SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
[ ] Preliminary Proxy Statement
[ ] Confidential for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
IVAX CORPORATION
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee:
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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IVAX CORPORATION
4400 BISCAYNE BOULEVARD
MIAMI, FLORIDA 33137
(305) 575-6000
NOTICE OF ANNUAL SHAREHOLDERS MEETING
The annual shareholders meeting of IVAX Corporation ("IVAX") will be
held at the Wyndham Hotel, 1601 Biscayne Boulevard, Miami, Florida on Friday,
June 5, 1998, at 10:00 a.m., local time, for the following purposes:
1. to elect eight directors to serve until the 1999
annual meeting of shareholders; and
2. to transact such other business as may properly come
before the meeting.
Only shareholders of record at the close of business on April 10, 1998
are entitled to notice of and to vote at the meeting or any adjournments
thereof. A list of such shareholders will be available for inspection during
normal business hours at IVAX's offices located at 4400 Biscayne Boulevard,
Miami, Florida during the 10 days preceding the meeting.
By Order of the Board of Directors
ARMANDO A. TABERNILLA
SECRETARY
Miami, Florida
April 17, 1998
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PLEASE SIGN, DATE AND RETURN YOUR PROXY
CARD PROMPTLY IN THE ENCLOSED ENVELOPE
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IVAX CORPORATION
PROXY STATEMENT
This proxy statement is furnished by the Board of Directors of IVAX
Corporation ("IVAX") in connection with its solicitation of proxies for use at
the annual meeting of shareholders to be held on June 5, 1998 (the "Annual
Meeting") at the time and place set forth in the accompanying Notice of Annual
Shareholders Meeting, and at any adjournments thereof. Mailing of the proxy
statement and the accompanying proxy card to shareholders will commence on or
about April 17, 1998. Record holders of common stock, par value $.10 per share
("Common Stock"), at the close of business on April 10, 1998 (the "Record Date")
are entitled to one vote for each share held on all matters to be considered at
the Annual Meeting. On the Record Date, 120,081,796 shares of Common Stock were
outstanding and entitled to vote.
VOTING
All properly executed proxies delivered pursuant to this solicitation
and not revoked will be voted in accordance with the directions given and, in
connection with any other business that may properly come before the meeting, in
the discretion of the persons named in the proxy. With respect to the proposal
to elect eight directors, shareholders may vote in favor of all nominees or
withhold their votes as to all or specific nominees. If no direction is given on
a proxy, it will be voted for the election of all nominees. A proxy delivered
pursuant to this solicitation is revocable at any time prior to its exercise by
giving written notice to IVAX's Secretary, by delivering a later dated proxy, or
by voting in person at the meeting. Attendance at the meeting will not, in
itself, constitute revocation of a proxy. A majority of the outstanding shares
of Common Stock, represented in person or by proxy, constitutes a quorum for
transaction of business at the meeting. The election of directors will require
the affirmative vote of a plurality of the shares of Common Stock voting in
person or by proxy at the meeting. Accordingly, votes that are withheld and
broker non-votes will not affect the outcome of the election.
PRINCIPAL SECURITY HOLDERS
The following table sets forth certain information with respect to the
only persons known by IVAX to own beneficially in excess of five percent of the
outstanding shares of Common Stock as of April 10, 1998.
NAME AND ADDRESS OF NUMBER OF PERCENT
BENEFICIAL OWNER SHARES OF CLASS
Phillip Frost, M.D. 15,704,733 (1) 13.1%
4400 Biscayne Boulevard
Miami, Florida 33137
Azure Limited 7,958,492 (2) 6.6%
c/o Charter Management, Ltd.
Town Mills
Trinity Square
St. Peter Port
Guernsey, Channel Islands
BASFIN Corporation 6,284,700 (3) 5.2%
3000 Continental Drive - North
Mount Olive, New Jersey 07828
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FOOTNOTES ON NEXT PAGE.
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(1) Includes 2,620,475 shares held directly, 1,066 shares held for Dr. Frost's
benefit under the IVAX Corporation Employee Savings Plan, 343,750 shares which
may be acquired pursuant to stock options exercisable within 60 days of April
10, 1998, 12,723,695 shares held by Frost-Nevada Limited Partnership ("FNLP"),
and 15,748 shares which may be acquired by FNLP upon conversion of $500,000 in
principal amount of IVAX's 6 1/2% Convertible Subordinated Notes Due 2001. Dr.
Frost is the sole limited partner of FNLP and the sole shareholder, an officer
and a director of Frost-Nevada Corporation, the general partner of FNLP. Dr.
Frost disclaims beneficial ownership of an additional 163,034 shares held of
record by his wife. Dr. Frost is a director and executive officer of IVAX.
(2) Azure Limited holds the shares as trustee for Charter Trust Company, the
trustee of the I. Kaye Family Trust, created by Mr. Isaac Kaye in 1988. The
beneficiaries of the I. Kaye Family Trust may include, among others, Mr. Kaye's
children. Mr. Kaye is neither a beneficiary nor a trustee of such trust, and he
disclaims beneficial ownership of all of the shares owned by Azure Limited. Mr.
Kaye is a director and executive officer of IVAX.
(3) Based on information contained in a Schedule 13D filed by BASFIN Corporation
on September 24, 1996.
