP or any affiliate or associate of AHP (other
than Immunex).
MATERIAL TRANSACTIONS WITH AMERICAN HOME PRODUCTS
Immunex may not enter into any contract, agreement or transaction with AHP
or any of its affiliates that is material to Immunex's business, taken as a
whole, unless two-thirds of the members of the Board of Directors, excluding the
Investor Directors and including at least two Independent Directors, approve
such contract, agreement or transaction.
TRANSFER OF IMMUNEX COMMON STOCK BY AMERICAN HOME PRODUCTS
AHP has agreed that, during the Standstill Period, it will not, and will not
permit any entity that is directly or indirectly wholly owned by it to, transfer
any shares of Common Stock, except (i) pursuant to a registered underwritten
public offering in accordance with the registration rights provisions of the
Governance Agreement, (ii) in accordance with the volume and manner of sale
limitations of Rule 144 promulgated under the Securities Act of 1933, as amended
(the "Securities Act"), or (iii) to any wholly owned subsidiary of AHP. During
the Standstill Period, AHP may not transfer any interest in any Common Stock to
any purchaser or group (within the meaning of Section 13(d)(3) of the Exchange
Act) of purchasers if, after giving effect to such sale, such purchaser or group
of purchasers would, to AHP's knowledge, own, or have the right to acquire, 5%
or more of the then-outstanding shares of Common Stock. Other than through a
block trade in an underwritten offering, AHP may not, directly or through any of
its subsidiaries, transfer any interest in shares of Common Stock in excess of
1% per day of the then-outstanding shares of Common Stock.
Notwithstanding the foregoing paragraph, after June 1, 1996, AHP and its
wholly owned subsidiaries may transfer (an "Acquisition Sale") all (but not less
than all) the shares of Common Stock beneficially owned by them to any other
person other than an affiliate of AHP, provided that such other person has
offered to acquire all outstanding shares of Common Stock on the same terms and
conditions as such Acquisition Sale. In addition, if AHP intends to engage in an
Acquisition Sale it is required to notify Immunex of such intent and, for three
months subsequent to such notice, Immunex will have the opportunity to present
to AHP a potential buyer willing to purchase all (but not less than all) the
shares of Common Stock beneficially owned by AHP and its wholly owned
subsidiaries. In the event that a potential buyer is presented, AHP may not
consummate an Acquisition Sale on terms less favorable to AHP than those
proposed by such potential buyer.
During the Standstill Period, AHP may not sell, transfer or otherwise
dispose of any of the capital stock of any wholly owned subsidiary of AHP that
owns Common Stock, except to another wholly owned subsidiary of AHP.
11
<PAGE>
REGISTRATION RIGHTS
The holders of at least 25% of the Registrable Securities (as defined in the
Governance Agreement) (the "Initiating Holders") may request that Immunex file a
registration statement under the Securities Act covering the registration of any
or all Registrable Securities held by such Initiating Holders. Immunex will not
be obligated to effect more than two such registrations. The Governance
Agreement, however, does not limit the number of registrations on Form S-3 that
may be requested and obtained if Immunex is eligible to use Form S-3, provided
that the estimated aggregate offering price to the public exceeds $25,000,000
and the other provisions of the Governance Agreement are satisfied.
Subject to certain conditions, if Immunex proposes to file a registration
statement under the Securities Act on any form (other than on Form S-4 or S-8)
that also would permit the registration of Registrable Securities, and such
filing is to be on behalf of Immunex or selling holders of its securities for
the general registration of shares of Common Stock for cash, Immunex must give
notice thereof to the holders of the registration rights and permit such holders
to include Registrable Securities in the registration.
AHP's registration rights are subject to certain conditions set forth in the
Governance Agreement. In addition, the Governance Agreement sets forth specific
procedures relating to such registration rights and detailed obligations of the
parties with respect thereto. All expenses incident to the performance by
Immunex of its obligations with respect to the registration of AHP's shares of
Common Stock will be borne by Immunex, except that the Initiating Holders will
pay all expenses incident to the second registration. In addition, the holders
of Registrable Securities will bear and pay the underwriting commissions and
discounts applicable to securities offered for their account in connection with
any registrations, filings and qualifications made pursuant to the Governance
Agreement, as well as related attorneys' fees. Immunex and the holders of
Registrable Securities each have agreed to indemnify the other, in certain
instances, with respect to liabilities incurred in connection with such
registrations.
GUARANTY PAYMENTS BY AMERICAN HOME PRODUCTS
Until December 31, 1997, AHP agreed to make certain payments to Immunex if
revenues from products from those assets and contractual obligations of
Cyanamid's oncology business in the United States and Canada that Cyanamid
contributed to Lederle Oncology Corporation just prior to the Effective Time
(the "Lederle Oncology Business") and certain other products of Immunex did not
achieve certain annual targets (the "Target Revenue"). Since the Target Revenue
for 1997 of $216,500,000 was not achieved, AHP paid $60,000,000 to Immunex in
February 1998 for the 1997 sales year.
The term "Cyanamid Oncology Products" is defined in the Governance Agreement
to mean NOVANTRONE mitoxantrone, methotrexate injectable, leucovorin calcium,
thiotepa, AMICAR aminocaproic acid, LEVOPROME methotrimeprazine and Cyanamid's
generic anticancer products that are the subject of filings seeking regulatory
approval. The term "New Oncology Products" means all oncology products useful
(to the extent useful) in the diagnosis or treatment of cancerous or
precancerous, transitional or neoplastic diseases or conditions in humans
resulting from research conducted by AHP or the Company or research jointly
sponsored by AHP and the Company, or any such product with respect to which AHP
or the Company (except for any such product that is acquired solely through the
Company's own efforts) is the licensee or distributor (to the extent of such
license or distribution rights) or is otherwise subsequently acquired by AHP or
the Company, including, without limitation: (i) cytotoxics (including
photosensitizers) and cytokine modulators; (ii) small molecule hematopoietic
stimulators; (iii) cytokines and cytokine receptors; (iv) MDR reversal agents;
(v) anti-tumor monoclonal antibody conjugates; (vi) RAS pathway antagonists; and
(vii) receptors other than tumor
12
<PAGE>
necrosis factor receptors ("TNFRs"). New Oncology Products will exclude such
products to the extent that the Company or AHP cannot grant license rights to
the other due to preexisting agreements entered into prior to December 15, 1992.
