<PAGE>
SENETEK PLC
23 Palace Street, London SW1E 5HW
Tel: (171) 828 4800 Fax: (171) 828 8081
Proxy Statement
1997 Annual Meeting of Shareholders
This Proxy Statement is furnished to the shareholders of Senetek Plc, a public
limited company registered in England ("Senetek" or "the Company") in connection
with the solicitation by the Board of Directors of the Company of Proxies to be
voted at the Annual Meeting of shareholders and at any and all adjournments or
postponements of such Meeting, to be held at 11:00am local time on Friday, May
16, 1997 at the Rubens Hotel, Buckingham Palace Road, London, SW1, England (the
"Annual Meeting"). The Company anticipates mailing this Proxy Statement to its
shareholders on or about April 7, 1997.
RECORD DATE AND VOTING
Only shareholders of record at the close of business on April 7, 1997 (the
"record date") are entitled to notice of, and to vote at, the Annual Meeting. At
the close of business on that date, the Company had outstanding 45,977,959
Ordinary shares, nominal value 5p (the "Ordinary shares"), of which 44,001,057
were held in the name of The Bank of New York as depositary (the "Depositary")
which issues Company sponsored American Depositary Receipts ("ADRs") evidencing
American Depositary Shares which, in turn, each represent one Ordinary share.
Each registered holder of Ordinary shares present in person at the Annual
Meeting is entitled to one vote at the Annual Meeting. In the event a matter is
defeated by the vote of those present in person at the Annual Meeting, a poll (a
vote by share) may be demanded, and every holder present in person or by proxy
at the Annual Meeting shall, upon such poll, have one vote for each Ordinary
share held by such holder. In the event that the proxy voting card is executed
but does not indicate by marking a vote "FOR" or "AGAINST", the Board of
Directors shall, at its discretion, treat the vote as "FOR" the proposal as
described herein. Proxy voting cards not received by the Depositary by the close
of business on Monday, May 5, 1997, shall not be included for calculation in the
votes "FOR" or "AGAINST" the proposed Resolutions.
A Deposit Agreement exists between The Bank of New York and the holders of ADRs
pursuant to which holders of ADRs are entitled to instruct the Depositary as to
the exercise of voting rights pertaining to the Ordinary shares so represented.
The Depositary has agreed it will endeavor, insofar as practicable, to vote (in
person or by delivery to the Company of a proxy) the Ordinary shares registered
in its name in accordance with the instructions of the ADR holders as given by
means of the accompanying proxy voting card, which, as indicated above, should
be returned to the Depositary so that it is received by no later than the close
of business on Monday, May 5, 1997.
Any holder of ADRs giving instructions to the Depositary in the proxy voting
card accompanying this Proxy Statement also has the power to revoke such
instructions by delivery of notice to the Depositary at The Bank of New York,
101 Barclay Street, 22nd Floor West, New York, NY 10286 at any time so that the
Depositary receives, by no later than the close of business on Monday, May 5,
1997 duly executed instructions bearing a later date or time than the date or
time of the instructions being revoked.
No matters upon which a vote has to be taken, other than those set forth in the
Notice of Annual Meeting, may be brought before the Annual Meeting.
In addition to solicitation by mail, solicitation of instructions from holders
of ADRs may be made by Directors, officers, and other employees of the Company
by personal interview, telephone, telefax or telegraph without additional
remuneration therefor. Cost of the solicitation of proxies, including the
mailing of proxy materials, will be borne by the Company.