ELECTION OF DIRECTORS
The Board of Directors of IVAX (the "Board") set the number of
directors constituting the Board at eight. The persons named below were
designated by the Board as nominees for election as directors to hold office
until the next annual meeting of shareholders or until their successors are
elected and qualified. All of the nominees except for Mr. Fernandez are
incumbent directors and, except for Mr. Fernandez and Mr. Flanzraich, were
previously elected by the shareholders. Although management does not anticipate
that any nominee will be unable or unwilling to serve as director, in the event
of such an occurrence, proxies may be voted in the discretion of the persons
named in the proxy for a substitute designated by the Board, unless the Board
determines to reduce the number of directors constituting the Board.
MARK ANDREWS. Mr. Andrews, age 47, has served as a director of IVAX
since 1987. He served as the Chairman of the Board of Directors and Chief
Executive Officer of American Exploration Company (oil and gas exploration and
production) since 1980, and was its President from 1980 to 1988. Upon the merger
of American Exploration Company into Louis Dreyfus Natural Gas Corp. (oil and
gas exploration and production) in October 1997, Mr. Andrews became the Vice
Chairman of the Board of Directors of the combined entity.
ERNST BIEKERT, PH.D. Dr. Biekert, age 73, has served as a director of
IVAX since 1991. He is a professor at the University of Heidelberg in Germany.
He was the Chairman of the Board and Chief Executive Officer of Knoll A.G.
(pharmaceuticals) from 1968 to 1985. Dr. Biekert was a consultant to BASF A.G.
(chemicals and pharmaceuticals) from 1985 to 1987 and was Chairman of its
pharmaceutical division from 1975 to 1985.
CHARLES M. FERNANDEZ. Mr. Fernandez, age 36, has served as Chairman of
the Board, Chief Executive Officer and President of Continucare Corporation
(integrated health care) since 1996. From 1985 to 1995, he served as Executive
Vice President and as a director of Heftel Broadcasting corporation (radio
broadcasting). He is a director of Frost Hanna Capital Group, Inc. (investment
company).
JACK FISHMAN, PH.D. Dr. Fishman, age 67, has served as a director of
IVAX since 1987. From 1991 to 1995, he served as IVAX's Chief Scientific
Officer, and from 1991 to 1997, he served as a Vice Chairman of the Board. He is
an Adjunct Professor at The Rockefeller University and Director of Research of
Strang Cornell Cancer Research Laboratory, a non-profit entity associated with
Cornell University Medical College. Dr. Fishman was President of IVAX from 1988
to 1991, and served as a Research Professor of Biochemistry and Molecular
Biology at the University of Miami from 1988 to 1992.
NEIL FLANZRAICH. Mr. Flanzraich, age 54, has served as a director of
IVAX since 1997. He has been a shareholder and has served as Chairman of the
Life Sciences Legal Practices Group of Heller Ehrman White
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& McAuliffe since September 1995. From 1981 to 1994, he served in various
capacities at Syntex Corporation (pharmaceuticals), most recently as its Senior
Vice President, General Counsel and a member of the Corporate Executive
Committee. From 1994 to 1995, after Syntex Corporation was acquired by Roche
Holding Ltd., he served as Senior Vice President and General Counsel of Syntex
(U.S.A.) Inc., a Roche subsidiary. He is Chairman of the Board of Directors of
North American Vaccine, Inc. (vaccine research and development), and is a
director of Whitman Education Group, Inc. (proprietary education) and LXR
Biotechnology, Inc. (biopharmaceuticals).
PHILLIP FROST, M.D. Dr. Frost, age 61, has served as Chairman of the
Board and Chief Executive Officer of IVAX since 1987. He served as IVAX's
President from 1991 until 1995. He was the Chairman of the Department of
Dermatology at Mt. Sinai Medical Center of Greater Miami, Miami Beach, Florida
from 1972 to 1990. Dr. Frost was Chairman of the Board of Directors of Key
Pharmaceuticals, Inc. from 1972 to 1986. He is Chairman of the Board of
Directors of Whitman Education Group, Inc. (proprietary education), Vice
Chairman of the Board of Directors of North American Vaccine, Inc. (vaccine
research and development), Vice Chairman of the Board of Directors of
Continucare Corporation (integrated health care), and a director of Northrop
Grumman Corp. (aerospace). He is Vice Chairman of the Board of Trustees of the
University of Miami and a member of the Board of Governors of the American Stock
Exchange.
JANE HSIAO, PH.D. Dr. Hsiao, age 50, has served as a director of IVAX
and as IVAX's Vice Chairman-Technical Affairs since February 1995, and as
Chairman, Chief Executive Officer and President of DVM Pharmaceuticals, Inc.,
IVAX's veterinary products subsidiary, since March 1998. From 1992 until
February 1995, she served as IVAX's Chief Regulatory Officer and Assistant to
the Chairman, and as Vice President-Quality Assurance and Compliance of Baker
Norton Pharmaceuticals, Inc., IVAX's principal proprietary pharmaceutical
subsidiary. From 1987 to 1992, Dr. Hsiao was Vice President-Quality Assurance,
Quality Control and Regulatory Affairs of Baker Norton Pharmaceuticals, Inc.
