SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __)
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Materials Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
BIO-TECHNOLOGY GENERAL CORP.
-----------------------------------------------
(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and O-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule O-11: (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
BIO-TECHNOLOGY GENERAL CORP.
70 WOOD AVENUE SOUTH
ISELIN, NEW JERSEY 08830
(732) 632-8800
April 30, 1999
Dear Fellow Stockholder:
You are cordially invited to attend the Company's Annual Meeting of
Stockholders to be held at 11:00 a.m. on Wednesday, June 9, 1999, at The
University Club, 1 West 54th Street, New York, New York.
This year, you are being asked only to elect nine directors to the
Company's Board of Directors. In addition, I will be pleased to report on the
affairs of the Company and a discussion period will be provided for questions
and comments of general interest to stockholders.
We look forward to greeting personally those stockholders who are able
to be present at the meeting; however, whether or not you plan to be with us at
the meeting, it is important that your shares be represented. Accordingly, you
are requested to sign and date the enclosed proxy and mail it in the envelope
provided at your earliest convenience.
Thank you for your cooperation.
Very truly yours,
/s/ SIM FASS
--------------------------
Sim Fass
Chairman of the Board and
Chief Executive Officer
<PAGE>
BIO-TECHNOLOGY GENERAL CORP.
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
------------------------
New York, New York
April 30, 1999
Notice is hereby given that the Annual Meeting of Stockholders of
Bio-Technology General Corp. will be held on Wednesday, June 9, 1999, at 11:00
a.m., at The University Club, 1 West 54th Street, New York, New York for the
following purposes:
(1) To elect nine directors to serve for the ensuing year; and
(2) To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Stockholders of record at the close of business on April 14, 1999 will
be entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof.
All stockholders are cordially invited to attend the Annual Meeting in
person. Stockholders who are unable to attend the Annual Meeting in person are
requested to complete and date the enclosed form of proxy and return it promptly
in the envelope provided. No postage is required if mailed in the United States.
Stockholders who attend the Annual Meeting may revoke their proxy and vote their
shares in person.
ROY L. GOLDMAN
Secretary
<PAGE>
BIO-TECHNOLOGY GENERAL CORP.
70 WOOD AVENUE SOUTH
ISELIN, NEW JERSEY 08830
----------
PROXY STATEMENT
----------
GENERAL INFORMATION
PROXY SOLICITATION
This Proxy Statement is furnished to the holders of Common Stock, par value
$.01 per share (the "Common Stock"), of Bio-Technology General Corp. (the
"Company") in connection with the solicitation by the Board of Directors of the
Company of proxies for use at the Annual Meeting of Stockholders to be held on
Wednesday, June 9, 1999, or at any adjournment thereof, pursuant to the
accompanying Notice of Annual Meeting of Stockholders. The purposes of the
meeting and the matters to be acted upon are set forth in the accompanying
Notice of Annual Meeting of Stockholders. The Board of Directors is not
currently aware of any other matters which will come before the meeting.
Proxies for use at the meeting are being solicited by the Board of
Directors of the Company. Proxies will be mailed to stockholders on or about May
6, 1999 and will be solicited chiefly by mail. The Company will make
arrangements with brokerage houses and other custodians, nominees and
fiduciaries to send proxies and proxy material to the beneficial owners of the
shares and will reimburse them for their expenses in so doing. Should it appear
desirable to do so in order to ensure adequate representation of shares at the
meeting, officers, agents and employees of the Company may communicate with
stockholders, banks, brokerage houses and others by telephone, facsimile or in
person to request that proxies be furnished. All expenses incurred in connection
with this solicitation will be borne by the Company. The Company has no present
plans to hire special employees or paid solicitors to assist in obtaining
proxies, but reserves the option of doing so if it should appear that a quorum
otherwise might not be obtained.
REVOCABILITY AND VOTING OF PROXY
A form of proxy for use at the Annual Meeting of Stockholders and a return
envelope for the proxy are enclosed. Stockholders may revoke the authority
granted by their execution of proxies at any time before their effective
exercise by filing with the Secretary of the Company a written notice of
revocation or a duly executed proxy bearing a later date, or by voting in person
at the meeting. Shares of the Company's Common Stock represented by executed and
unrevoked proxies will be voted in accordance with the choice or instructions
specified thereon. If no specifications are given, the proxies intend to vote
the shares represented thereby for all listed nominees for director and in
accordance with their best judgment on any other matters which may properly come
before the meeting.
RECORD DATE AND VOTING RIGHTS
Only stockholders of record at the close of business on April 14, 1999 are
entitled to notice of and to vote at the Annual Meeting or any and all
adjournments thereof. On April 14, 1999, there were 52,112,580 shares of Common
Stock outstanding; each such share is entitled to one vote on each of the
matters to be presented at the Annual Meeting. The holders of a majority of the
outstanding shares of Common Stock, present in person or by proxy and entitled
to vote, will constitute a quorum at the Annual Meeting. Abstentions and broker
non-votes will be counted for purposes
<PAGE>
of determining the presence or absence of a quorum. "Broker non-votes" are
shares held by brokers or nominees which are present in person or represented by
proxy, but which are not voted on a particular matter because instructions have
not been received from the beneficial owner. Under applicable Delaware law, the
effect of broker non-votes on a particular matter depends on whether the matter
is one as to which the broker or nominee has discretionary voting authority
under the applicable rule of the New York Stock Exchange. With respect to the
proposal to elect directors, abstentions, broker non-votes and instructions on
the accompanying proxy card to withhold authority to vote for one or more
nominees will result in the respective nominees receiving fewer votes. However,
the number of votes otherwise received by the nominee will not be reduced by
such action.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth information as of March 31, 1999 (except as
otherwise noted in the footnotes) regarding the beneficial ownership (as defined
by the Securities and Exchange Commission (the "SEC")) of the Company's Common
Stock of: (i) each person known by the Company to own beneficially more than
five percent of the Company's outstanding Common Stock; (ii) each director and
nominee for election as a director of the Company; (iii) each executive officer
named in the Summary Compensation Table (see "Executive Compensation"); and (iv)
all directors and executive officers of the Company as a group. Except as
otherwise specified, the named beneficial owner has the sole voting and
investment power over the shares listed.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP OF PERCENTAGE OF
NAME OF BENEFICIAL OWNER COMMON STOCK COMMON STOCK
- ------------------------ ------------------------ -------------
<S> <C> <C>
Norman Barton ................................................... 57,500(1) *
Herbert Conrad .................................................. 28,713(2) *
Sim Fass ........................................................ 653,845(3) 1.2%
Marian Gorecki .................................................. 260,000(4) *
Carl E. Kaplan .................................................. 11,155(5) *
Ernest Kelly .................................................... 55,179(6) *
William Pursley ................................................. 77,244(7) *
Allan Rosenfield ................................................ 14,074(8) *
David Tendler ................................................... 34,822(9) *
Virgil Thompson ................................................. 25,625(10) *
Dan Tolkowsky ................................................... 67,521(11) *
Faye Wattleton .................................................. 13,504(8) *
Herbert Weissbach ............................................... 11,875(12) *
All directors and executive officers as a group
(15 persons) ................................................... 1,371,958(13) 2.6%
</TABLE>
- ----------
* Represents less than one percent of the Company's Common Stock.