1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
To the knowledge of the Company, the following table sets forth beneficial
ownership information (including information regarding ownership of the
Company's outstanding Ordinary shares, American Depositary Shares representing
Ordinary shares, and option and warrant entitlements) as of February 28, 1997
by: (i) each Director, (ii) each executive officer named in the "Summary
Compensation Table" below, (iii) all Directors and executive officers as a
group, and (iv) each person who beneficially owns more than five percent. of the
Company's outstanding Ordinary shares, American Depositary Shares represented by
Ordinary shares, and option and warrant entitlements. Each person has sole
investment and voting power with respect to the shares indicated, subject to
applicable community property laws, except as may otherwise be set forth in the
footnotes to the table.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Percentage of
Outstanding
Ordinary
Name & Address Number of Shares Shares (1)
- ----------------------------------------------------------------------------
<S> <C> <C>
Anthony J. Cataldo 829,000(2) *
62A Weldon Parkway
Maryland Heights, MO 63043
Gerlof Homan 550,100(3) 1.20
62A Weldon Parkway
Maryland Heights, MO 63043
Paul A. Logan 408,500(4) *
23 Palace Street
London SW1E 5HW
Gary D. Frentz 109,727(5) *
62A Weldon Parkway
Maryland Heights, MO 63043
Roger A. Oakes 252,130(6) *
23 Palace Street
London SW1E 5HW
Clifford D. Brune 400,000(7) *
62A Weldon Parkway
Maryland Heights, MO 63043
Steven Georgiev None *
66 Cherry Hill Drive
Beverly, Massachusetts 01915
The American Heritage Fund Inc. 2,903,000 6.32
1370 Avenue of the Americas
New York, NY 10019
The Bank of New York
101 Barclays Street 40,479,697(8) 88.07
22nd Floor West,
New York, NY 10286
All Directors and Executive
Officers 1,144,457(9) 2.49
as a group (7 persons)
- ----------------------------------------------------------------------------
* Less than one per cent
</TABLE>
2
<PAGE>
(1) Assumes that the person has exercised, to the extent exercisable on or
before May 1, 1997 ("currently exercisable"), all options and warrants to
purchase Ordinary shares held by him and that no other person has exercised
any outstanding options.
(2) Includes options to purchase 800,000 Ordinary shares which are not currently
exercisable.
(3) Includes options to purchase 350,000 Ordinary shares, all of which are
currently exercisable, and 200,000 shares in ADR format.
(4) Includes options to purchase 385,000 Ordinary shares, of which 342,500 are
currently exercisable. Mr Logan may be deemed the beneficial owner of 23,500
Ordinary shares owned by his wife, 5,000 of which are held in ADR format;
however, Mr Logan disclaims beneficial ownership on the grounds that he has
no voting control or investment power over such shares.
(5) Includes options to purchase 105,000 Ordinary shares, all of which are
currently exercisable.
(6) Includes options to purchase 250,000 Ordinary shares, of which 87,500 are
currently exercisable.
(7) Represents options to purchase 400,000 Ordinary shares which are not
currently exercisable.
(8) The Ordinary shares listed are held by The Bank of New York as depositary
for various holders of ADRs evidencing ownership of American Depositary
Shares, except as individually identifiable from the above tabulation,
pursuant to a Deposit Agreement between the Company, the holders of ADRs and
The Bank of New York for ADRs evidencing American Depositary Shares, each
representing one Ordinary share of the Company. To the Company's knowledge,
except for the individual disclosure in the above tabulation, each holder
individually beneficially owns less than 5% of the Company's presently
issued and outstanding Ordinary shares.
(9) Based on the amount of shares outstanding held by Directors and executive
officers as a group including 885,000 shares for which they have the right
to acquire through the exercise of currently exercisable options.
Proposal 1: Financial Statements
The Company's Annual Report for the fiscal year ended December 31, 1996
containing financial and other information pertaining to the Company is being
furnished to shareholders simultaneously with this Proxy Statement. Audited
financial statements of the Company for the 12 months ended December 31, 1996
and the Report of the Directors and Auditors contained in the Annual Report (the
"Report and Accounts") are incorporated herein by reference. Under UK law,
shareholders have to vote to "receive" such Report and Accounts at the Annual
Meeting of the Company.
Adoption of Proposal
Adoption of Proposal 1 requires the affirmative vote of a majority of the
holders present in person at the Meeting or, if a poll is taken, the holders of
a majority of the number of shares represented by proxy at the Meeting. The
Board of Directors recommends a vote "FOR" receiving the Company's Accounts and
the Reports of the Directors and Auditors.
Proposals 2, 3 and 4: Election of Directors
The Company currently has six Directors. Mr Cataldo was elected to the Board on
August 28, 1996 and Mr S. Georgiev on February 3, 1997.
The Articles of Association of the Company provide that one-third of the
Directors (not including those appointed since the last Annual Meeting), or if
their number is not three or a multiple of three, then the number nearest to but
not exceeding one-third, are subject to retirement (expiration of their term of
office)
3
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at each Annual Meeting based on the length of time in office as calculated from
each Director's last election or appointment. As between two or more Directors
who have been in office an equal length of time, the Director to retire shall,
absent an agreement between them, be determined by means of a lottery. Any
Director who has been appointed since the last Annual Meeting is also required
to retire. A retiring Director is eligible for re-election. If at the time of
the Annual Meeting, the nominee is unable or declines to serve, the person named
in the Proxy will at the direction of the Board of Directors either vote for
such substitute nominee as the Board of Directors recommends or vote to allow
the vacancy created thereby to remain open until filled by the Board.