ISAAC KAYE. Mr. Kaye, age 68, has served as Deputy Chief Executive
Officer and a director of IVAX since 1990, and as Chief Executive Officer of
Norton Healthcare Limited, IVAX's principal United Kingdom pharmaceutical
subsidiary, since 1990.
DIRECTOR COMPENSATION
Each director who is not employed by IVAX receives $10,000 per year for
his service as a director and is reimbursed for expenses incurred in attending
board and committee meetings. Pursuant to IVAX's 1994 Stock Option Plan,
non-employee directors automatically are granted each year, on the first
business day following IVAX's annual meeting of shareholders, non-qualified
options to purchase 5,000 shares of Common Stock at an exercise price equal to
the fair market value of the Common Stock on the date of the grant, and having a
term of ten years.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board held fourteen meetings during 1997. During 1997, all
incumbent directors attended at least 75% of the meetings of the Board and the
committees of the Board on which they served. The Board does not have a
nominating committee, and the usual functions of such a committee are performed
by the entire Board.
AUDIT COMMITTEE. The principal functions of the Audit Committee include
reviewing the adequacy of IVAX's internal systems of accounting controls,
recommending to the Board the appointment of independent auditors, conferring
with independent auditors and internal auditors concerning the scope of their
examinations of the books and records of IVAX and their independence, reviewing
the financial statements of IVAX and management's disclosures, reviewing the
independent auditors' findings and recommendations, and considering other
appropriate matters regarding the financial affairs and internal polices and
procedures of IVAX. The
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Audit Committee's current members are Messrs. Andrews and Flanzraich and Dr.
Fishman, and it held four meetings during 1997.
COMPENSATION AND STOCK OPTION COMMITTEE. The principal functions of the
Compensation and Stock Option Committee are to approve or recommend to the Board
remuneration arrangements and compensation plans involving IVAX's directors and
executive officers and other highly compensated employees, to review with
management IVAX's employee benefit programs, and to administer IVAX's stock
option plans. The Compensation and Stock Option Committee's current members are
Messrs. Andrews and Flanzraich and Dr. Biekert, and it held eight meetings
during 1997.
REGULATORY COMPLIANCE COMMITTEE. The principal function of the
Regulatory Compliance Committee is to review with management IVAX's compliance
with regulatory requirements. The Regulatory Compliance Committee's current
members are Drs. Biekert, Fishman and Hsiao, and it held three meetings during
1997.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires IVAX's
directors, executive officers and 10% shareholders to file initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of IVAX with the Securities and Exchange Commission and the American
Stock Exchange. Directors, executive officers and 10% shareholders are required
to furnish IVAX with copies of all Section 16(a) forms they file. Based on a
review of the copies of such reports furnished to IVAX and written
representations from IVAX's directors and executive officers that no other
reports were required, IVAX believes that, during 1997, IVAX's directors,
executive officers and 10% shareholders complied with all Section 16(a) filing
requirements applicable to them, except that Mr. Beier inadvertently filed a
late Form 3 upon becoming an executive officer in October 1997, and Michael
Weintraub, a former director of IVAX, inadvertently filed a late Form 4 in
August 1997 relating to a change in the form of beneficial ownership of certain
shares of IVAX common stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Whitman Education Group, Inc. ("Whitman") leases approximately 7,747
square feet of office space from IVAX in Miami, Florida at an annual rental of
$144,598. The lease may be terminated by either party upon 180 days notice.
Certain executive officers and directors of IVAX serve as directors of Whitman.
In addition, Dr. Frost is a principal shareholder of Whitman.
In January 1998, IVAX sold all of the outstanding shares of PharmAir
Corporation, the primary asset of which is the IVAX corporate jet (the
"Airplane"), to Aircraft 45470 Acquisition Corp., a corporation beneficially
owned by Dr. Frost, for $1,800,000 in cash. The purchase price was determined
based upon two independent appraisals of the Airplane, as well as several
bona-fide written offers to purchase the Airplane. The Board of Directors, with
Dr. Frost abstaining, approved the sale.
During 1997, IVAX paid approximately $45,650 on behalf of Dr. Frost as
an advancement of expenses incurred in the defense of an action filed in the
United States District Court for the Eastern District of New York on October 14,
1997 styled MARK FEDER, DERIVATIVELY ON BEHALF OF IVAX CORPORATION V. PHILLIP
FROST AND FROST-NEVADA LIMITED PARTNERSHIP. This action alleges a derivative
claim on behalf of IVAX pursuant to Section 16(b) of the Securities Exchange
Act, 15 U.S.C. Section 78p(b), and seeks disgorgement of profits purportedly
obtained by Dr. Frost and FNLP as a result of purchases of Common Stock by them
and sales of Common Stock by another corporation. The complaint, which alleges
that such transactions resulted in "short-swing profits" of at least $3 million,
seeks damages in an unspecified amount, as well as interest and attorneys' fees.
The defendants have filed a motion to dismiss the action, which motion remains
pending.
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Mr. Flanzraich, who was elected to the Board of Directors in September
1997, is a shareholder in the law firm of Heller Ehrman White & McAuliffe, which
rendered legal services to IVAX and its subsidiaries in 1997 and is expected to
render legal services to IVAX and its subsidiaries in 1998.