(1) Consists of shares which may be acquired through the exercise of stock
options. Does not include 122,500 shares of Common Stock issuable upon the
exercise of options which are not exercisable within 60 days of March 31,
1999.
2
<PAGE>
(2) Includes 25,625 shares which may be acquired through the exercise of stock
options. Does not include 9,375 shares of Common Stock issuable upon the
exercise of options which are not exercisable within 60 days of March 31,
1999.
(3) Includes 410,000 shares which may be acquired through the exercise of
stock options. Does not include 372,500 shares of Common Stock issuable
upon the exercise of options which are not exercisable within 60 days of
March 31, 1999.
(4) Includes 210,000 shares which may be acquired through the exercise of
stock options. Does not include 242,500 shares of Common Stock issuable
upon the exercise of options which are not exercisable within 60 days of
March 31, 1999.
(5) Includes 5,000 shares which may be acquired through the exercise of stock
options. Does not include 15,000 shares of Common Stock issuable upon the
exercise of options which are not exercisable within 60 days of March 31,
1999.
(6) Includes 55,000 shares which may be acquired through the exercise of stock
options. Does not include 95,000 shares of Common Stock issuable upon the
exercise of options which are not exercisable within 60 days of March 31,
1999.
(7) Includes 52,500 shares which may be acquired upon the exercise of stock
options. Does not include 187,500 shares of Common Stock issuable upon the
exercise of options which are not exercisable within 60 days of March 31,
1999. Mr. Pursley resigned from the Company effective March 31, 1999.
(8) Includes 11,875 shares which may be acquired through the exercise of stock
options. Does not include 15,625 shares of Common Stock issuable upon the
exercise of options which are not exercisable within 60 days of March 31,
1999.
(9) Includes 25,625 shares which may be acquired through the exercise of stock
options. Does not include 9,375 shares of Common Stock issuable upon the
exercise of options which are not exercisable within 60 days of March 31,
1999.
(10) Consists of shares which may be acquired upon the exercise of stock
options. Does not include 9,375 shares of Common Stock issuable upon the
exercise of options which are not exercisable within 60 days of March31,
1999. Mr. Thompson will become President and Chief Operating Officer of
the Company effective May 3, 1999.
(11) Includes 5,625 shares which may be acquired through the exercise of stock
options. Does not include 9,375 shares of Common Stock issuable upon the
exercise of options which are not exercisable within 60 days of March 31,
1999.
(12) Consists of shares which may be acquired through the exercise of stock
options. Does not include 15,625 shares of Common Stock issuable upon the
exercise of options which are not exercisable within 60 days of March 31,
1999.
(13) Includes 968,875 shares of Common Stock which may be acquired through the
exercise of stock options.
3
<PAGE>
PROPOSAL-ELECTION OF DIRECTORS
Nine directors (constituting the entire Board) are to be elected at the
Annual Meeting. Unless otherwise specified, the enclosed proxy will be voted in
favor of the persons named below to serve until the next annual meeting of
stockholders and until their successors shall have been duly elected and shall
qualify. In the event any of these nominees shall be unable to serve as a
director, the shares represented by the proxy will be voted for the person, if
any, who is designated by the Board of Directors to replace the nominee. All
nominees have consented to be named and have indicated their intent to serve if
elected. The Board of Directors has no reason to believe that any of the
nominees will be unable to serve or that any vacancy on the Board of Directors
will occur.
The nominees, their ages, the year in which each first became a director
and their principal occupations or employment during the past five years are:
<TABLE>
<CAPTION>
YEAR FIRST
DIRECTOR AGE BECAME DIRECTOR PRINCIPAL OCCUPATION DURING THE PAST FIVE YEARS
- -------- -- --------------- ------------------------------------------------
<S> <C> <C> <C>
Herbert Conrad .................... 66 1993 Retired; President of Roche Pharmaceuticals
Division, Hoffmann-La Roche from December 1981
until September 1993. (1)(2)
Sim Fass .......................... 57 1983 Chairman of the Board since March 1997; CEO of
the Company since May 1984; Treasurer of the
Company since August 1983; President of the
Company and Bio-Technology General (Israel)
Ltd., the Company's wholly-owned subsidiary
("BTG Israel"), from May 1984 to May 1999; Chief
Operating Officer of BTG Israel between August
1983 and May 1987. (1)(3)
Carl Kaplan ....................... 60 1998 Senior Partner, Fulbright & Jaworski L.L.P.; from
January 1969 to January 1, 1989, a partner of
Reavis & McGrath, which merged with Fulbright &
Jaworski effective January 1, 1989. (1)(4)(5)
Allan Rosenfield .................. 66 1997 Dean, School of Public Health, Joseph R. DeLamar
Professor of Public Health and Professor of
Obstetrics and Gynecology, Columbia University,
since 1986. (2)
David Tendler ..................... 61 1994 Partner, Tendler Beretz L.L.C. since January
1985; Chairman of V.I. Technologies, Inc.
(previously Melville BioLogics Inc.) since
February 1995; Co-Chairman and Chief Executive
Officer of Phibro-Salomon, Inc. from May 1982
until October 1984. (1)(2)(5)
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
YEAR FIRST
DIRECTOR AGE BECAME DIRECTOR PRINCIPAL OCCUPATION DURING THE PAST FIVE YEARS
- -------- -- --------------- ------------------------------------------------
<S> <C> <C> <C>
Virgil Thompson ................... 59 1994 President and Chief Operating Officer of the
Company effective as of May 3, 1999; President
and Chief Executive Officer of Cytel
Corporation from January 1996 to May 1999;
President and Chief Executive Officer of CIBUS
Pharmaceutical, Inc. from July 1994 until
January 1996; President from August 1991 to
August 1993 and Executive Vice President from
March 1986 to August 1991 of Syntex
Laboratories, Inc.
Dan Tolkowsky ..................... 78 1985 Partner, Tolkowsky Associates; Partner, Adler &
Tolkowsky Management Associates, the general
partner of Athena Venture Partners L.P., a
venture capital partnership, from May 1985 to
September 1997; prior thereto, Vice Chairman
and Managing Director of Discount Investment
Corporation (Tel-Aviv); Chairman of the
Executive Committee of BTG Israel from 1983
through October 1989. (5)
Faye Wattleton .................... 56 1997 President of the Center for Gender Equality since
1995; President of Planned Parenthood
Federation of America, Inc. (New York) from
1978 to 1992. (1)
Herbert Weissbach ................. 67 1997 Distinguished Research Professor, Department of
Biological Sciences, Florida Atlantic
University, since January 1997; prior thereto,
Vice President, Hoffmann-LaRoche Inc. from 1983
to 1996; Director, Roche Institute of Molecular
Biology from 1983 to 1996. (2)
</TABLE>
- --------------
(1) Member of the Executive Committee of the Board of Directors.