At the Annual Meeting, Dr R.A. Oakes retires by rotation and is nominated for
re-election by the Board, and Mr Cataldo and Mr Georgiev who were appointed
after the last Annual Meeting, also retire and are nominated for re-election by
the Board.
Adoption of Proposals
Adoption of Proposals 2, 3 and 4 require the affirmative vote of a majority of
the holders present in person at the Meeting or, if a poll is taken, the holders
of a majority of the shares represented by proxy at the Meeting. The Board of
Directors recommends that the Shareholders vote "FOR" the election of Dr Oakes,
Mr Cataldo and Mr Georgiev to serve as Directors of the Company.
The following table indicates certain information regarding Dr Oakes, Mr Cataldo
and Mr Georgiev, as well as all other Directors
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Year Year of
first last
Name Position with Company elected re-election
a as a
Director Director Age
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Anthony Joseph
Cataldo Chairman of the Board of
Directors and Chief
Executive Officer 1996 N/A 45
Gerlof Homan Director 1989 Not subject
to
re-election 67
Paul Anthony Logan Director and Company
Secretary 1985 Not subject
to
re-election 73
Gary David Frentz Director 1989 1996 53
Roger Anthony Oakes Director and
President of Pharmaceutical 1995 1996 49
Division
Steven Georgiev Director 1997 N/A 60
- --------------------------------------------------------------------------------
</TABLE>
BACKGROUND OF NOMINEES
ANTHONY JOSEPH CATALDO received a BA from Ohio State University and a Masters
Degree in Economics from Georgia Technical Institute. During the 20 years prior
to joining Senetek, Mr Cataldo focused on the financing and management of
emerging companies, particularly in the technology and medical sectors. As
Chairman and CEO of Management Technologies, Inc., he was instrumental in
raising over $50 million from 1990-1995 where revenues increased from $300,000
to over $20 million. As financial consultant, he was associated with successful
funding arrangements for Palomar Medical Technologies Inc.
ROGER ANTHONY OAKES Ph.D. was appointed a Director in October 1995. After
obtaining his Bachelor of Science degree in Biochemistry, and following a
period of research with a large pharmaceutical company, he became a
Research Fellow at Keele University where he completed his Ph.D. in 1978.
Subsequently he spent 8 years as the Director of new product development
with a British pharmaceutical company. Before joining the Company he
spent the previous 5 years as Managing
4
<PAGE>
Director of Leicester Clinical Research Centre Limited, an internationally
accepted clinical contract research organisation. Dr Oakes heads the Company's
Male Sexual Dysfunction ("MSD") project and the identification, research and
development of potential new project lines.
STEVEN GEORGIEV was appointed a Director in February 1997. Since 1991, he has
acted as Chairman and Chief Executive Officer of Palomar Medical Technologies
Inc., based in Beverly, Massachusetts, a company specialising in the design,
manufacture and marketing of lasers for use in medical and cosmetic procedures,
and which also operates in the field of electronic circuitry for use in
industrial, military and medical devices, and in products for the personal
computer industry. Mr. Georgiev is also presently Chairman of American Materials
& Technology Inc., and a director of Excel Technology Inc., a public company he
co-founded in 1972 which was later acquired by EG&G Inc., a NYSE company. He has
a Bachelor of Science in Engineering Physics from Cornell University and a
Master of Science in Management from the Massachusetts Institute of Technology
(Sloan Fellow).