Effective March 5, 1997, IVAX entered into an employment agreement with
Robert Strauss to serve as President and Chief Operating Officer and as a
director of IVAX. Pursuant to the agreement, Mr. Strauss was granted options to
purchase 700,000 shares of Common Stock, and he was entitled to receive an
annual salary of $475,000 and certain employee benefits. The agreement provided
for severance payments if Mr. Strauss' employment was terminated under certain
circumstances. On July 25, 1997, Mr. Strauss resigned as President and Chief
Operating Officer and as a director of IVAX. In connection with his resignation,
Mr. Strauss was paid $950,000 and the vesting of 300,000 of his stock options
was accelerated.
Michael W. Fipps, the former Senior Vice President - Finance and Chief
Financial Officer of IVAX, resigned on October 3, 1997. In consideration for Mr.
Fipps' continued employment after his announced resignation and his agreement to
assist in an orderly transition of his duties, Mr. Fipps was paid $235,000 and
the vesting of 10,000 of his stock options was accelerated.
STOCK OWNERSHIP OF MANAGEMENT
The following table indicates, as of April 10, 1998, the number of
shares of Common Stock beneficially owned by each director, each nominee for
director, each executive officer named in the "Summary Compensation Table," and
by all directors and executive officers as a group, and the percentage such
shares represent of the total outstanding shares of Common Stock. All shares
were owned directly with sole voting and investment power unless otherwise
indicated.
SHARES PERCENT
NAME OR IDENTITY BENEFICIALLY OF
OF GROUP OWNED(1) CLASS
-------- -------- -----
Mark Andrews 50,000 (2) *
Ernst Biekert, Ph.D. 25,000 (3) *
Charles M. Fernandez 100,000 *
Jack Fishman, Ph.D. 2,035,085 (4) 1.7%
Neil Flanzraich 5,000 (3) *
Phillip Frost, M.D. 15,704,733 (5) 13.1%
Jane Hsiao, Ph.D. 3,196,877 (6) 2.7%
Isaac Kaye 373,750 (3) *
David R. Bethune 10,500 (7) *
Samuel Broder, M.D. 166,344 (8) *
Rafick G. Henein, Ph.D. 92,500 (9) *
All directors and executive officers
as a group (12 persons) 21,772,589 (10) 18.1%
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* Represents beneficial ownership of less than 1%.
(1) For purposes of this table, beneficial ownership is computed pursuant to
Rule 13d-3 under the Securities Exchange Act of 1934; the inclusion of shares as
beneficially owned should not be construed as an admission that such shares are
beneficially owned for purposes of such act.
(2) Includes 25,000 shares which may be acquired pursuant to stock options
exercisable within 60 days of April 10, 1998 and 2,800 shares held by a trust
for the benefit of Mr. Andrews' children. Mr. Andrews disclaims beneficial
ownership of the shares held by the trust for the benefit of his children.
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(3) Includes shares which may be acquired pursuant to stock options exercisable
within 60 days of April 10, 1998 as follows: Dr. Biekert (25,000), Mr.
Flanzraich (5,000) and Mr. Kaye (343,750).
(4) Includes 5,000 shares which may be acquired pursuant to stock options
exercisable within 60 days of April 10, 1998 and 9,200 shares held by his wife.
Dr. Fishman disclaims beneficial ownership of an additional 60,000 shares held
as co-trustee of certain trusts for the benefit of certain family members.
(5) Includes 2,620,475 shares held directly, 1,066 shares held on Dr. Frost's
behalf under the IVAX Corporation Employee Savings Plan, 343,750 shares which
may be acquired pursuant to stock options exercisable within 60 days of April
10, 1998, 12,723,695 shares held by Frost-Nevada Limited Partnership ("FNLP"),
and 15,748 shares which may be acquired by FNLP upon conversion of $500,000 in
principal amount of IVAX's 6 1/2% Convertible Subordinated Notes Due 2001. Dr.
Frost is the sole limited partner of FNLP and the sole shareholder, an officer
and a director of Frost-Nevada Corporation, the general partner of FNLP. Dr.
Frost disclaims beneficial ownership of an additional 163,034 shares held of
record by his wife.
(6) Includes 984,285 shares held as trustee for the benefit of certain family
members, 200,000 shares which may be acquired pursuant to stock options
exercisable within 60 days of April 10, 1998, 2,100 shares held by her children
and 1,553 shares held on Dr. Hsiao's behalf under the IVAX Corporation Employee
Savings Plan.
(7) These shares are held by Mr. Bethune as trustee of a trust for the benefit
of his children.
(8) Includes 165,000 shares which may be acquired pursuant to stock options
exercisable within 60 days of April 10, 1998 and 1,344 shares held on Dr.
Broder's behalf under the IVAX Corporation Employee Savings Plan.
(9) Includes 62,500 shares which may be acquired pursuant to stock options
exercisable within 60 days of April 10, 1998.
(10) Includes an additional 300 shares of common stock and 12,500 additional
shares of common stock which may be acquired pursuant to stock options
exercisable within 60 days of April 10, 1998.
EXECUTIVE COMPENSATION
The following table contains certain information regarding aggregate
compensation paid or accrued by IVAX during 1997 to the Chief Executive Officer
and to each of the four highest paid executive officers other than the Chief
Executive Officer.