(2) Member of the Audit Committee of the Board of Directors.
(3) Pursuant to Dr. Fass' employment agreement with the Company, the Company
has agreed to nominate Dr. Fass for election as a director during all
periods when Dr. Fass serves as President and/or Chief Executive Officer of
the Company. See "Executive Compensation--Employment Agreements."
(4) Fulbright & Jaworski L.L.P. has rendered legal services to the Company in
1998 and 1999.
(5) Member of the Compensation and Stock Option Committee of the Board of
Directors.
5
<PAGE>
Mr. Conrad is a director of Gensia Sicor Inc., Dura Pharmaceuticals, Inc.,
GenVec Inc. and Urocor Inc. Mr. Tendler is a director of C2I Solutions Inc. Mr.
Thompson is a director of Cytel Corporation, Cypros Pharmaceuticals Corp. and
Anadigm Corporation. Mr. Tolkowsky is a director of The Israel Fund. Ms.
Wattleton is a director of Empire Blue Cross & Blue Shield, Estee Lauder
Companies, the Henry J. Kaiser Family Foundation, the Institute for
International Education, Quidel Corporation and Jazz at Lincoln Center and a
member of the advisory board of Columbia University School of Public Health.
On December 6, 1994, the Board reestablished the Executive Committee to
exercise, to the extent authorized by law, all of the powers and authority of
the Board in the management of the business and affairs of the Company. Messrs.
Herbert Conrad, Sim Fass, Carl Kaplan and David Tendler and Ms. Faye Wattleton
are the current members of the Executive Committee. During the fiscal year ended
December 31, 1998, the Executive Committee held three meetings.
In November 1989, the Board formed an Audit Committee which was established
to review the internal accounting procedures of the Company and to consult with
and review the Company's independent auditors and the services provided by such
auditors. Messrs. Herbert Conrad, Allan Rosenfield, David Tendler, Virgil
Thompson and Herbert Weissbach are the current members of the Audit Committee,
although Mr. Thompson will no longer be a member of the Committee when he joins
the Company as President and Chief Operating Officer effective May 3, 1999.
During the fiscal year ended December 31, 1998, the Audit Committee held two
meetings.
In January 1990, the Board formed a Compensation Committee. In May 1990,
the Board combined the Compensation Committee and the Stock Option Plan
Committee to form the Compensation and Stock Option Committee to review
compensation practices, to recommend compensation for executives and key
employees, and to administer the Company's stock option plans. Messrs. Carl
Kaplan, David Tendler, Virgil Thompson and Dan Tolkowsky are the current members
of the Compensation and Stock Option Committee, although Mr. Thompson will no
longer be a member of the Committee when he joins the Company as President and
Chief Operating Officer effective May 3, 1999. During the fiscal year ended
December 31, 1998, the Compensation and Stock Option Committee held three
meetings.
During the fiscal year ended December 31, 1998, the Board of Directors held
five meetings. Each director attended at least 75% of the meetings of the Board
of Directors held when he was a director and of all committees of the Board of
Directors on which he served.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, as well as persons who beneficially own more than ten percent of
the Company's Common Stock, to file initial reports of ownership and reports of
changes in ownership with the SEC. Executive officers, directors and greater
than ten percent beneficial owners are required by the SEC to furnish the
Company with copies of all Section 16(a) forms they file.
Based upon a review of the copies of such forms furnished to the Company
and written representations from the Company's executive officers and directors,
the Company believes that during fiscal 1998 all Section 16(a) filing
requirements applicable to its executive officers, directors and greater than
ten percent beneficial owners were complied with, except Marian Gorecki failed
to file two Forms 4 and each of Dan Tolkowsky, Nadim Kassem (who resigned from
the Company effective March 6, 1998) and David Haselkorn (who resigned from the
Company effective April 30, 1998) failed to file one Form 4 on a timely basis.
VOTE REQUIRED
The nine nominees receiving the highest number of affirmative votes of the
shares present in person or represented by proxy and entitled to vote, a quorum
being present, shall be elected as directors. Only votes cast for a
6
<PAGE>
nominee will be counted, except that the accompanying proxy will be voted for
all nominees in the absence of instruction to the contrary. Abstentions, broker
non-votes and instructions on the accompanying proxy card to withhold authority
to vote for one or more nominees will result in the respective nominees
receiving fewer votes. However, the number of votes otherwise received by the
nominee will not be reduced by such action.
THE BOARD OF DIRECTORS DEEMS "PROPOSAL--ELECTION OF DIRECTORS" TO BE IN THE
BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR"
EACH NOMINEE.
7
<PAGE>
EXECUTIVE COMPENSATION
The following table shows all the cash compensation paid or to be paid by
the Company or its subsidiaries as well as certain other compensation paid or
accrued during the fiscal years indicated to the Chief Executive Officer of the
Company and each of the four other most highly compensated executive officers of
the Company (the "Named Executive Officers") for such period in all capacities
in which they served.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM ALL OTHER
ANNUAL COMPENSATION COMPENSATION COMPENSATION(1)
FISCAL ------------------------- -------------- ---------------
NAME AND PRINCIPAL POSITION(2) YEAR SALARY ($) BONUS($)(3) OPTIONS(#)
- ------------------------------ ---- ---------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Sim Fass ................................ 1998 $347,500 $125,000 200,000 $ 5,000(4)
Chairman of the Board 1997 321,000 125,000 150,000 4,750(4)
and Chief Executive Officer 1996 298,500 110,000 90,000 4,750(4)
William Pursley ......................... 1998 212,500 80,000 100,000 5,000(4)
Senior Vice President-- 1997 197,500 70,000 70,000 4,750(4)
Marketing, Sales and Commercial 1996 182,500 60,000 70,000 66,717(6)
Development (5)
Marian Gorecki .......................... 1998 209,388 80,000 150,000 --
Senior Vice President-- 1997 189,363 65,000 75,000 --
Chief Technical Officer 1996 175,000 58,000 55,000 --
Norman Barton ........................... 1998 193,150 50,000 85,000 5,000(4)
Senior Vice President-- 1997 166,400 40,000 35,000 4,750(4)
Chief Medical Officer 1996 108,503 0 60,000 4,750(4)
Ernest Kelly ............................ 1998 192,504 50,000 40,000 5,000(4)
Senior Vice President-- 1997 182,250 65,000 50,000 4,750(4)
Quality Assurance, Quality 1996 150,086 0 60,000 4,401(4)
Control and Regulatory Affairs
</TABLE>
- --------------
(1) Pursuant to the SEC's rules on executive compensation disclosure, "All
Other Compensation" does not include perquisites because the aggregate
amount of such compensation for each of the persons listed did not exceed
the lesser of (i) $50,000 or (ii) 10 percent of the combined salary and
bonus for such person in each such year.
(2) Each of the Named Executive Officers is a party to an employment agreement
with the Company. See "--Employment Agreements."
(3) Bonuses paid during a fiscal year are for the prior fiscal year.