Should either party, however, have those rights returned to it, such product
will immediately become a New Oncology Product. For purposes of determining
Actual Revenues only, New Oncology Products excluded any product of Immunex that
was marketed, clinically tested or in preclinical testing as of the Effective
Time. The term "Additional Products" is defined in the Governance Agreement to
mean such additional products designated (on an annual basis) by AHP, with the
concurrence of the Board of Directors, that are not Cyanamid Oncology Products,
New Oncology Products or Co-promoted Products from which sales or corporation
revenues are to be included in Immunex's consolidated income statements by
reason of the fact that the Annual Operating Plan of Immunex forecasts a Revenue
Shortfall in respect of Cyanamid Oncology Products, New Oncology Products and
Co-promoted Products. The term "Products" is defined in the Governance Agreement
to mean, in the aggregate, Cyanamid Oncology Products, New Oncology Products and
Additional Products.
TERMINATION
The Governance Agreement will terminate at the earlier of (i) such time as
AHP and its affiliates beneficially own 95% of all classes and series of Common
Stock and (ii) such time as AHP and its affiliates no longer own any such
shares.
RESEARCH AND DEVELOPMENT AGREEMENT
On July 17, 1996, the Immunex Board of Directors approved the terms of
revised and amended research agreements among Immunex, Cyanamid and AHP relating
to oncology products and ENBREL-TM- (TNFR:Fc). Following such approval, Immunex,
Cyanamid and AHP entered into a new Research Agreement effective July 1, 1996,
which terminates and replaces the Research and Development Agreement between
Immunex and Cyanamid dated as of June 1, 1993. As discussed below, Immunex and
AHP also (i) amended the Immunex New Oncology Product License Agreement between
Immunex and Cyanamid dated June 1, 1993, effective as of July 1, 1996, and (ii)
entered into a new TNFR License and Development Agreement, effective as of July
1, 1996.
Under the terms of the superseded Research and Development Agreement,
Immunex was obligated to contribute up to $38,300,000 in 1997 and 50% of AHP's
oncology research and development expenses thereafter. Under the terms of the
new Research Agreement, Immunex currently funds 50% of AHP's oncology discovery
research expenditures, up to a maximum amount of $16,000,000 per year (adjusted
annually for inflation beginning in 1997), and has the option to elect which
products it will continue to support beyond the discovery stage. Immunex
contributed $16,240,000 to support AHP's oncology research programs in 1997.
Under the terms of the new and amended agreements, Immunex retains North
American marketing rights to ENBREL (TNFR:Fc) and those oncology products
resulting from its own research. AHP retains ex-North American rights to
oncology products discovered by Immunex.
Immunex's rights with respect to AHP oncology products were converted into
an option to obtain North American marketing rights to oncology products arising
from certain discovery research activities conducted by Wyeth-Ayerst Research
that are supported by Immunex contributions. Immunex's product rights do not
extend to any products resulting from third-party collaborations of AHP,
products or technology acquired by AHP from third parties, or certain non-small
molecule products developed by AHP.
The option held by Immunex will be exercisable for a period of 90 days
following receipt by Immunex of notice from Wyeth-Ayerst Research that a product
has been selected by Wyeth-Ayerst
13
<PAGE>
Research for preclinical and clinical development, together with certain
relevant information concerning such products. If Immunex exercises its option,
the parties will negotiate and develop the terms of a product license and
development agreement under which Immunex will be granted exclusive marketing
rights in the United States and Canada, and the parties will equally share
development expenses for such product for the North American and European
markets. If Immunex elects not to exercise its option, all rights in the product
will revert to Wyeth-Ayerst Research and AHP without further obligations of any
kind on Immunex. Immunex will also be entitled to discontinue its support of the
development process at certain decision events coordinated with the product
development cycle. If its decision to discontinue development occurs following
the completion of Phase II or Phase III studies, Immunex will be entitled to a
royalty or revenue sharing if AHP continues to develop the product or licenses
the product rights in North America to a third party.
The right of first refusal (the "ROFR") previously held by Cyanamid that
applies to Immunex products and technology was transferred to AHP under the new
Research Agreement and amended to address the diversity of technologies and
opportunities that may result from Immunex research, as well as the data needed
by Wyeth-Ayerst to make a decision regarding exercise of the ROFR. The ROFR was
extended to included ENBREL (TNFR:Fc) and Immunex oncology products. A 90-day,
rather than 180-day, decision period for the ROFR applies to these products. At
Immunex's request, AHP will review any product prior to completion of Phase I
clinical studies to exclude products of no interest to AHP. Under the superseded
Research and Development Agreement, Immunex received $2,000,000 in TNFR research
support during 1996.
ONCOLOGY PRODUCT LICENSE AGREEMENT
In connection with the Merger, Cyanamid and Immunex entered into an Oncology
Product License Agreement under which Immunex granted to Cyanamid and certain of
its subsidiaries an exclusive license under the patents and know-how acquired by
Immunex to make, have made and use Contributed Lederle Products other than
Distributed Products (the "Assigned Products"), thereby permitting Cyanamid to
manufacture the Assigned Products in the Immunex Territory for supply to Immunex
and for ultimate sale by Cyanamid and its sublicensees in the Cyanamid
Territory. AHP pays to Immunex a royalty equal to 5% of the net sales by AHP of
the Assigned Products manufactured in the Immunex Territory and sold in the
Cyanamid Territory. Immunex and AHP have agreed to cooperate in preparing,
filing, maintaining and defending all patents, and in protecting all technology,
relating to the Assigned Products. Immunex recognized revenue under this
agreement of $2,972,000 during 1997.