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<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
--------------------------------------------------- LONG-TERM
NAME AND OTHER ANNUAL COMPENSATION ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION STOCK OPTIONS COMPENSATION
------------------ ---- ------ ----- ------------ ------------- ------------
($) ($) ($) (#) ($)(1)
<S> <C> <C> <C> <C> <C> <C>
Phillip Frost, M.D. 1997 575,000 0 0 0 4,800
CHIEF EXECUTIVE OFFICER 1996 579,246 0 0 75,000 4,500
1995 550,000 0 0 75,000 4,500
Isaac Kaye (2) 1997 521,520 0 0 0 46,039
DEPUTY CHIEF EXECUTIVE OFFICER 1996 525,000 0 0 75,000 63,167
1995 500,000 0 0 75,000 48,600
David R. Bethune (3) 1997 169,231 250,000 0 350,000 0
PRESIDENT AND CHIEF OPERATING 1996 -- -- -- -- --
OFFICER 1995 -- -- -- -- --
Rafick G. Henein, Ph.D. (4) 1997 165,865 150,000 38,500 250,000 114,508
SENIOR VICE PRESIDENT 1996 -- -- -- -- --
1995 -- -- -- -- --
Samuel Broder, M.D. (5) 1997 350,000 25,000 0 100,000 4,800
CHIEF SCIENTIFIC OFFICER 1996 371,101 0 0 75,000 4,500
1995 239,393 0 0 150,000 57,300
</TABLE>
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(1) Except for Mr. Kaye, Dr. Broder and Dr. Henein, the amounts included in the
"All Other Compensation" column represent matching contributions made by IVAX
under the IVAX Corporation Employee Savings Plan, an employee retirement plan
maintained under Section 401(k) of the Internal Revenue Code. For Mr. Kaye, such
amounts consist of the use of an automobile and reimbursement for a chauffeur,
parking and other automobile related expenses. For Dr. Broder, such amount
includes matching contributions under the IVAX Corporation Employee Savings Plan
and, for 1995, taxable relocation expenses totaling $52,800. For Dr. Henein,
such amount includes taxable relocation expenses and a $100,000 payment to cover
the loss on the sale of his former residence.
(2) Mr. Kaye's salary and other compensation is paid in British pounds, and the
information in the table is based on the average exchange rate during the
applicable year.
(3) Mr. Bethune's employment commenced in July 1997.
(4) Dr. Henein's employment commenced in July 1997. The amount included in the
"Other Annual Compensation" column represents an additional annual payment made
pursuant to the terms of his employment agreement.
(5) Dr. Broder's employment commenced in March 1995.
EMPLOYMENT AGREEMENTS
In November 1997, IVAX entered into employment agreements with Dr.
Frost and Mr. Kaye, pursuant to which Dr. Frost serves as Chairman and Chief
Executive Officer and Mr. Kaye serves as Deputy Chief Executive Officer and as
Chief Executive Officer of Norton Healthcare Limited, IVAX's United Kingdom
subsidiary. Pursuant to the agreements, Dr. Frost receives an annual base salary
of $575,000, and Mr. Kaye receives an annual base salary of $575,000 less
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certain automobile-related expenses paid on his behalf. The agreements provide
for severance payments if either executive's employment is terminated under
certain circumstances. The agreements have five year terms, and automatically
renew for additional two year terms thereafter unless terminated by either
party.
In July 1997, IVAX entered into an agreement with Mr. Bethune pursuant
to which he serves as President and Chief Operating Officer. Pursuant to the
agreement, Mr. Bethune was granted options to purchase 350,000 shares of Common
Stock, and IVAX agreed to pay Mr. Bethune's relocation expenses, including up to
a $60,000 payment to cover expenses associated with the sale of his former
residence. In November 1997, IVAX entered into a new agreement with Mr. Bethune
that provides for an annual salary of $400,000 and certain employee benefits.
The agreement provides for severance payments if Mr. Bethune's employment is
terminated under certain circumstances. The agreement has a five year term, and
automatically renews for additional two year terms thereafter unless terminated
by either party. In December 1997, Mr. Bethune was paid a $250,000 bonus and his
annual salary was increased to $614,000 effective January 1, 1998.
In July 1997, IVAX entered into an employment agreement with Dr. Henein
pursuant to which he serves as a Senior Vice President of IVAX and as the
President and Chief Executive Officer of Zenith Goldline Pharmaceuticals, Inc.
Pursuant to the agreement, Dr. Henein was paid a signing bonus of $150,000 and
he was granted options to purchase 250,000 shares of Common Stock. He is
entitled to an annual base salary of $575,000, an additional annual cash payment
of $38,500 and certain employee benefits, and he is eligible for an annual bonus
of up to 100% of his base salary dependent on the performance of Zenith Goldline
Pharmaceuticals, Inc. IVAX also agreed to pay Dr. Henein's relocation expenses,
including a $100,000 payment to cover the loss on the sale of his former
residence. The agreement provides for severance benefits if Dr. Henein's
employment is terminated under certain circumstances. The agreement has a five
year term, and automatically renews for additional two year terms thereafter
unless terminated by either party.
CHANGE IN CONTROL AGREEMENTS
IVAX has entered into change in control employment agreements with
certain officers, including Dr. Frost, Mr. Kaye, Mr. Bethune and Dr. Broder.