(4) Represents the Company's matching contribution pursuant to its 401(k)
defined contribution plan.
(5) Mr. Pursley resigned from the Company effective March 31, 1999.
(6) Represents the Company's matching contribution ($4,750) pursuant to its
401(k) defined contribution plan and the forgiveness of loan ($40,000) and
$21,967 gross-up payment to cover taxes on forgiveness. See "--Employment
Agreements."
8
<PAGE>
The following table sets forth information with respect to option grants in
1998 to the Named Executive Officers.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF
NUMBER OF OPTIONS STOCK PRICE
SECURITIES GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES IN EXERCISE OR OPTION TERM (3)
OPTIONS FISCAL YEAR BASE PRICE EXPIRATION -------------------------
NAME GRANTED(#)(1) (2) ($/SH) DATE 5% ($) 10% ($)
- ---- ------------- ----- -------- ----- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Sim Fass .................... 200,000 11.1% $7.5625 06/15/08 $951,500 $2,411,500
Marian Gorecki .............. 150,000 8.3% 7.5625 06/15/08 713,625 1,808,625
William Pursley ............. 100,000 5.6% 7.5625 06/15/08 475,750 1,205,750
Ernest Kelly ................ 40,000 2.2% 7.5625 06/15/08 190,300 482,300
Norman Barton ............... 25,000 1.4% 7.875 03/06/08 123,875 313,875
60,000 3.3% 7.5625 06/15/08 285,450 723,450
</TABLE>
- ----------------
(1) Options vest in four equal annual installments commencing on the first
anniversary date of the grant; however, options granted under the Company's
1992 Stock Option Plan and certain other options become immediately
exercisable upon a change in control of the Company. See "--Employment
Agreements."
(2) Based upon options to purchase 1,801,000 shares granted to all employees in
1998.
(3) These amounts represent assumed rates of appreciation in the price of the
Company's Common Stock during the terms of the options in accordance with
rates specified in applicable federal securities regulations. Actual gains,
if any, on stock option exercises will depend on the future price of the
Common Stock and overall stock market conditions. The 5% rate of
appreciation over the 10-year option term of each of the $7.5625 stock
price and the $7.875 stock price on each date of grant would result in a
stock price of $12.32 and $12.83, respectively. The 10% rate of
appreciation over the 10-year option term of each of the $7.5625 stock
price and the $7.875 stock price on each date of grant would result in a
stock price of $19.62 and $20.43, respectively. There is no representation
that the rates of appreciation reflected in this table will be achieved.
9
<PAGE>
The following table sets forth information with respect to (i) stock
options exercised in 1998 by the Named Executive Officers and (ii) unexercised
stock options held by such individuals at December 31, 1998.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES
IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED,
OPTIONS HELD AT FISCAL IN-THE-MONEY OPTIONS AT
SHARES YEAR END FISCAL YEAR END ($)(1)
ACQUIRED ON VALUE --------------------------- ------------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Sim Fass (2) ...................... 115,000 $615,469 410,000 372,500 $576,544 $51,563
Marian Gorecki (3) ................ 30,000 147,188 230,000 242,500 487,716 30,078
William Pursley (4) ............... 18,750 119,531 52,500 206,250 -- 86,719
Ernest Kelly ...................... -- -- 42,500 107,500 -- --
Norman Barton ..................... -- -- 38,750 141,250 7,813 7,813
</TABLE>
- ----------
(1) Based on a closing stock price of the Company's Common Stock on December
31, 1998 of $6.9375.
(2) During 1998, Dr. Fass exercised options to purchase 115,000 shares of the
Company's Common Stock at a price of $3.00 per share. The closing price of
the Company's Common Stock on the dates of exercise ranged from $7.5625 to
$8.859375. Dr. Fass has retained ownership of 35,000 of these shares.
(3) On April 23, 1998, Dr. Gorecki exercised options to purchase 30,000 shares
of the Company's Common Stock at a price of $3.00 per share. The closing
price of the Company's Common Stock on such date was $7.90625. Dr. Gorecki
has retained ownership of all of these shares.
(4) On May 6, 1998, Mr. Pursley exercised options to purchase 18,750 shares of
the Company's Common Stock at a price of $2.3125 per share. The closing
price of the Company's Common Stock on May 6, 1998 was $8.6875. Mr. Pursley
has retained ownership of 4,750 of these shares.
EMPLOYMENT AGREEMENTS
The Company and Sim Fass entered into an employment agreement dated as of
January 1, 1990 (the "Fass Agreement") pursuant to which Dr. Fass has served as
President (through May 3, 1999) and Chief Executive Officer of the Company. At
January 1, 1998, the Fass Agreement was automatically renewed for another two
year period, and will automatically be renewed for successive two year periods
thereafter unless either party gives the other notice of nonrenewal. The Fass
Agreement also provides that the Company will nominate Dr. Fass for election as
a director during all periods when he serves as President and/or Chief Executive
Officer of the Company. For his services, Dr. Fass is currently entitled to an
annual salary of $360,000, with bonuses to be determined at the discretion of
the Company's Board. In the event Dr. Fass' employment is terminated by the
Company at any time for any reason other than justifiable cause, disability or
death, or the Company shall fail to renew the Fass Agreement at any time within
two years following a "Change in Control of the Company," the Company shall pay
Dr. Fass, for a period equal to the longer of (1) the remaining term of the Fass
Agreement or (2) one year (such period being hereinafter referred to as the
"Fass Severance Period") a monthly payment equal to the sum of (a) 1/12 of Dr.
Fass' salary at the time of such termination and (b) 1/12 of Dr. Fass' most
recently declared bonus, which amount shall be in lieu of any and all other
payments due and owing to Dr. Fass under the terms of the Fass Agreement. During
the Fass Severance Period, the Company shall continue to provide Dr. Fass with
health, life and disability insurance. In the event the Company elects not to
renew the Fass Agreement other than within two years following a "Change in
Control of the Company," the
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Company is obligated to pay Dr. Fass a severance payment equal to the sum of one
month's salary plus 1/12 of his most recently declared bonus for each year Dr.
Fass has been employed by the Company.
Pursuant to the Fass Agreement, all options granted or to be granted to Dr.
Fass under any Company stock option plan shall become immediately exercisable
and all restrictions against disposition, if any, which have not otherwise
lapsed shall immediately lapse if (i) Dr. Fass' employment with the Company is
terminated upon a determination by the Company's Board that the performance of
his duties has not been fully satisfactory for any reason that would not
constitute "justifiable cause" (as defined in the Fass Agreement), (ii) Dr. Fass
dies or is disabled (as defined in the Fass Agreement) while employed by the
Company, (iii) Dr. Fass is not nominated by the Company for re-election to the
Company's Board, other than for justifiable cause, (iv) there shall occur a
material reduction in Dr. Fass' duties, other than for justifiable cause, or (v)
any event constituting a "Change in Control of the Company" shall occur while
Dr. Fass is employed by the Company.