IMMUNEX NEW ONCOLOGY PRODUCT LICENSE AGREEMENT
Cyanamid and Immunex entered into an Immunex New Oncology Product License
Agreement under which Immunex granted to Cyanamid a co-exclusive license to
make, have made, use and sell in the Cyanamid Territory New Oncology Products
resulting from the research and development efforts of Immunex ("Immunex New
Oncology Products"). AHP pays to Immunex a royalty equal to 5% of the net sales
of Immunex New Oncology Products in the Cyanamid Territory by AHP. Immunex and
AHP cooperate in preparing, filing, maintaining and defending all patents, and
in protecting all technology, in each case relating to the Immunex New Oncology
Products covered by the Immunex New Oncology Product License Agreement. In the
event that an Immunex New Oncology Product is to be manufactured by Immunex for
AHP or by AHP for Immunex, the manufacturing party has agreed to supply the
reasonable clinical and commercial requirements of the other party for such
product under a supply agreement to be entered into by Immunex and AHP, at a
price that will reimburse the manufacturing party for its manufacturing and
process development costs (including an allocation for general and
administrative costs) allocable to such product, plus, with respect to
14
<PAGE>
commercial requirements, a reasonable profit. Immunex recognized revenue under
this agreement of $1,246,000 during 1997.
Under the terms of the July 1, 1996 amendment to this agreement, Immunex
will provide notice to Cyanamid if an Immunex product is selected by Immunex for
preclinical and clinical development, together with certain relevant information
concerning such product. Following receipt of such notice and information,
Cyanamid will have 90 days in which to notify Immunex that it intends to retain
its rights in such product. If Cyanamid elects to retain its rights, the parties
will negotiate and develop the terms of a product development agreement
governing the ongoing development and commercialization of the retained product,
including the equal sharing of development expenses for such product for the
North American and European markets. If Cyanamid does not elect to retain its
rights, all rights in the product will revert to Immunex without further
obligations of any kind to Cyanamid or AHP.
SUPPLY AGREEMENT, TOLL MANUFACTURING AGREEMENT AND METHOTREXATE DISTRIBUTORSHIP
AGREEMENT
In connection with the Merger, Cyanamid and Immunex entered into a Supply
Agreement, under which Cyanamid agreed to supply the reasonable commercial
requirements of Immunex, subject to specific maximum quantities, for AMICAR
aminocaproic acid, oral formulations of leucovorin calcium (currently marketed
forms only) and thiotepa (currently marketed forms only) at a price equal to
125% of Cyanamid's manufacturing costs (including reasonable overhead charges
and certain other costs) for such products. In addition, Lederle Parenterals,
Inc. ("LPI"), a subsidiary of Cyanamid that operates a pharmaceutical
manufacturing facility in Carolina, Puerto Rico, and Immunex Carolina
Corporation ("ICC"), a subsidiary of Immunex that manufactured pharmaceuticals
in Puerto Rico in 1994, have entered into a Toll Manufacturing Agreement under
which LPI toll converts raw materials provided into injectable formulations of
NOVANTRONE mitoxantrone, leucovorin calcium, AMICAR aminocaproic acid and
LEVOPROME methotrimeprazine at a price equal to 125% of LPI's costs relating to
such toll conversion. ICC was dissolved in December 1994 and its rights under
the Supply Agreement were assigned to Immunex Manufacturing Corporation, a
subsidiary of Immunex. LPI and Immunex have also entered into a Methotrexate
Distributorship Agreement whereby LPI supplies methotrexate to Immunex at prices
that are adjusted annually. Immunex and ICC purchased inventory at a cost of
$7,905,000 from AHP and LPI under these agreements during 1997.
DISTRIBUTORSHIP AGREEMENT FOR CANADA
Wyeth-Ayerst Canada, Inc. and Immunex were parties to a distributorship
agreement under which Immunex appointed Cyanamid Canada as its distributor in
Canada for certain products. Immunex agreed to supply the products to Cyanamid
Canada at established prices that were subject to annual adjustment. Immunex
sold $2,010,000 of inventory to Cyanamid Canada during 1997. In December 1997,
Immunex sold the rights to these products in Canada to LPI for $4,000,000.
TAXANE AGREEMENT
In 1994, Cyanamid and Immunex entered into the Taxane Agreement pursuant to
which Immunex agreed to purchase bulk paclitaxel from Cyanamid that is supplied
to Cyanamid by Hauser Chemical Research, Inc. The bulk is being purchased for
use in developing paclitaxel products for marketing in the United States and
Canada. Immunex has also agreed to share with Cyanamid certain costs of
formulation development, clinical studies, and research and development of new
taxane derivatives. In 1997, Immunex incurred costs totaling $3,243,000 under
the Taxane Agreement.
15
<PAGE>
TACE AGREEMENT
In December 1995, Immunex and AHP entered into a License Agreement and a
Research Collaboration, Development and License Agreement relating to tumor
necrosis factor converting enzyme (the "TACE Agreements"). Pursuant to the TACE
Agreements, Immunex has granted AHP a worldwide exclusive license under Immunex
intellectual property relating to TACE, and agreed to collaborate with AHP in
developing TACE inhibitors, in consideration of certain fixed payments for
research services, and contingent additional payments that are payable upon
achievement of specified research and clinical milestone events. In 1997,
Immunex recognized $6,000,000 in revenues under the TACE Agreements. In
September 1997, in conjunction with the Promotion Agreement discussed below, AHP
and Immunex amended one of the TACE Agreements in order to substantially
increase the royalty payable by AHP to Immunex on the first TACE molecule
approved by the United States Food and Drug Administration, if any.