These agreements are intended to provide protection to key employees and to
provide for continuity of management in the event of a change in control of
IVAX. The agreements become effective if a change in control occurs during the
three-year period that commences on the execution of the agreement. The period
is automatically renewed each year for an additional three years, unless IVAX
provides notice of non-renewal.
Under the change in control agreements, a change in control includes
any of the following events: (1) the acquisition of 40% or more of IVAX's common
stock by a person or group, (2) a change in the majority of IVAX's board (other
than a change approved by the incumbent board), (3) approval by the shareholders
of a reorganization, merger or consolidation, or (4) approval by the
shareholders of a liquidation or dissolution or sale of all or substantially all
of the assets of IVAX. Exceptions are provided for certain transactions,
including those where the existing shareholders of IVAX maintain effective
control.
Once the agreements become effective upon a change in control, they
have a term of three years. Each agreement provides that a covered officer will
have a position, responsibilities and authority at least commensurate with those
held during the ninety days preceding the change in control. Each agreement also
provides that the covered officer will be paid an annual base salary equal to
the highest salary received during the twelve months preceding the change in
control; will be entitled to an annual bonus equal to the average annual bonus
paid during the three years preceding the change in control; will be entitled to
a one-time special bonus equal to his annual base salary plus the higher of his
last annual bonus or the average annual bonus paid during the three years
preceding the change in control if the officer remains employed with IVAX
through the six month anniversary of the change in control; and will be entitled
to continued participation in IVAX's benefit plans, fringe benefits, office
support and staff, vacation, and expense
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reimbursement on the same basis as prior to the change in control, and in any
case no less favorable than those provided by IVAX to peer executives (as
defined in the agreements).
If, following a change in control, the officer is terminated for any
reason other than death, disability or for cause, or if such officer terminates
his employment agreement for good reason (as defined in the agreements) or for
any reason during the thirty-day period following the six month anniversary of
the change in control, then the officer is entitled to a severance payment equal
to two times the officer's annual base salary (as defined in the agreements)
plus the higher of his last annual bonus or the average annual bonus paid during
the three years preceding the change in control. In addition, if the special
bonus has not been paid to the officer, the severance payment shall be increased
by the amount of the special bonus. The agreements also provide that the officer
is entitled to continue to participate in IVAX's welfare benefit plans for the
full three-year employment period.
In the event that any payments made in connection with a change in
control would be subjected to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended, IVAX will "gross-up" the officer's
compensation for all federal, state and local income and excise taxes and any
penalties and interest thereon.
STOCK OPTIONS
The following table sets forth information concerning stock option
grants made during 1997 to the executive officers named in the "Summary
Compensation Table." Unless otherwise noted, all stock options identified in the
table are nonqualified options and vest in equal portions over four years.
<TABLE>
<CAPTION>
STOCK OPTION GRANTS IN FISCAL YEAR 1997
PERCENT OF POTENTIAL REALIZABLE VALUE
TOTAL AT ASSUMED ANNUAL RATES OF
OPTIONS STOCK PRICE APPRECIATION FOR
OPTIONS GRANTED TO EXERCISE EXPIRATION OPTION TERM
NAME GRANTED EMPLOYEES PRICE DATE
---- ------- --------- ----- ---- ----------------------------
(#) (%) ($) 5% 10%
($) ($)
<S> <C> <C> <C> <C> <C> <C>
Phillip Frost, M.D. 0 -- -- -- -- --
Isaac Kaye 0 -- -- -- -- --
David R. Bethune (1) 350,000 13.0 8.94 7/27/2007 1,967,811 4,986,820
Rafick G. Henein, Ph.D. (2) 250,000 9.3 8.94 7/27/2007 1,405,579 3,562,014
Samuel Broder, M.D. 100,000 3.7 12.88 3/13/2004 524,345 1,221,948
</TABLE>
- --------------------
(1) Mr. Bethune's stock options vest in equal portions over three years.
(2) One-fourth of Dr. Henein's stock options vested on July 27, 1997, the date
of grant, and the remainder will vest in equal portions over three years.
The following table sets forth information concerning stock option
exercises during 1997 by each of the executive officers named in the "Summary
Compensation Table" and the year-end value of unexercised options held by such
officers, based on the closing price of $6.75 on December 31, 1997.
9
<PAGE>
<TABLE>
<CAPTION>
STOCK OPTION EXERCISES IN FISCAL YEAR 1997
AND FISCAL YEAR-END OPTION VALUES
SHARES VALUE OF UNEXERCISED
ACQUIRED NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
ON VALUE OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- -------- ----------- ------------- ----------- --------------
(#) ($) (#) (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C>
Phillip Frost, M.D. 0 0 293,750 106,250 0 0
Isaac Kaye 0 0 293,750 106,250 0 0
David R. Bethune 0 0 0 350,000 0 0
Rafick G. Henein, Ph.D. 0 0 62,500 187,500 0 0
Samuel Broder, M.D. 0 0 83,750 231,250 0 0
</TABLE>
PERFORMANCE GRAPH
The graph and table set forth below compare the cumulative total
shareholder return on the Common Stock for 1993 through 1997 with the Dow Jones
Pharmaceuticals Index and the Dow Jones Equity Market Index for the same period.