BACKGROUND OF DIRECTORS WHOSE TERMS ARE CONTINUING
GERLOF HOMAN joined the Company on September 1, 1988 as Executive Vice
President/General Manager of Operations, was appointed President/Chief Executive
Officer January 31, 1989, and was appointed a Director of the Company on April
20, 1989. He retired from the position of Chairman of the Board and Chief
Executive Officer in August 1996 but remains a Director and the Company's Chief
Scientific adviser. He holds a Ph.D. in Clinical Pharmacy (Groningen, Holland,
1961) and is an associate member of the British Institute of Chemical Engineers
(London, 1957). From 1956 to 1972, he worked at Philips-Duphar on chemical
synthesis and pharmaceuticals in Europe, the United States and Asia. He was
General Manager of KV Pharmaceuticals in St Louis, Missouri, from 1972 to 1975
and was Director of Research and then Vice President of Research and Development
at Survival Technology, Inc., ("STI") also in St Louis, from 1975 until joining
the Company. In his position with STI, Dr Homan designed and managed facilities
for pilot, clinical, and full-scale production of a range of pharmaceuticals. He
was also responsible for IND and NDA approvals and worked with co-ventures and
research contracts with major pharmaceutical companies in the United States,
Europe and Asia to bring products to market.
PAUL ANTHONY LOGAN has been Secretary of the Company since its formation in
October 1983 and has been a Director of the Company since December 1985. Since
February 1989 he also served as the Company's principal financial and accounting
officer until October 1996. Mr Logan is a Chartered Accountant and a former
member of the London Stock Exchange in England. He has many years of experience
in finance and industry and the financial and legal regulations affecting public
stock issues, and is familiar with the procedures and practices relating to
public companies.
GARY DAVID FRENTZ M.D., was appointed a Director of the Company in April 1989.
Since August 1991, he has been the Senior Associate Director for Hospital
Medical Affairs for Tulane University Medical Center and has been the Medical
Director of its Managed Care Programs since July 1988. He served as Chief of
Staff for the Tulane University Hospital between July 1988 and August 1991.
Since July 1988, he has been a Professor in the Department of Urology at the
Tulane University School of Medicine. Dr Frentz is currently involved with
several research programs at the Tulane University School of Medicine. He has
presented, or has been associated with, seventeen articles published in medical
journals and has made numerous presentations at national meetings in the field
of urology. Dr Frentz received his M.D. from the Tulane University School of
Medicine.
COMPENSATION OF DIRECTORS
Directors do not receive salaries or cash fees for serving as Directors nor do
they receive cash compensation for serving on any committee. However, all
members of the Board of Directors who are not employees of the Company are
reimbursed for attendance and out-of-pocket expenses incurred in their capacity
as members of the Board of Directors.
Certain Directors have been retained from time to time to provide consulting
services to the Company in their areas of expertise. Dr Frentz had a two-year
consulting agreement with the Company at an annual rate of $36,000 which expired
on April 30, 1996. Thereafter he will be remunerated at the rate of $1,000 per
day for attending Board Meetings and for providing specialized services relating
in particular to the Company's MSD project, as the Board may request from time
to time.
5
<PAGE>
The Company operates stock options plans for employees, including Directors, and
for non-executive Directors and consultants to the Company, as referred to under
"Stock Options Plans", below.
BOARD MEETINGS
The Company's Board of Directors met six times 1996. No Director attended less
than 75% of the Board Meetings except for Mr. Cataldo who became a Director in
August 1996. Two of the executive members of the Board met 19 additional times
to attend to certain ministerial items including the review and approval of the
grant of options and the allotment of equity securities for issuance.
BOARD COMMITTEES
The Board does not have standing audit or nominating committees. During 1996 the
Compensation Committee consisted of Dr Frentz and Mr Logan. The Compensation
Committee reviews and authorises salaries and other matters relating to
compensation including the grant of options for the principal officers of the
Company and its subsidiaries, subject subsequently to Board approval.
EXECUTIVE OFFICERS
All executive officers of the Company, save for Mr Brune, are also currently
Directors of the Company. Mr Cataldo's name is included in the names listed
under Proposal 3 above, in the section on "Election of Directors". On October 1,
1996 Mr Clifford D. Brune, 43, was appointed the Company's Chief Financial
Officer under a 2 year agreement, subsequently extended to December 31, 1999.
Prior to joining Senetek he was a business unit executive for the Computer Task
Group of Buffalo, New York, a publicly held professional information technology
services company where he was responsible for the development and marketing
internationally of an Australian financial services software start-up company,
Huon Corp. From 1991 to 1993 Mr Brune served as Senior Vice-President Business
Development, and Chief Financial Officer of Management Technologies Inc., an
international financial systems company and was formerly employed in a senior
position with one of the major international accountancy firms. Mr Brune is a
certified public accountant and received a Bachelor of Science degree in
accounting from the University of South Carolina
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934.