For purposes of the Fass Agreement, the Gorecki Agreement (as described
below) and the Pursley Agreement (as described below), a "Change in Control of
the Company" shall be deemed to occur if (i) there shall be consummated (x) any
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of the Company's
Common Stock would be converted into cash, securities or other property, other
than a merger of the Company in which the holders of the Company's Common Stock
immediately prior to the merger have the same proportionate ownership of common
stock of the surviving corporation immediately after the merger, or (y) any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the
Company, or (ii) the stockholders of the Company shall approve any plan or
proposal for liquidation or dissolution of the Company, or (iii) any person (as
such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act) shall
become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange
Act) of 40% or more of the Company's outstanding Common Stock other than
pursuant to a plan or arrangement entered into by such person and the Company,
or (iv) during any period of two consecutive years, individuals who at the
beginning of such period constitute the entire Board shall cease for any reason
to constitute a majority thereof unless the election, or the nomination for
election by the Company's stockholders, of each new director was approved by a
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period.
BTG Israel and Marian Gorecki entered into an employment agreement dated as
of September 5, 1990 (the "Gorecki Agreement") pursuant to which Dr. Gorecki
serves as Senior Vice President and Chief Technical Officer of the Company. Dr.
Gorecki also began to serve as General Manager of BTG Israel effective May 1,
1998. At September 5, 1998, the Gorecki Agreement was automatically renewed for
an additional two year period, and the Gorecki Agreement provides that it
automatically will be renewed for successive two year periods unless either
party gives the other notice of nonrenewal. For his services, Dr. Gorecki is
currently entitled to an annual salary of $220,000 and to bonuses to be
determined at the discretion of the Company's Board. In the event that Dr.
Gorecki's employment is terminated by BTG Israel at any time for any reason
other than justifiable cause, disability or death, or BTG Israel shall fail to
renew the Gorecki Agreement at any time within two years following a "Change in
Control of the Company," BTG Israel is obligated to pay Dr. Gorecki an amount
equal to the greater of (i) one year's salary plus Dr. Gorecki's most recent
bonus, if any, or (ii) the product of one month's salary plus 1/12 of Dr.
Gorecki's most recently declared bonus multiplied by the number of years Dr.
Gorecki has been employed by BTG Israel.
The Company and William Pursley entered into an employment agreement dated
as of April 24, 1995 (the "Pursley Agreement") pursuant to which Mr. Pursley
served as Senior Vice President--Marketing, Sales and Commercial Development of
the Company. At April 24, 1997, the Pursley Agreement was automatically renewed
for an additional two years; however, Mr. Pursley resigned from his position
with the Company effective March 31, 1999. For his services, Mr. Pursley was
entitled to an annual salary of $220,000 and to bonuses to be determined at the
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discretion of the Company's Board. In addition, pursuant to the Pursley
Agreement the Company loaned $80,000 to Mr. Pursley. The loans bore interest at
a rate of 6.8% per annum. Pursuant to the terms of one of the loans, the
repayment of $40,000 of indebtedness was forgiven upon his relocation to New
Jersey. The remaining $40,000 of indebtedness was originally due on June 30,
1997; however, the Company extended the maturity date and, in connection with
the termination of Mr. Pursley's employment, forgave repayment of the loan.
Furthermore, in connection with the Pursley Agreement, Mr. Pursley was granted
options to purchase 75,000 shares of the Company's Common Stock at an exercise
price of $2.3125 per share, the fair market value on the date of grant. Such
options become exercisable in four annual installments of 18,750 shares each. In
the event that Mr. Pursley's employment was terminated by the Company at any
time for any reason other than justifiable cause, disability or death, or the
Company failed to renew the Pursley Agreement, the Company would have been
obligated to pay Mr. Pursley an amount equal to his then annual salary, payable
bi-weekly in equal installments.
The Company and Ernest Kelly entered into an employment agreement dated as
of January 29, 1996 (the "Kelly Agreement") pursuant to which Mr. Kelly serves
as Senior Vice President--Quality Assurance of the Company. At January 29, 1998,
the Kelly Agreement was automatically renewed for an additional two year period.
For his services, Mr. Kelly is currently entitled to an annual salary of
$198,000 and to bonuses to be determined at the discretion of the Company's
Board. In connection with the commencement of his employment with the Company,
Mr. Kelly was granted options to purchase 50,000 shares of the Company's Common
Stock at an exercise price of $7.1875 per share, the fair market value on the
date of grant. Such options become exercisable in four annual installments of
12,500 shares each. In the event that Mr. Kelly's employment is terminated by
the Company at any time for any reason other than justifiable cause, disability
or death, or the Company shall fail to renew the Kelly Agreement, the Company is
obligated to pay Mr. Kelly an amount equal to his then annual salary, payable
bi-weekly in equal installments.
The Company and Norman Barton entered into a severance agreement dated as
of April 26, 1996 (the "Barton Agreement"). In March 1998, Dr. Barton was
appointed Senior Vice President-Chief Medical Officer of the Company; prior
thereto, Dr. Barton served as Vice President-Medical Affairs of the Company. For
his services, Dr. Barton is currently entitled to an annual salary of $195,000
and to bonuses to be determined at the discretion of the Company's Board. In
connection with his appointment to Senior Vice President-Chief Medical Officer,
Dr. Barton was granted options to purchase 25,000 shares of the Company's Common
Stock at an exercise price of $7.875 per share, the fair market value on the
date of grant. Pursuant to the terms of the Barton Agreement, in the event that
Dr. Barton's employment is terminated by the Company at any time for any reason
other than justifiable cause, disability or death, the Company is obligated to
pay Dr. Barton an amount equal to his then annual salary, payable bi-weekly in
equal installments.
COMPENSATION OF DIRECTORS
The Company's non-employee directors are paid $10,000 annually in shares of
the Company's Common Stock pursuant to the Company's Stock Compensation Plan for
Outside Directors and $10,000 per annum in cash, payable quarterly. In addition,
non-employee members of the Executive Committee are paid $5,000 per annum in
cash, payable quarterly, and non-employee members of the Audit Committee and the
Compensation and Stock Option Committee receive $1,000 for each committee
meeting attended if not held on the same day as a meeting of the Board of
Directors. All directors are reimbursed for their expenses in connection with
attending meetings of the Company's Board. In addition, the Company pays each
director who attends the Company's research and development meetings a fee of
$1,500 per day. Upon becoming a director of the Company, non-employee directors
also receive a one time grant of options to purchase 20,000 shares of the
Company's Common Stock pursuant to the Company's 1992 Stock Option Plan for
Outside Directors. In addition, each non-employee director receives an option to
purchase 7,500 shares of Common Stock each year upon re-election as a director
pursuant to the Company's Stock Option Plan for Non-Employee Directors.
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Stock Option Plan for Non-Employee Directors. Pursuant to the Company's
1997 Stock Option Plan for Non-Employee Directors (the "1997 Directors Option
Plan"), each non-employee director will receive an option to purchase 7,500
shares of Common Stock each year upon re-election as a director. The option
exercise price per share of Common Stock will be the Fair Market Value (as
defined in the 1997 Directors Option Plan) of the Common Stock subject to the
option on the date that the option is granted. Options granted under the 1997
Directors Option Plan have a term of ten years from the date the option is
granted, subject to earlier termination upon such person ceasing to be a
director. A total of 500,000 shares of Common Stock have been reserved for
issuance under the 1997 Directors Option Plan.