The graph and table assume an investment of $100 in the Common Stock and each
index on December 31, 1992 and the reinvestment of all dividends.
[GRAPH OMITTED]
YEAR-END 1992 1993 1994 1995 1996 1997
-------- ---- ---- ---- ---- ---- ----
IVAX Corporation 100 98 65 98 35 23
Dow Jones Pharmaceuticals Index 100 93 106 174 219 339
Dow Jones Equity Market Index 100 110 111 152 188 251
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE
The compensation of IVAX's executive officers, including the Chief
Executive Officer, is determined by the Compensation and Stock Option Committee
of the Board of Directors (the "Committee"), which is presently composed of
three non-employee directors. The Committee's compensation policies are based on
a desire to enhance long-term shareholder value. To achieve this goal, the
Committee recognizes that it must adopt compensation policies which will
attract, retain and motivate qualified and experienced executive
10
<PAGE>
officers. In attracting and retaining executives, the Committee recognizes that
IVAX must compete for the services of executives with many other companies which
possess significantly greater financial resources than IVAX and have available
more comprehensive compensation plans and arrangements than are presently
utilized by IVAX. To adequately motivate executives in view of the goal of
enhancing shareholder value, the Committee recognizes that it must design
compensation policies which align the financial interests of IVAX's executive
officers with those of its shareholders.
In light of these factors, the Committee believes that a critical
component of compensation for executives of IVAX is the award of significant
long-term compensation in the form of stock options at the time the executive
joins IVAX and periodically thereafter. The Committee believes that providing
executives with opportunities to acquire significant stakes in the growth and
prosperity of IVAX through the grant of stock options will enable IVAX to
attract and retain qualified and experienced executive officers. In addition,
the Committee believes that this approach to compensation creates an
entrepreneurial atmosphere which motivates executives to perform to their full
potential. The Committee believes that dependence on stock options for a
significant portion of executive compensation more closely aligns the
executives' interests with those of IVAX's shareholders, since the ultimate
value of such compensation is directly dependent on the stock price.
The Committee has implemented Guidelines Regarding Exercise of Stock
Options (the "Guidelines"), applicable to all managers, scientists and other
professionals, including all executive officers of IVAX, which are intended to
encourage individuals who have been awarded stock options to maintain ownership
of a meaningful portion of any shares acquired upon exercise. The Committee will
consider an individual's past compliance with the Guidelines in considering the
award of additional options.
The Committee did not establish performance targets or adopt any formal
bonus plan for 1997. The Committee may, in certain circumstances, pay a cash
bonus to executives whose individual performance during a particular year was
outstanding, in the subjective opinion of the Committee. The amount of any such
bonus is based upon the recommendation of the Chief Executive Officer.
EXECUTIVE OFFICERS (OTHER THAN THE CHIEF EXECUTIVE OFFICER). The Chief
Executive Officer, with the assistance of other executive officers, makes annual
base salary recommendations to the Committee for the executive officers of IVAX.
Such recommendations are reviewed and approved by the Committee with any
modifications deemed appropriate. In reviewing and approving annual base salary
recommendations, the Committee considers several factors, including individual
performance, the executive's responsibilities, the cost of living, and the
financial performance of IVAX, including IVAX's revenues, net income and
earnings per share. The determination of annual base salary is largely
subjective, and no specific weight is given to any particular factor.
Stock options represent a significant portion of total compensation for
IVAX's executive officers. Options are generally awarded to executive officers
at the time that they join IVAX and periodically thereafter. Stock options are
granted at the prevailing market price on the date of grant, and will only have
value if the value of IVAX's stock price increases. Generally, grants vest in
equal amounts over a four-year period and have seven-year terms. Executives must
be employed by IVAX at the time of vesting in order to exercise the options.
Grants of stock options to executive officers are generally made upon the
recommendation of the Chief Executive Officer based on the level of an
executive's position with IVAX, an evaluation of the executive's past and
expected performance, the number of outstanding and previously granted options,
past compliance with the Guidelines, and discussions with the executive. The
determination of the timing and number of stock options granted to the executive
officers is made by the Committee on a subjective basis, with no specific weight
given to any particular factor.
CHIEF EXECUTIVE OFFICER. For 1997, the Committee approved Dr. Frost's
base salary of $575,000, on the basis of the magnitude of his responsibilities
and his ability to influence IVAX's financial performance. In light of IVAX's
financial performance in 1996, the Committee did not increase Dr. Frost's base
salary and did
11
<PAGE>
not grant Dr. Frost any bonus or stock options during 1997. The determination of
his compensation package was subjective, with no specific weight given to any
particular factor. The Committee also noted that Dr. Frost was compensated below
the levels paid to chief executive officers with comparable qualifications,
experience, and responsibilities at other similarly-situated companies.
TAX MATTERS. Section 162(m) of the Internal Revenue Code of 1986, as
amended, generally disallows a deduction for federal income tax purposes to
public companies for compensation over $1 million paid in any taxable year to
the chief executive officer or to any of the four other most highly compensated
executive officers of the company. Qualifying performance-based compensation is
not subject to the limitation if certain requirements are satisfied. Based upon
applicable regulations, IVAX believes that compensation expenses relating to
options granted under its stock option plans will not be subject to the Section
162(m) limitations. At this time, the Company does not intend to qualify other
compensation paid to its executive officers for deductibility under Section
162(m). The potential tax implications of Section 162(m) will, however, continue
to be evaluated with respect to the Company's compensation strategies and future
decisions involving executive compensation.