TNFR LICENSE AND DEVELOPMENT AGREEMENT
On July 1, 1996, Immunex and AHP entered into a new TNFR License and
Development Agreement (the "TNFR License Agreement") which restates AHP's
exclusive rights to ENBREL (TNFR:Fc) outside North America and addresses joint
project management, cost sharing, manufacturing responsibilities, intellectual
property protection and disposition of rights upon relinquishment or termination
of product development. Previously, AHP's rights in ENBREL (TNFR:Fc) had been
stated in the superseded Research and Development Agreement between Immunex and
Cyanamid. The superseded Research and Development Agreement was terminated and
replaced by the new Research Agreement discussed above. Pursuant to the TNFR
License Agreement, Immunex and AHP have also agreed to negotiate the terms of a
manufacturing agreement for the commercial supply of ENBREL (TNFR:Fc) to AHP
outside North America. AHP's shared development costs totaled $17,200,000 during
1997.
FLT-3 LIGAND LICENSE AND DEVELOPMENT AGREEMENT
Immunex and AHP entered into the Flt-3 Ligand License and Development
Agreement (the "Flt-3 Ligand License Agreement"), effective as of July 1, 1996,
which grants AHP exclusive rights to Flt-3 Ligand outside North America and
provides that AHP will pay Immunex a royalty equal to 5% of the net sales of
Flt-3 Ligand outside North America. The Flt-3 Ligand License Agreement also
addresses joint project management, cost sharing, manufacturing
responsibilities, intellectual property protection and disposition of rights
upon relinquishment or termination of product development. Pursuant to the Flt-3
Ligand License Agreement, Immunex and AHP have also agreed to negotiate the
terms of a manufacturing agreement for the commercial supply of Flt-3 Ligand to
AHP outside North America. AHP's shared development costs under the Flt-3 Ligand
License Agreement totaled $1,518,000 during 1997.
ENBREL PROMOTION AGREEMENT
On September 25, 1997, Immunex and AHP entered into the Enbrel Promotion
Agreement (the "Promotion Agreement"), pursuant to which AHP, acting through its
Wyeth-Ayerst Laboratories division, will upon regulatory approval promote ENBREL
(TNFR:Fc) to all appropriate customer segments in North America for all approved
indications other than oncology. Under the terms of the Promotion Agreement,
which is a long-term agreement, Immunex may receive up to $100,000,000 from AHP
in nonrefundable milestone payments for the North American promotion rights to
ENBREL (TNFR:Fc). In September 1997, Immunex received a $15,000,000 milestone
payment from AHP upon signature of the Promotion Agreement. The Promotion
Agreement also addresses (i) the formation of a joint Enbrel Management
Committee, (ii) payment to AHP of a certain percentage of any gross profits of
ENBREL (TNFR:Fc) in North America, (iii) an allocation of each party's
commercial expenses
16
<PAGE>
associated with marketing and sales activities with respect to ENBREL (TNFR:Fc),
(iv) Immunex's retained rights to promote ENBREL (TNFR:Fc) in North America for
any approved oncology indications and to co-promote ENBREL (TNFR:Fc) in North
America for any approved indications promoted by AHP, (v) AHP's reimbursement of
certain clinical and regulatory expenses associated with obtaining certain new
indications for ENBREL (TNFR:Fc), (vi) an allocation of certain intellectual
property expenses, (vii) a working capital loan to Immunex of up to $25,000,000
for a portion of any United States launch inventory of ENBREL (TNFR:Fc), (viii)
certain protections for Immunex in the event AHP markets a product in North
America that is directly competitive with ENBREL (TNFR:Fc), and (ix) the payment
of certain residual royalties to AHP in the three years following completion of
AHP's activities under the Promotion Agreement.
17
<PAGE>
EXECUTIVE OFFICERS
The following persons are executive officers of the Company who will serve
in the capacities noted until April 30, 1998, or until the election and
qualification of their successors. Each officer named below is expected to be
reelected at the Board of Directors meeting to be held on April 30, 1998.
<TABLE>
<CAPTION>
POSITIONS AND OFFICES OFFICER
NAME AGE WITH THE COMPANY SINCE
- ------------------------- --- ------------------------------------------------------------------------ -----------
<S> <C> <C> <C>
Edward V. Fritzky 47 Chief Executive Officer 1994
Scott G. Hallquist 44 Senior Vice President; General Counsel; Secretary 1987
Peggy V. Phillips 44 Senior Vice President, Pharmaceutical Development 1995
Douglas G. Southern 55 Senior Vice President; Chief Financial Officer; Treasurer 1991
Leonard R. Stevens 48 Senior Vice President, Marketing 1994
Douglas E. Williams 39 Senior Vice President, Discovery Research 1995
</TABLE>
For the biographical summaries of Mr. Fritzky, Ms. Phillips and Dr.
Williams, see "ELECTION OF DIRECTORS."
Mr. Hallquist has been Senior Vice President, General Counsel and Secretary
of the Company since October 1990. Mr. Hallquist joined the Company in June
1986, initially as Director, Legal Affairs. He was elected to serve as Secretary
in May 1987 and as Vice President and General Counsel in January 1989. Prior to
joining the Company, he was employed by E.I. du Pont de Nemours & Co. as patent
counsel. Mr. Hallquist is a director of Qual-Med Washington Health Plan, Inc., a
health maintenance organization and subsidiary of Health Systems International,
Inc. Mr. Hallquist received an M.B.A. and a J.D. from the University of North
Carolina in 1981.
Mr. Southern has been Senior Vice President, Chief Financial Officer and
Treasurer of the Company since January 1991. Prior to joining the Company, Mr.
Southern was Senior Vice President, Chief Financial Officer, Treasurer and
Secretary of Pay 'N Pak Stores, Inc., a retail firm headquartered in Seattle,
Washington, and a partner in the accounting firm of Arthur Young & Company (now
Ernst & Young LLP). Mr. Southern received a Masters of Accounting degree from
the University of Southern California in 1965.