In general, options become exercisable in four equal installments on the
six month and first, second and third anniversaries of the date of grant. In the
event a director ceases to be a director of the Company for any reason, such
person may exercise the option, to the extent exercisable at the time he or she
ceases to be a director of the Company, within six months after the date he or
she ceases to be a director of the Company (one year if he or she ceases to be a
director of the Company by reason of death). Options may not be transferred
during the lifetime of an optionee. The 1997 Directors Option Plan provides that
the options will become immediately exercisable in full upon a "Change in
Control" (as defined in the 1997 Directors Option Plan) of the Company.
Pursuant to the 1997 Directors Option Plan, on June 17, 1998, Messrs.
Conrad, Rosenfield, Tendler, Thompson, Tolkowsky and Weissbach and Ms.
Wattleton, who were re-elected directors of the Company at the 1998 Annual
Meeting of Stockholders, each received an option to purchase 7,500 shares of the
Company's Common Stock at a per share exercise price of $7.875. Upon the
re-election of Messrs. Conrad, Kaplan, Rosenfield, Tendler, Tolkowsky and
Weissbach and Ms. Wattleton as directors of the Company at the 1999 Annual
Meeting of Stockholders, each of them will receive an option to purchase 7,500
shares of the Company's Common Stock at a per share exercise price equal to Fair
Market Value on the date of the annual meeting. As a result of Mr. Thompson's
recent appointment as President and Chief Operating Officer of the Company, Mr.
Thompson is no longer eligible to receive options under this plan.
Stock Option Plan For Outside Directors. Pursuant to the Company's 1992
Stock Option Plan for Outside Directors (the "1992 Directors Plan"), each person
who is neither an officer nor employee of the Company or its subsidiaries and
who is elected or appointed a director of the Company (the "New Director")
automatically receives on the date of his initial election or appointment to the
Company's Board (the "Grant Date") an option to purchase 20,000 shares of the
Company's Common Stock (the "Option") at a per share exercise price equal to the
Fair Market Value (as defined in the 1992 Directors Plan) of the Company's
Common Stock on the Grant Date.
Options issued under the 1992 Directors Plan may be exercised as to 5,000
shares on the date which is six months and one day after the Grant Date and an
additional 5,000 shares on each of the three successive anniversaries of the
Grant Date. In the event that a New Director ceases to be a director of the
Company, such person may exercise any portion of the Option that is exercisable
by him at the time he ceases to be a director of the Company, but only to the
extent such Option is exercisable as of such date, within six months after the
date he ceases to be a director of the Company. However, in the event a "Change
of Control of the Corporation" (as defined in the 1992 Directors Plan) shall
occur, all options granted under the 1992 Directors Plan which are outstanding
at the time a Change of Control of the Corporation occurs shall immediately
become exercisable. Options granted under the 1992 Directors Plan have a term of
ten years from the Grant Date and are not "incentive stock options" within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code").
Mr. Herbert J. Conrad, who was elected a director of the Company on October
14, 1993, was automatically granted an Option at a per share price of $5.8125.
Mr. David Tendler and Mr. Virgil Thompson, who were elected as directors of the
Company on June 2, 1994, were each automatically granted an Option at a per
share exercise price of $2.9375. Ms. Wattleton and Messrs. Rosenfield and
Weissbach, who were elected directors of the Company on June 18, 1997, were each
automatically granted an Option at a per share exercise price of $13.9375. Mr.
Carl E. Kaplan, who was elected a director of the Company on June 17, 1998, was
automatically granted an Option at a per share price of $7.91.
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Stock Compensation Plan for Outside Directors. Pursuant to the Company's
Compensation Plan for Outside Directors (the "Compensation Plan"), each director
of the Company who is neither an officer nor employee of the Company or its
subsidiaries (an "Outside Director") is awarded automatically, in lieu of cash
compensation for services as a director, on the last business day of each full
fiscal quarter subsequent to his election or appointment as an Outside Director,
such number of shares of the Company's Common Stock as has an aggregate Fair
Market Value (as defined in the Compensation Plan) equal to $2,500, based on the
price of the Company's Common Stock on the date of issue (the "Shares"). The
Compensation Plan provides that each Outside Director will be awarded Shares
until such time as he is no longer an Outside Director. If an Outside Director
ceases to be an Outside Director for any reason, the number of Shares which he
will be awarded on the last business day of the Company's next fiscal quarter
will be equal to one-third of the number of Shares which he would have been
awarded on such date for each complete month that he was an Outside Director in
the fiscal quarter in which he ceased to be an Outside Director.
The Compensation Plan allows any Outside Director to defer the issuance and
delivery of the Company's Common Stock awarded under the Compensation Plan until
the termination of his services on the Company's Board or such other time as the
Company's Board may determine. The Company entered into a deferral agreement
with Virgil Thompson in June 1994 and Herbert Weissbach in June 1997 (the
"Deferral Agreements") pursuant to which the issuance and delivery of the
Company's Common Stock to be awarded to each of Mr. Thompson and Mr. Weissbach
under the Compensation Plan has been deferred until after the date he ceases to
be a member of the Company's Board; provided, however, that any shares of the
Company's Common Stock, the issuance of which was deferred, will be issued to
Mr. Thompson and Mr. Weissbach at the time of a change in ownership or effective
control of the Company or a change in ownership of a substantial portion of the
Company's assets, as defined in the Code, except that in determining whether
there is a change in effective control by reason of a stock acquisition, there
must be an acquisition of stock possessing at least 40% (as opposed to the 20%
requirement set forth in the Code) of the total voting power of the Company's
Common Stock. As a result of Mr. Thompson's recent appointment as President and
Chief Operating Officer of the Company, Mr. Thompson is no longer eligible,
whether by deferral or otherwise, to receive any future awards of shares of the
Company's Common Stock issued under the Compensation Plan other than those
shares already accumulated pursuant to the terms of his Deferral Agreement.
During the 1998 fiscal year, each Outside Director eligible to receive
shares under the Compensation Plan received 294 shares of the Company's Common
Stock on March 31, 1998, 352 shares of the Company's Common Stock on June 30,
1998, 377 shares of the Company's Common Stock on September 30, 1998 and 360
shares of the Company's Common Stock on December 31, 1998. On March 31, 1998,
June 30, 1998, September 30, 1998 and December 31, 1998, the Fair Market Value
of the Company's Common Stock was $8.50, $7.09375, $6.625 and $6.9375,
respectively. Each of Messrs. Herbert Conrad, Allan Rosenfield, David Tendler
and Dan Tolkowsky and Ms. Faye Wattleton received an aggregate of 1,383 shares
of the Company's Common Stock under the Compensation Plan for their services as
director during the 1998 fiscal year. Mr. Moses Marx, who did not stand for
re-election at the 1998 Annual Meeting of Stockholders, received an aggregate of
528 shares of the Company's Common Stock under the Compensation Plan for his
services as a director during the 1998 fiscal year. Mr. Carl E. Kaplan, who was
elected a director at the 1998 Annual Meeting of Stockholders, received an
aggregate of 737 shares of the Company's Common Stock under the Compensation
Plan for his services as a director during the 1998 fiscal year. On March 31,
1999, each of Ms. Wattleton and Messrs. Conrad, Kaplan, Rosenfield, Tendler and
Tolkowsky received 418 shares of the Company's Common Stock under the
Compensation Plan.