The Committee continually evaluates IVAX's compensation policies and
procedures with respect to its executive officers.
COMPENSATION COMMITTEE:
MARK ANDREWS
ERNST BIEKERT, PH.D.
NEIL FLANZRAICH
INDEPENDENT AUDITORS
Arthur Andersen LLP, independent public accountants, was appointed by
the Board to audit IVAX's financial statements for 1998. This firm has acted as
independent public accountants for IVAX since 1986. Representatives of Arthur
Andersen LLP are expected to attend the Annual Meeting and will have an
opportunity to make a statement if they desire and to respond to appropriate
questions raised by shareholders.
OTHER INFORMATION
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
If a shareholder desires to bring business before the annual meeting,
the shareholder must follow procedures outlined in IVAX's by-laws. A copy of
these procedures is available upon request from the Secretary of IVAX, 4400
Biscayne Boulevard, Miami, Florida 33137. One of the procedural requirements in
the by-laws is timely notice in writing of the business the shareholder proposes
to bring before the meeting. Notice must be received not less than 60 days nor
more than 90 days prior to the meeting.
If a shareholder wants to nominate a person for election to the Board
other than a director nominated by the Board, notice of the proposed nomination
must be received by the Secretary not less than 60 days nor more than 90 days
prior to the meeting. A copy of the by-law provisions governing the requirement
for notice is available upon request from the Secretary. The notice of
nomination is required to contain certain information about both the nominee and
the shareholder making the nomination. A nomination which does not comply with
the above procedure will be disregarded.
Under the rules of the Securities and Exchange Commission, any
shareholder proposals intended to be presented at IVAX's 1999 annual meeting of
shareholders must be received by the Secretary no later
12
<PAGE>
than December 16, 1998, in order to be considered for inclusion in IVAX's proxy
statement and form of proxy card relating to such meeting.
EXPENSES OF SOLICITATION
The cost of this solicitation will be borne by IVAX. In addition to the
use of the mail, regular employees of IVAX may solicit proxies personally or by
telephone or facsimile. IVAX will reimburse brokers, banks, and other
custodians, nominees and fiduciaries for their reasonable expenses in forwarding
solicitation materials to beneficial owners of Common Stock.
OTHER BUSINESS
As of the date of this proxy statement, the Board knows of no business
to be presented at the Annual Meeting other than as set forth in this proxy
statement. If other matters properly come before the meeting, the persons named
as proxies will vote on such matters in their discretion.
April 17, 1998
13
<PAGE>
(..continued)
IVAX CORPORATION
4400 BISCAYNE BOULEVARD, MIAMI, FLORIDA 33137
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Phillip Frost, M.D., David R. Bethune, and
Armando A. Tabernilla, and each of them severally, as proxies of the
undersigned, each with the power to appoint his substitute, and hereby
authorizes each of them to vote as designated on the reverse side, all the
shares of Common Stock, par value $0.10 per share, of IVAX Corporation (the
"Company") held of record by the undersigned at the close of business on April
10, 1998, at the Annual Meeting of Shareholders to be held on June 5, 1998, and
at any adjournment of such meeting, and, in their discretion, to vote such
shares upon such other business as may properly come before the meeting.
WHEN PROPERLY EXECUTED AND RETURNED, THIS PROXY WILL BE VOTED IN THE MANNER
DIRECTED BY THE UNDERSIGNED. IF NO DIRECTION IS INDICATED, THIS PROXY WILL BE
VOTED "FOR" THE ELECTION OF ALL DIRECTOR NOMINEES.
PLEASE COMPLETE, SIGN, AND DATE THIS PROXY ON THE REVERSE SIDE, AND MAIL IT
PROMPTLY IN THE ENCLOSED ENVELOPE.
(continued on other side)
<PAGE>
(continued from other side)
<TABLE>
<CAPTION>
1. ELECTION OF DIRECTORS
<S> <C> <C>
FOR each nominee WITHHOLD AUTHORITY to vote for Mark Andrews; Ernst Biekert, Ph.D.; Charles M. Fernandez;
listed (except as all nominees listed. Jack Fishman,Ph.D.; Neil Flanzraich; Phillip Frost, M.D.;
marked to the Jane Hsiao, Ph.D. and Isaac Kaye.
contrary).
[ ] [ ] -----------------------------------------------------
(INSTRUCTION: To withhold authority to vote for any
individual nominee, write that nominee's name in
the space provided above.)
The undersigned acknowledges receipt of the
accompanying Notice of Annual Meeting of Shareholders
and Proxy Statement for the June 5, 1998 meeting.
Dated: ____________________________________, 1998
----------------------------------------------------
Signature
----------------------------------------------------
Signature if held jointly
(Please sign exactly as name or names appear hereon.
Full title of one signing in a representative
capacity should be clearly designated after signature.
Names of all joint holders should be written even if
signed by only one.)
</TABLE>
PLEASE COMPLETE, SIGN, AND DATE THIS PROXY, AND MAIL IT PROMPTLY IN THE
ENCLOSED ENVELOPE. Postage is not necessary if mailed in the United
States.