Mr. Stevens has been Senior Vice President, Marketing of the Company since
February 1997. Mr. Stevens joined the Company in July 1993 as Senior Vice
President, Strategic and New Product Planning, and was elected an executive
officer in 1994. From May 1996 until February 1997, Mr. Stevens served as Senior
Vice President, Marketing and Business Development. Mr. Stevens had been
employed by Lederle since December 1989, where he served in several capacities,
including Director of Medical Education and Programs, Director of Professional
Education and Director of Oncology Marketing, prior to being appointed as Vice
President and General Manager of Oncology in June 1992. Mr. Stevens received an
M.B.A. from the University of Pittsburgh in 1977.
18
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION SUMMARY
The following table sets forth certain compensation information as to (i)
the Company's Chief Executive Officer and (ii) the Company's four other most
highly compensated executive officers for services rendered in all capacities
for the Company during the fiscal years ended December 31, 1995, 1996 and 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION -------------
---------------------------------------- SHARES ALL OTHER
OTHER ANNUAL UNDERLYING COMPENSATION($)
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS(#) (1)
- ---------------------------------------- --------- ---------- ---------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Edward V. Fritzky....................... 1997 $ 468,000 $ 409,500 -- 40,000 $ 23,929
Chief Executive Officer 1996 450,000 59,061 -- 60,000 27,452
1995 375,000 175,782 -- 2,500 19,245
Scott G. Hallquist...................... 1997 245,960 150,930 -- 21,250 15,236
Senior Vice President; 1996 258,000 33,860 -- 27,200 36,227
General Counsel; 1995 248,063 116,280 -- 22,500 16,644
Secretary
Peggy V. Phillips....................... 1997 228,690 214,397 -- 45,000 12,594
Senior Vice President, 1996 207,900 27,287 -- 29,750 6,000
Pharmaceutical 1995 181,125 88,594 -- 6,000 7,367
Development
Douglas G. Southern..................... 1997 217,402 122,289 -- 17,000 14,057
Senior Vice President; Chief 1996 209,040 27,437 -- 24,650 30,130
Financial Officer; Treasurer 1995 190,095 94,219 -- 17,500 10,222
Douglas E. Williams..................... 1997 226,800 141,750 -- 20,000 13,608
Senior Vice President, 1996 210,000 27,563 -- 29,750 25,947
Discovery Research 1995 186,404 93,750 -- 6,000 7,646
</TABLE>
- ------------------------
(1) Consists of matching contributions to a 401(k) savings plan of $21,083,
$13,991, $11,532, $12,242 and $12,718, payment of excess life insurance
premiums of $1,629, $547, $467, $1,250 and $300 and payment of long-term
disability premiums of $1,217, $698, $595, $565 and $590 for Mr. Fritzky,
Mr. Hallquist, Ms. Phillips, Mr. Southern and Dr. Williams, respectively, in
1997. All dollar amounts are rounded to the nearest whole dollar.
19
<PAGE>
OPTION GRANTS
The following table sets forth certain information regarding options granted
during the fiscal year ended December 31, 1997 to the Company's Chief Executive
Officer and the other officers for whom compensation is reported in this Proxy
Statement.
OPTION GRANTS IN 1997 FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
--------------------------------------------------------- AT ASSUMED ANNUAL RATES
NUMBER OF PERCENT OF OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR OPTION
UNDERLYING GRANTED TO TERM(3)
OPTIONS EMPLOYEES IN EXERCISE PRICE EXPIRATION ----------------------------
NAME GRANTED(#) FISCAL YEAR ($/SHARE)(1) DATE(2) 5%($) 10%($)
- ------------------------------------- ----------- -------------- -------------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Edward V. Fritzky.................... 40,000 3% $ 24.25 2/13/07 $ 610,028 $ 1,545,930
Scott G. Hallquist................... 21,250 2% 24.25 2/13/07 324,077 821,275
Peggy V. Phillips.................... 20,000 2% 24.25 2/13/07 305,014 772,965
25,000 2% 76.75 10/23/07 1,206,692 3,057,993
Douglas G. Southern.................. 17,000 1% 24.25 2/13/07 259,262 657,020
Douglas E. Williams.................. 20,000 2% 24.25 2/13/07 305,014 772,965
</TABLE>
- ------------------------
(1) The exercise price of the options is equal to the fair market value of the
underlying Common Stock on the date of grant.
(2) All options granted in 1997 terminate 10 years from the date of grant.
(3) Future value of current year grants assuming appreciation of 5% and 10% per
year over the 10-year option period. The actual value realized may be
greater or less than the potential realizable values set forth in the table.
OPTION EXERCISES AND YEAR-END VALUES
The following table sets forth certain information as of December 31, 1997
regarding options held by the Company's Chief Executive Officer and the other
officers for whom compensation is reported in this Proxy Statement. None of such
officers exercised any options during the fiscal year ended December 31, 1997.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
OPTIONS AT FISCAL MONEY OPTIONS AT FISCAL
YEAR-END (#) YEAR-END ($)
-------------------------- ----------------------------
<S> <C> <C> <C> <C>
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------------------------------- ----------- ------------- ------------- -------------
Edward V. Fritzky....................................... 88,000 139,500 $ 3,284,625 $ 4,937,250
Scott G. Hallquist...................................... 51,774 59,176 1,486,426 1,960,262
Peggy V. Phillips....................................... 22,750 77,000 770,744 1,797,475
Douglas G. Southern..................................... 39,930 49,220 1,156,956 1,646,075
Douglas E. Williams..................................... 22,750 52,000 770,744 1,797,475
</TABLE>
20
<PAGE>
CHANGE IN CONTROL AND EMPLOYMENT AGREEMENTS
Messrs. Fritzky, Hallquist and Southern and Ms. Phillips and Dr. Williams
are each covered under Immunex's Leadership Continuity Policy (the "Leadership
Continuity Policy"). The Leadership Continuity Policy provides that, if such
executive officer's employment is terminated under certain circumstances within
two years of the occurrence of a specified change in control of Immunex, then
such executive officer will be entitled to receive (i) an amount equal to two
years of his or her then-current salary and then-current annual incentive
opportunity assuming the target has been achieved at the 100% level for the
two-year period following termination of employment, less applicable
withholdings required by law; (ii) continued participation in Immunex's medical,
dental, employee assistance and life insurance plans for two years following
such termination; and (iii) certain outplacement services.