COMPENSATION AND STOCK OPTION COMMITTEE REPORT TO STOCKHOLDERS
The report of the Compensation and Stock Option Committee (the
"Compensation Committee") shall not be deemed incorporated by reference by any
general statement incorporating by reference this proxy statement into any
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filing under the Securities Act of 1933, as amended (the "Securities Act"), or
under the Exchange Act, except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
The Compensation Committee is currently comprised of four directors. As
members of the Compensation Committee, it is our responsibility to determine the
most effective total executive compensation strategy based on the Company's
business and consistent with stockholders' interests. Our specific duties entail
reviewing the Company's compensation practices, recommending compensation for
executives and key employees and administering the Company's stock option plans.
Compensation Philosophy
The Company has been engaged in the research, development, manufacture and
marketing of products for human health care since its inception in 1980. One of
the Company's strengths contributing to its success is the strong management
team--many of whom have been with the Company for a significant period of time.
The central goal of the Compensation Committee is to ensure that the Company's
remuneration policy is such that the Company is able to attract, retain and
reward capable employees who can contribute, both short- and longer-term, to the
continued success of the Company. Equity participation and a strong alignment to
stockholders' interests are key elements of the Company's compensation
philosophy. The Company's executive compensation program consists of three
parts: base salary, annual bonus and stock options. In awarding salary increases
and bonuses, the Compensation Committee did not relate the various elements of
corporate performance to each element of executive compensation. Rather, the
Compensation Committee considered whether the compensation package as a whole
adequately compensated each executive for the Company's performance during 1998
and executive's contribution to such performance.
Under the Omnibus Budget Reconciliation Act ("OBRA") which was enacted in
1993, publicly held companies may be prohibited from deducting as an expense for
federal income tax purposes total remuneration in excess of $1 million paid to
certain executive officers in a single year. However, OBRA provides an exception
for "performance based" remuneration, including stock options. The Company
expects to keep "non-performance based" remuneration within the $1 million limit
to ensure that all executive compensation will be fully deductible.
Nevertheless, although the Committee considers the net cost to the Company in
making all compensation decisions (including, for this purpose, the potential
limitation on deductibility of executive compensation), there is no assurance
that compensation realized with respect to any particular award will qualify as
"performance based" remuneration.
Base Salary
Base salary represents the fixed component of the executive compensation
program. The Company's philosophy regarding base salaries is conservative,
maintaining salaries at approximately competitive industry average.
Determinations of base salary levels are established on an annual review of
marketplace competitiveness with similar biotechnology companies, and on
internal relationships. Periodic increases in base salary relate to individual
contributions to the Company's overall performance, relative marketplace
competitiveness levels, length of service and the industry's annual competitive
pay practice movement. No specific performance targets were established for
fiscal year 1997, which was the base year for determining the salary increases
awarded in June 1998. In determining appropriate levels of base salary, the
Compensation Committee relied in part on several biotechnology industry
compensation surveys.
Bonus
Bonuses represent the variable component of the executive compensation
program that is tied to the Company's performance and individual achievement.
The Company's policy is to base a significant portion of its senior
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executives' cash compensation on bonus. In determining bonuses, the Compensation
Committee considers factors such as relative performance of the Company during
the year and the individual's contribution to the Company's performance as well
as the degree to which Executive met certain objectives established for him.
Stock Options
The Compensation Committee, which administers the Company's stock option
plans, believes that one important goal of the executive compensation program
should be to provide executives, key employees and consultants--who have
significant responsibility for the management, growth and future success of the
Company--with an opportunity to increase their ownership and potentially gain
financially from the Company's stock price increases. This approach ensures that
the best interests of the stockholders, executives and employees will be closely
aligned. Therefore, executive officers and other key employees of the Company
are granted stock options from time to time, giving them a right to purchase
shares of the Company's Common Stock in the future at a specified price. The
grant of options is based primarily on an employee's potential contribution to
the Company's growth and financial results. In determining the size of option
grants, the Compensation Committee considers the number of options owned by such
officer, the number of options previously granted and currently outstanding, and
the aggregate size of the current option grants. Options generally are granted
at the prevailing market value of the Company's Common Stock and will only have
value if the Company's stock price increases. Generally, grants of options vest
in equal amounts over four years and the individual must be employed by the
Company for such options to vest.
1998 Compensation to Chief Executive Officer
In reviewing and recommending Dr. Fass' salary and bonus and in awarding
him stock options for fiscal year 1998 and for his future services, the
Compensation Committee followed its compensation philosophy. Dr. Fass' annual
salary was increased to $360,000 in June 1998, a 7.5% increase over the prior
year, compared to a 9.1% increase in salary in June 1997 over the prior year.
The Compensation Committee recommended this increase in salary over the prior
year in recognition of Dr. Fass' achievements in establishing new commercial
relationships and advancing the commercialization of many of the Company's
products as well as achieving profitable financial results. For the 1997 fiscal
year, Dr. Fass received a bonus of $125,000, representing approximately 27% of
his cash compensation in bonus, which bonus was paid in 1998. The Committee
recommended the particular dollar amount of Dr. Fass' bonus in recognition of
Dr. Fass' efforts in establishing new commercial relationships and advancing the
commercialization of many of the Company's products. In 1998, Dr. Fass was
granted options to purchase 200,000 shares of the Company's Common Stock at an
exercise price of $7.5625, the fair market value on the date of grant, under the
terms of the 1992 Stock Option Plan. The options become exercisable in equal
installments over four years beginning on the first anniversary of the date of
grant. The Compensation Committee believes a grant of a stock option to purchase
200,000 shares of the Company's Common Stock is reasonable, based on marketplace
competitiveness, to secure the long-term services of the Company's chief
executive officer and to further align the chief executive officer's
compensation with stockholder interests.