Under the securities laws of the United States, the Company's Directors,
executive officers and any persons holding more than 10% of the equity
securities are required to report their ownership of equity securities and any
changes in their ownership, on a timely basis, to the SEC. Directors, executive
officers and greater than 10% shareholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms that they have filed.
To the Company's knowledge, based solely on materials provided to the Company,
for the fiscal year ended December 31, 1996, all such required reports were
filed on a timely basis except that as of the date of this Proxy Statement, and
Notice of Meeting, the Company believes that Mr. Georgiev's filing pursuant to
Section 16(a) following his appointment as a Director may not have been effected
on a timely basis.
6
<PAGE>
CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS
None.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information concerning the compensation
of the Chief Executive Officer and other officers of the Company whose total
salary and bonus during the last three fiscal years exceeded $100,000:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
LONG-TERM
ANNUAL COMPENSATION
Name and Principal Fiscal COMPENSATION AWARDS
Position Year Salary(1) Bonus Other(2) Options (3)
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ $ $
Anthony J. Cataldo* 1996 83,333 -- -- 800,000
Chairman and
Chief Executive Officer
Gerlof Homan* 1994 245,000 250,000 10,630 --
Director 1995 236,258 100,000 11,640 --
1996 247,926 -- 13,140 --
Paul A. Logan* 1994 132,964 -- 2,703 35,000
Director and Company 1995 146,182 30,000 2,703 50,000
Secretary 1996 160,936 -- 3,537 --
Roger A. Oakes 1996 172,040 -- 2,816 250,000
Director and President of
Pharmaceutical Division
- ------------------------------------------------------------------------------
</TABLE>
* Dr Homan and Mr Logan are also Directors of MEIS Corporation ("MEIS"), a
Delaware corporation and a wholly-owned subsidiary of the Company. Mr
Cataldo and Dr. Homan are also a Directors of Carme International Inc.
("CII"), a Delaware corporation and a wholly-owned subsidiary of the
Company.
(1) The base salary includes cost of living adjustment for Dr. Homan and Mr.
Logan, which in Dr. Homan's case provides for an increase on January 1 of
each year by the percentage by which the cost of living, as determined by
the US Labor Department, has increased over the previous year, and in Mr.
Logan's case by the end year percentage increase in the UK Index of Retail
Prices published by the Central Statistical Office, and in both cases may
also be supplemented by annual performance bonuses as determined by the
Board of Directors.
(2) The payments under the heading of "Other" represent the cost of Life
Insurance cover for $1 million in the case of Dr Homan, (pound)100,000 for
Mr Logan and (pound)500,000 for Dr. Oakes. In all cases the policies are
expressed for the benefit of their dependents.
(3) Options entitle the grantee to subscribe for Ordinary shares on the UK
register of stockholders. There is no market for the Company's Ordinary
shares in this format. Any subsequent conversion into American Depositary
Shares, evidenced by American Depositary Receipts, entails the grantee
paying UK Inland Revenue Stamp Duty at 1.5% on the deemed market value or,
in certain cases, on the exercise price, of the shares so converted, and a
present fee of US$0.015 to the US Depositary.
7
<PAGE>
EMPLOYMENT CONTRACTS
The Company has entered into employment agreements with Mr Cataldo, Dr Homan, Mr
Logan, Dr. Oakes and Mr. Brune. Mr Cataldo has a two year agreement effective
from September 1, 1996, subsequently extended to December 31, 1999, at an annual
base salary of $250,000. Under the terms and conditions of Mr Cataldo's
agreement, he was granted 800,000 options exercisable into a similar number of
shares of the Company as to 500,000 options at $1.25 per share, 150,000 options
at $1.50 per share issuable on August 31, 1997 and 150,000 options at $4 per
share issuable on August 31, 1998. Dr Homan has a two year agreement effective
from October 1, 1995, subsequently extended to December 31, 1999 at an annual
base salary of $125,000, fluctuating in accordance with the number of days
worked per week. Mr Logan has a two year agreement effective from September 1,
1995 at an annual base salary of (pound)100,000 (the pound sterling exchange
rate fluctuated from approximately $1.71 to $1.49 during 1996), followed by a
one year agreement, payment being dependent upon the number of days worked per
week, and a subsequent 3 year consultancy agreement. Dr. Oakes has a 2 year
agreement, effective from October 1, 1995, subsequently extended to December 31,
1999, at an annual base salary of (pound)100,000, increasing to (pound)110,000
effective from January 1, 1996.