Messrs. Fritzky and Hallquist entered into employment agreements with the
Company in November 1995 that are effective for a term of three years. Each
employment agreement provides that the executive's position, authority, duties
and responsibilities will be maintained at levels at least commensurate with
those held by the employee as of its effective date, and that the executive's
salary, bonus and benefits will be continued through the term of the agreement.
If the employment of the executive is terminated by the Company without Cause or
by the employee for Good Reason (each as defined in the employment agreement),
the employee will be entitled to receive his or her base salary, annual
incentive bonus, continued participation in the Company's medical, dental and
insurance programs, and certain other benefits until the second anniversary of
the date the executive's employment with the Company is terminated. Messrs.
Fritzky and Hallquist have the option of electing whether to receive the
benefits provided under their respective employment agreements or the benefits
provided under the Leadership Continuity Policy, but not both.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is currently composed of Messrs. Carr, Cramer and
Lyons and Dr. Martin. Mr. Carr is a Senior Vice President of AHP. See
"RELATIONSHIP WITH AMERICAN HOME PRODUCTS CORPORATION AND AMERICAN CYANAMID
COMPANY."
REPORT ON EXECUTIVE COMPENSATION BY THE COMPENSATION COMMITTEE AND THE
STOCK OPTION PLAN ADMINISTRATION COMMITTEE
The Company's compensation policy as established by the Board of Directors
is intended to provide competitive compensation to all employees, giving
consideration to the relative contribution and performance of each employee on
an individual basis. It is the Company's policy to compensate its executive
officers at levels consistent with industry norms, primarily in the form of base
salary, together with incentive bonuses. In addition, it is the Company's policy
to grant stock options to each of its executive officers to align their
interests with shareholder value. The biotechnology industry is extremely
competitive with respect to recruitment and retention of qualified executives;
accordingly, the Company uses independently published surveys of biotechnology
industry compensation levels to ensure that the Company's compensation practices
are comparable to other biotechnology companies.
Determining the compensation of the Company's executive officers is the
responsibility of the Board of Directors, through its Compensation Committee,
which has overall responsibility for the Company's compensation policies for
senior management. Its Stock Option Plan Administration Committee is responsible
for administering the Company's stock option plans. The Compensation Committee
makes recommendations to the Board of Directors as to the salaries of, and
incentive bonuses awarded to, the Company's Chief Executive Officer and other
executive officers. The Stock Option Plan Administration Committee determines
the number and terms of options granted to the Company's Chief Executive
Officer, other executive officers and all other employees.
21
<PAGE>
Executive compensation consists of three major components: base salary,
annual incentive bonus and stock options. The determination of base salaries of
the Chief Executive Officer and other executive officers is based on annual
surveys of similar positions at other biotechnology companies (described below
as the Comparison Group), together with assessments of individual performance
and the Company's achievement of predetermined operating goals that are
established annually by the Board of Directors (the goals for 1997 are described
below). The Compensation Committee does not assign relative weights to the
factors on which base salaries are based. Assessments of individual performance
include subjective evaluations of the value of individual executives to the
Company. The surveys employed include some, but not all, of the companies in the
Nasdaq Pharmaceutical Index, one of the indices used in the Company's
performance graph that appears below.
The Compensation Committee meets each December to determine the annual
salary component of executive compensation to be paid in the following calendar
year, and the amount of cash incentive bonus compensation to be awarded
executives for performance in the current year. The salaries paid to executives
in 1997 were determined by reference to 1996 compensation survey data, adjusted
upwards for inflation during the term between July 1996 and December 1996. The
survey data considered by the Compensation Committee in determining executive
salaries included salary information provided by 39 biotechnology companies
having more than 500 employees (the "Comparison Group"), as well as a subgroup
of the 15 largest biotechnology companies (the "Comparison Subgroup"). The
Compensation Committee believes that the Comparison Group and the Comparison
Subgroup were representative of industry norms in late 1996; each group is
weighted approximately equally by the Compensation Committee. The Comparison
Subgroup consisted of Amgen, Inc., Biogen, Inc., Genentech, Inc., Chiron
Corporation, Centocor, Inc., Genetics Institute, Genzyme Corporation, and
biotechnology affiliates or subsidiaries of Baxter Biotech Group, Bayer
Corporation, Berlex Biosciences, Boehringer Mannheim Group, Bristol-Myers Squibb
Pharmaceutical Research, Novo Nordisk Biotech, Inc., Roche Bioscience and Scios
Nova, Inc. In the case of Mr. Fritzky, the Compensation Committee established a
base salary of $468,000 for 1997, which represented approximately 83% of average
compensation for chief executive officers included in the Comparison Subgroup
and 98% of the average compensation for chief executive officers included in the
Comparison Group. The Compensation Committee established 1997 base salaries for
the Company's other executive officers ranging from 92% to 117% of the average
compensation for executives performing similar functions in companies included
in the Comparison Subgroup and from 102% to 126% of the average compensation for
executives performing similar functions in companies included in the Comparison
Group.
In December 1996, the Compensation Committee directed the Company's Human
Resources Department to work with the Company's external compensation consultant
to make recommendations regarding revised annual bonus incentive targets for the
Company's executive officers and a severance policy for the Company. As a result
of such activities, the Company's Human Resources Department and the external
compensation consultant made recommendations to the Compensation Committee in
February 1997 to increase the annual bonus incentive targets for the Company's
executive officer group to reflect current market trends and to ensure that
total compensation for the executive officer group remained competitive with
comparable biotechnology companies. In addition, a recommendation was made to
adopt the Leadership Continuity Policy for key management personnel in the event
of a change in control of the Company.