COMPENSATION AND STOCK OPTION COMMITTEE
-- CARL KAPLAN
-- DAVID TENDLER
-- VIRGIL THOMPSON
-- DAN TOLKOWSKY
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THE COMPANY'S PERFORMANCE
The following Stock Price Performance Graph shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act or under the
Exchange Act, except to the extent the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
The following graph compares cumulative total return of the Company's
Common Stock with the cumulative total return of (i) the S&P 500 Index, (ii) an
industry peer group index (the "1998 Peer Index") and (iii) the industry peer
group index utilized in 1997 (the "1997 Peer Index"). The graph assumes (a) $100
was invested on December 31, 1993 in each of the Company's Common Stock, the
stocks comprising the S&P 500 Index, the stocks comprising the 1998 Peer Index
and the stocks comprising the 1997 Peer Index, and (b) the reinvestment of
dividends. The 1998 Peer Index consists of Alkermes, Inc., Aviron, Cephalon,
Inc., COR Therapeutics, Inc., Coulter Pharmaceutical, Inc., EntreMed, Inc.,
GelTex Pharmaceuticals, Inc., Gliatech Inc., Guilford Pharmaceuticals Inc.,
ImClone Systems Incorporated, Immune Response, Inc., ISIS Pharmaceuticals, Inc.,
Ligand Pharmaceuticals Inc., Neurogen Corporation, NeXstar Pharmaceuticals,
Inc., North American Vaccine Inc., Pharmacyclics, Inc., Protein Design Labs
Inc., Regeneron Pharmaceuticals, Inc., SangStat Medical Corporation, Scios Inc.,
Sugen, Inc., Transkaryotic Therapies, Inc., Triangle Pharmaceuticals, Inc. and
Vical Incorporated. The 1997 Peer Index consists of Advanced Tissue Sciences,
Inc., Affymetrix, Inc., Agouron Pharmaceuticals Inc., Amgen Inc., Biogen Inc.,
Centocor Inc., Chiron Corp., COR Therapeutics, Inc., Genentech Inc., Genzyme
Corp., Gilead Sciences Inc., Human Genome Sciences, Inc., ICOS Corporation, IDEC
Pharmaceuticals Corp., Immunex Corp., Incyte Pharmaceuticals, Inc., Interneuron
Pharmaceuticals Inc., Ligand Pharmaceuticals Inc., MedImmune, Inc., Millennium
Pharmaceuticals Inc., North American Vaccine Inc., PathoGenesis Corporation,
Protein Design Labs Inc., SangStat Medical Corporation, Sepracor Inc.,
Transkaryotic Therapies, Inc. and Vertex Pharmaceuticals Inc. The 1998 Peer
Index consists of all biotechnology companies with a market capitalization at
December 31, 1998 of between $200 million and $500 million; at that date the
Company had a market capitalization of $360.4 million. The 1997 Peer Index
consists of all biotechnology companies with a market capitalization at December
31, 1997 of in excess of $400 million; at December 31, 1997 the Company had a
market capitalization of $508.5 million. The Company changed the companies in
the peer group index because of the decrease in the Company's market
capitalization between December 31, 1997 and December 31, 1998.
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STOCK PERFORMANCE GRAPH
BIO-TECHNOLOGY GENERAL CORP.
ANALYSIS OF PEER GROUP INDICES
1997 Peer 1998 Peer
BTGC Index Group Index Group S&P 500
- --------------- ---------------- --------------------- -----------------
1993 100 1993 100 1993 100 1993 100
1994 41.0714 1994 99.624 1994 56.6347 1994 98.4608
1995 86.9047 1995 178.799 1995 123.0626 1995 132.046
1996 250.000 1996 176.420 1996 163.086 1996 158.803
1997 204.762 1997 198.731 1997 167.451 1997 208.046
1998 132.143 1998 317.495 1998 145.157 1998 263.529
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RELATIONSHIP WITH INDEPENDENT AUDITORS
Arthur Andersen LLP have been the independent auditors for the Company
since December 1990 and will serve in that capacity for the 1999 fiscal year. A
representative of Arthur Andersen LLP will be present at the Annual Meeting and
will have an opportunity to make a statement if he desires to do so, and will
respond to appropriate questions from stockholders.
STOCKHOLDER PROPOSALS
Stockholder proxies obtained by the Board of Directors in connection with
the annual meeting of stockholders in the year 2000 will confer on the
proxyholders discretionary authority to vote on any matters presented at the
meeting which were not included in the proxy statement, unless notice of the
matter to be presented at the meeting is provided to the Company's Corporate
Secretary no later than March 22, 2000.
All stockholder proposals which are intended to be presented at the 2000
Annual Meeting of Stockholders of the Company must be received by the Company no
later than January 6, 2000 for inclusion in the Board of Directors' proxy
statement and form of proxy relating to that meeting.
OTHER BUSINESS
The Board of Directors knows of no other business to be acted upon at the
Annual Meeting. However, if any other business properly comes before the Annual
Meeting, it is the intention of the persons named in the enclosed proxy to vote
on such matters in accordance with their best judgment.
The prompt return of your proxy will be appreciated and helpful in
obtaining the necessary vote. Therefore, whether or not you expect to attend the
Annual Meeting, please sign the proxy and return it in the enclosed envelope.
By Order of the Board of Directors
ROY L. GOLDMAN
Secretary
Dated: April 30, 1999
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K WILL BE SENT WITHOUT
CHARGE TO ANY STOCKHOLDER REQUESTING IT IN WRITING FROM: BIO-TECHNOLOGY GENERAL
CORP., ATTENTION: LEAH BERKOVITS, 70 WOOD AVENUE SOUTH, ISELIN, NEW JERSEY
08830.
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BIO-TECHNOLOGY GENERAL CORP.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 9, 1999
Herbert Conrad, Sim Fass and Dan Tolkowsky, and each of them, as the true
and lawful attorneys, agents and proxies of the undersigned, with full power of
substitution, are hereby authorized to represent and to vote all shares of
Common Stock of Bio-Technology General Corp. held of record by the undersigned
on April 14, 1999, at the Annual Meeting of Stockholders to be held at 11:00
A.M. on Wednesday, June 9, 1999, at The University Club, 1 West 54th Street, New
York, New York, and at any adjournment thereof. Any and all proxies heretofore
given are hereby revoked.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DESIGNATED BY THE
UNDERSIGNED. IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED FOR
PROPOSAL--ELECTION OF DIRECTORS.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
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SEE REVERSE
SIDE
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PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
Proposal--Election of Directors--Nominees are:
Herbert Conrad, Sim Fass, Carl Kaplan, Allan Rosenfield, David Tendler, Virgil
Thompson, Dan Tolkowsky, Faye Wattleton and Herbert Weissbach.
[ ] FOR all listed nominees (except do not vote for the nominee(s) whose
name(s) appears(s) below):
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[ ] WITHHOLD AUTHORITY to vote for the listed nominees.
Discretionary authority is hereby granted with respect to such other matters as
may properly come before the meeting.
IMPORTANT: PLEASE SIGN EXACTLY AS NAME APPEARS BELOW. EACH JOINT OWNER SHALL
SIGN. EXECUTORS, ADMINISTRATORS, TRUSTEES, ETC. SHOULD GIVE FULL TITLE AS SUCH.
IF SIGNOR IS A CORPORATION, PLEASE GIVE FULL CORPORATE NAME BY DULY AUTHORIZED
OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
Dated ________________________________, 1999
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Signature
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Signature If Held Jointly
THE ABOVE-SIGNED ACKNOWLEDGES RECEIPT OF THE
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS AND THE
PROXY STATEMENT FURNISHED THEREWITH.
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