The employment agreements for Dr Homan and Mr Logan provide that if the Company
is not the surviving entity in any merger or other reorganization, Dr Homan or
Mr Logan shall be offered employment by the Company's successor for the
remainder of the term of their respective agreements. Mr. Brune's employment
agreement is dated October 1, 1996 and provides an annual salary of $155,000,
together with the grant of 400,000 options exercisable into a number of shares
of the Company as to 200,000 options at $1.25 per share, 100,000 options at
$1.50 per share issuable on August 31, 1997 and 100,000 options at $4 per share
issuable on August 31, 1998.
STOCK OPTIONS PLANS
The Company has two stock option plans pursuant to which options to purchase the
Company's Ordinary shares may be granted. The first plan relates to the grant of
options to employees, including employee Directors, and officers of the Company.
The second plan relates to the grant of options to non-executive Directors and
consultants to the Company. In both cases, the exercise price of these options
may not be less than the fair market value of the American Depositary Shares
representing the Company's Ordinary shares twenty-one days before the date of
grant.
The following table sets forth information with respect to the options granted
in 1996 exercisable by the executive officers named in the Summary Compensation
Table.
Option grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants
Option Term
- --------------------------------------------------------------------------------
Percentage
of Total
Number of Options
Name Securities Granted
Underlying to Employees Exercise
Options in Fiscal or Base Expiration
Granted Year Price Date 10%
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
A.J. Cataldo 500,000 { -- $1.25 12/31/1999 $226,737
150,000 { 56.30 S1.50 12/31/1999 $30,802
150,000 { -- $4.00 12/31/1999 --
{
C.D. Brune 200,000 { -- $1.25 12/31/1999 $113,368
100,000 { 28.15 $1.50 12/31/1999 $15,401
100,000 { -- $4.00 12/31/1999 --
- --------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Aggregated option exercises in last fiscal year and FY-end option values
- --------------------------------------------------------------------------------
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
Value UNEXERCISED IN-THE-MONEY
Shares Realized OPTIONS AT OPTIONS AT
Name acquired at FY-END FY-END(1)
on Exercisable Exercisable/ Exercisable/
exercise Date Unexercisable Unexercisable
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gerlof Homan 200,000 $264,000 Exercisable Exercisable
350,000 $162,190
- --------------------------------------------------------------------------------
</TABLE>
1)The value of the exercisable options is based on the closing bid price of the
American Depositary Receipts ("ADR's") of $1.25 per share, on the Nasdaq system
on December 31, 1996, less the estimated conversion costs of the Ordinary shares
so acquired upon such exercise into ADR's.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Compensation Principles
The Company's compensation policy is administered by two Directors acting as the
Compensation Committee and is designed to complement the Company's short and
long term business strategy by attracting and retaining key executives critical
to the Company's success, creating a performance oriented environment, meeting
research and development objectives for its products and achieving subsequent
commercialization of such products through the negotiation of distribution
rights for individual territories, with the ultimate objective of realising
initial revenues, subsequent profitability, and enhancing stockholders' value.
At its present stage of development, the Company's corporate performance cannot
be gauged in terms of profitability as it has focused on developing its
products, attracting sufficient equity finance for this purpose and endeavoring
to negotiate licensing agreements for the development and marketing of its
products.
Currently the Company and its two subsidiaries MEIS and CII have 67 employees,
60 in the United States (including four Directors), and 7 in the United Kingdom
(including two Directors). Given its personnel structure and the Company's
formative former stage of development, it had not, in the past, been practicable
for the Company to set-up a detailed and integrated compensation philosophy for
its executives, nor to specify levels of seniority, areas of responsibility,
performance criteria and profitability-related awards.
Executive Compensation
Typically, executives have been awarded fixed term employment agreements (two
years in the cases of Mr Cataldo, Dr Homan, Mr Logan, Dr Oakes and Mr Brune) as
extended in the case of Mr Cataldo, Dr Oakes and Mr Brune to December 31, 1999
at a base salary subject in certain cases to an annual cost of living increase.
The compensation of executive officers, including the Chief Executive Officer,
has been determined by a consideration of the compensation paid to officers in
companies in a similar position to Senetek. In certain cases the agreements
provide for consideration by the Board of a bonus but there is otherwise no
provision for a review of compensation during the fixed term of the agreements.