In February 1997, the Compensation Committee considered survey data in
establishing new annual bonus incentive targets for the Company's executive
officers, including annual bonus information provided for executive officers by
a representative group of selected biotechnology companies, as well as from
proprietary sources obtained by the external compensation consultant. The annual
bonus incentive targets approved by the Compensation Committee for the Company's
executive officers represented approximately the 50(th) percentile from these
sources. In revising these annual bonus
22
<PAGE>
incentive targets, the Compensation Committee determined that given the broad
scope of management responsibilities held by the executive officer group, it
would be difficult to distinguish between results achieved as an organization
and results achieved in areas of individual performance. These distinctions had
previously been part of the calculation of the annual bonus payable to the
Company's executive officers, as discussed below. Accordingly, the Compensation
Committee decided that annual bonus incentive targets for the Company's
executive officers should be driven by the Company's overall achievements.
Company objectives are established at the beginning of each year and approved by
the Board of Directors. On an annual basis, the Compensation Committee agreed to
conduct an assessment of the Company's overall performance as measured against
the Company objectives for the applicable year, and at that time the
Compensation Committee would determine the maximum percentage of the annual
bonus incentive targets payable to the Company's executive officers. An annual
bonus award can be modified by the Compensation Committee, depending on the
strength of the individual executive officer's performance. Finally, the annual
bonus awards can be increased by the Compensation Committee if the Company has
exceeded its objectives for the year.
At its February 1997 meeting, the Compensation Committee approved the
following revised annual bonus incentive targets for the Company's executive
officers. In 1997, the Chief Executive Officer is eligible for an annual bonus
incentive target of 70% of base salary, versus a maximum 1996 annual bonus
incentive target of 37.5% of base salary, which had been comprised of a team
bonus of up to 25% of base salary based on the achievement of corporate
operating goals and an additional individual bonus of up to 12.5% of base salary
based on individual contributions toward achievement of corporate operating
goals and subjective evaluation of individual performance. In addition, the
other officers for whom compensation is reported in this Proxy Statement are
eligible in 1997 for an annual bonus incentive target of 45% of base salary or
50% of base salary, versus a maximum 1996 annual bonus incentive target of 37.5%
of base salary, which had been calculated in the same way that the annual bonus
was calculated for the Chief Executive Officer in 1996.
The Compensation Committee also recommended that the Board of Directors
approve a new Leadership Continuity Policy for key management personnel of the
Company, including the Company officers for whom compensation is reported in
this Proxy Statement. The Compensation Committee determined that it is in the
best interests of the Company's shareholders to foster the continuous employment
of key management personnel. In this connection, the possibility of a change in
control may exist for the Company, and the uncertainty and questions such a
possibility may raise among management could result in the departure or
distraction of key management personnel to the detriment of the Company and its
shareholders. The Leadership Continuity Policy is designed to reinforce and
encourage the continued attention and dedication of key management personnel to
their assigned responsibilities without distraction in the face of circumstances
arising from the possibility of a change in control of the Company. The Board of
Directors approved the Leadership Continuity Policy at its meeting in April
1997. The Leadership Continuity Policy as it affects the Company officers for
whom compensation is reported in this Proxy Statement is summarized under
"EXECUTIVE COMPENSATION -- Compensation Summary -- Change in Control and
Employment Agreements."
For 1997, the Compensation Committee elected to award Mr. Fritzky and the
other officers for whom compensation is reported in this Proxy Statement a total
of 125% of the annual bonus incentive target amount for which each officer was
eligible (i.e., 125% of 70% of base salary for Mr. Fritzky, 125% of 50% for Ms.
Phillips and Dr. Williams, and 125% of 45% for Mr. Hallquist and Mr. Southern).
The Compensation Committee's decision took into account the Company's overall
performance against established 1997 objectives, which had been assigned
relative weights by the Board of Directors. All the Company's 1997 objectives
previously established by the Board of Directors had been met or exceeded,
including achievement of budgeted goals for revenue growth and reduction of the
net operating loss for the Company; completion of enrollment of efficacy
clinical trials in the United States for ENBREL (TNFR:Fc), manufacture of
adequate supply of ENBREL (TNFR:Fc) for global pivotal
23
<PAGE>
clinical trials; achievement of manufacturing scale-up of ENBREL (TNFR:Fc) to
commercial quantities; completion of an Flt-3 Ligand Phase II clinical trial in
peripheral blood stem cell mobilization; submission of an Abbreviated New Drug
Application in the United States for paclitaxel; launching a liquid formulation
of LEUKINE-Registered Trademark-; and selection of a new pre-development
molecule. To qualify compensation for deductibility for federal income tax
purposes, it is the Company's policy to meet the requirements for exclusion from
the limit on deduction imposed by Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"), by paying performance-based compensation if
possible and, with respect to cases in which it is not possible to meet the
requirements for exclusion from Section 162(m) of the Code, the Company intends
to minimize any award of compensation in excess of the limit.
Options to purchase shares of Immunex stock were granted to the officers
named in this report, as well as other employees, during 1997. The option grant
was undertaken pursuant to the Company's long-term incentive performance award
program, initially implemented in 1993, wherein employees are eligible to
receive a grant of stock options dependent on individual performance and
position held. Under this program in 1997, Mr. Fritzky received a grant to
purchase 40,000 shares of stock; other officers named in this Proxy Statement
received grants to purchase between 17,000 and 45,000 shares.
COMPENSATION COMMITTEE
Joseph J. Carr
Kirby L. Cramer
John E. Lyons
Edith W. Martin
STOCK OPTION PLAN ADMINISTRATION COMMITTEE
Joseph J. Carr
Kirby L. Cramer
Robert A. Essner
Richard L. Jackson
John E. Lyons
Edith W. Martin
24
<PAGE>
PERFORMANCE GRAPH
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN(1)
AMONG IMMUNEX, NASDAQ COMPOSITE INDEX AND NASDAQ PHARMACEUTICAL INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
IMMUNEX NASDAQ COMPOSITE NASDAQ PHARMACEUTICAL
<S> <C> <C> <C>
1992 100.00 100.00 100.00
1993 56.95 114.79 89.13
1994 52.13 112.21 67.08
1995 57.83 158.68 122.73
1996 68.34 195.19 122.86
1997 189.26 239.63 127.19
</TABLE>
- ------------------------
(1) Assumes $100 invested at the close of trading on December 31, 1992 in the
Common Stock, in the Nasdaq Composite Index and in the Nasdaq Pharmaceutical
Index.
NOTE: Stock price performance shown above for the Common Stock is historical and
not necessarily indicative of future price performance.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers, directors
and persons who own more than 10% of a registered class of the Company's equity
securities to file reports of ownership and changes in ownership with the
Commission. Officers, directors and greater-than-10% shareholders are required
by Commission regulation to furnish the Company with copies of all Section 16(a)
forms they file.
Based solely on its review of the copies of such forms it received, or
written representations from certain reporting persons that no forms were
required for those persons, the Company believes that during 1997 all filing
requirements required by Section 16(a) applicable to its officers, directors and
greater-than-10% beneficial owners were complied with by such persons.
25
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Ernst & Young LLP, certified public
accountants, to act as independent auditors of the Company for the fiscal year
ending December 31, 1998. Ernst & Young LLP has been the Company's auditor since
the Company's inception.
A representative of Ernst & Young LLP is expected to be present at the
Annual Meeting, with the opportunity to make a statement, if the representative
so desires, and is expected to be available to respond to appropriate questions
from shareholders.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Under the Commission's proxy rules, shareholder proposals that meet certain
conditions may be included in the Company's Proxy Statement and Proxy for a
particular annual meeting. Proposals of shareholders that are intended to be
presented by such shareholders at the Company's 1999 Annual Meeting must be
received by the Company no later than November 26, 1998 to be considered for
inclusion in the Proxy Statement and form of Proxy relating to that meeting.
Receipt by the Company of any such proposal from a qualified shareholder in a
timely manner will not guarantee its inclusion in the Company's proxy material
because there are other requirements in the proxy rules for such inclusion.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not
intend to present, and has not been informed that any other person intends to
present, any matters for action at the Annual Meeting other than the matters
specifically referred to in this Proxy Statement. If other matters properly come
before the Annual Meeting, it is intended that the holders of the Proxies will
act with respect thereto in accordance with their best judgment.
Copies of the 1997 Annual Report of the Company are being mailed to
shareholders, together with this Proxy Statement, form of Proxy and Notice of
Annual Meeting of Shareholders. Additional copies may be obtained from the
Secretary of the Company, 51 University Street, Seattle, Washington 98101.
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER
31, 1997, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, IS INCLUDED IN
THE COMPANY'S 1997 ANNUAL REPORT TO SHAREHOLDERS.
BY ORDER OF THE BOARD OF DIRECTORS
Scott G. Hallquist
SECRETARY
Seattle, Washington
March 26, 1998
26
<PAGE>
P R O X Y
________________________________________________________________________________
IMMUNEX CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS--APRIL 30, 1998
The undersigned hereby appoint(s) Edward V. Fritzky and Peggy V.
Phillips and each of them as proxies, with full power of subscription, to
represent and vote as designated all shares of Common Stock of Immunex
Corporation held of record by the undersigned on March 10, 1998 at the Annual
Meeting of Shareholders of the Company to be held at the Sheraton Seattle
Hotel & Towers, 1400 6th Avenue, Seattle, Washington at 9:00 a.m. on
Thursday, April 30, 1998, with authority to vote upon the following matters
and with discretionary authority as to any other matters that may properly
come before the meeting or any adjournment or postponement thereof.
IMPORTANT--PLEASE DATE AND SIGN ON THE OTHER SIDE.
SEE REVERSE
SIDE
________________________________________________________________________________
- FOLD AND DETACH HERE -
<PAGE>
________________________________________________________________________________
Please mark your votes as indicated in this example /X/
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
SHAREHOLDER IN THE SPACES PROVIDED. IF NO DIRECTION IS GIVEN,
THIS PROXY WILL BE VOTED "FOR ALL NOMINEES" IN ITEM 1.
1. Election of the nine nominees to serve as directors for the ensuing year and
until their successors are elected and qualify: Joseph J. Carr, Kirby L.
Cramer, Edward V. Fritzky, Richard L. Jackson, John E. Lyons, Joseph M.
Mahady, Edith W. Martin, Peggy V. Phillips and Douglas E. Williams.
FOR all nominees / /
WITHHOLD AUTHORITY
to vote for all nominees / /
The Board of Directors recommends a vote "FOR all nominees" in Item 1.
WITHHOLD for the following only* (Write the name of the nominee(s) in the space
below.)
- --------------------------------------------------------------------------------
*UNLESS OTHERWISE DIRECTED, ALL VOTES WILL BE APPORTIONED EQUALLY AMONG THESE
PERSONS FOR WHOM AUTHORITY IS GIVEN TO VOTE.
Please send me an admittance ticket to the Annual Meeting. / /
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS HEREON. ATTORNEYS, TRUSTEES, EXECUTORS
AND OTHER FIDUCIARIES ACTING IN A REPRESENTATIVE CAPACITY SHOULD SIGN THEIR
NAMES AND GIVE THEIR TITLES. AN AUTHORIZED PERSON SHOULD SIGN ON BEHALF OF
CORPORATIONS, PARTNERSHIPS, ASSOCIATIONS, ETC. AND GIVE HIS OR HER TITLE. IF
YOUR SHARES ARE HELD BY TWO OR MORE PERSONS, EACH PERSON MUST SIGN. RECEIPT OF
THE NOTICE OF MEETING AND PROXY STATEMENT IS HEREBY ACKNOWLEDGED.
Signature(s) Date
-------------------------------------------- ---------------
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, trustee, executor or other fiduciary acting in a
representative capacity, please give full title as such.
________________________________________________________________________________
- FOLD AND DETACH HERE -