Additionally, stock options entitling the grantee to purchase Ordinary shares in
the Company are issued at such times when the Board considers that certain
critical stages in the Company's product development or funding requirements
have been achieved. Save for Mr Cataldo and Mr Brune, the employment agreements
in question make no provision for the grant of stock options upon the occurrence
of identifiable times or events and the grant of such options remain at the
discretion of the Board. The grant of stock options to Mr. Cataldo and Mr. Brune
were negotiated provisions of their respective employment agreements and are
described above under the caption "Employment Contracts".
9
<PAGE>
The Company also provided medical benefits to executive officers that are
generally available to the Company's employees
Employee Option Plan
The Company approved the adoption of a Stock Option Plan for Employees (the No.
1 Plan) at a Special Meeting of stockholders on December 20, 1985. At a
subsequent meeting of stockholders on December 16, 1992, the number of options
that may be granted under the plan was increased from a figure representing the
lesser of 800,000 options or 5 percent. of the outstanding shares to the present
maximum figure of 2,000,000. Options may not be granted at an exercise figure
lower than the market price ruling for the Company's shares 21 days prior to the
date of grant.
G.D. FRENTZ
P.A. LOGAN
Members of the Compensation Committee
April 9, 1997
10
<PAGE>
PERFORMANCE GRAPH
The following graph reflects a comparison of the total cumulative return of the
Company's Ordinary shares in ADR format with the cumulative total return of the
Nasdaq (US and Foreign Companies) Stock Market index and the Nasdaq Health
Services Stocks index from December 31, 1991 through December 31, 1996. The
comparisons in the table are required by the Securities Exchange Commission and
are not intended to represent a forecast or to provide any indication of
possible future performance of the Company's shares.
Return Performance For Years Ended December 31, 1991 to December 31, 1996
Inclusive (Base Year December 31, 1991)
Comparison of 5 year total return between the Nasdaq Stock Markets (US and
Foreign Companies), Nasdaq Health Services Stocks Index and Senetek PLC.
11
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Proposal 5: Independent Auditors
The Company wishes to obtain from the shareholders their approval for the
re-appointment of Price Waterhouse as the Company's auditors for the fiscal year
1997, and to authorize the Directors to fix their remuneration. Price Waterhouse
has acted as the Company's auditors since January 1991. Representatives of Price
Waterhouse are expected to be present at the Annual Meeting, will have the
opportunity to make a statement if they so desire, and will be available to
respond to questions which the Board deems appropriate. If the reappointment of
Price Waterhouse as the Company's auditors is not approved by the shareholders,
the adverse vote will be considered a direction to the Board of Directors to
select other independent accountants to serve as the Company's auditors for
fiscal year 1997.
Adoption of Proposal
Adoption of Proposal 5 requires the affirmative vote of a majority of the
holders present in person at the Meeting or, if a poll is taken, the holders of
a majority of the shares represented by proxy at the Meeting. The Board of
Directors believes that the Resolution is in the best interests of the Company
and its shareholders and, accordingly, recommends a vote "FOR" the
re-appointment of Price Waterhouse as the Company's auditors for the fiscal year
1997.
Proposal 6: Increase in Authorized Ordinary Share Capital
The Company proposes to increase the authorised number of Ordinary shares
available from 58,000,000 to 100,000,000.
Of the Company's presently authorized Ordinary shares, 45,962,959 are
outstanding at February 28, 1997, 6,368,402 have been reserved for issuance upon
exercise of outstanding warrants mainly issued in connection with the Company's
initial public financing in the United States and subsequent private equity
financings, and 3,592,000 have been reserved for issuance upon exercise of
option entitlements. Under UK law, authorized Ordinary shares have pre-emptive
rights under Section 89 of the Companies Act 1985 (but see Proposal 8:
"Disapplication of Shareholders' Rights of Pre-emption", below).
One purpose of the proposed increase is to enable the Company to be in a
position to make available, where appropriate, a suitable number of options
within the existing option plans, modified in accordance with Proposals 9, 10,
11, 12, 13 and 14 for senior management personnel and consultants who have been
engaged or whom it is intended to engage within the reasonably near future, and
whose engagement and retention is necessary for the successful exploitation of
the Company's existing and potential products. Without such incentives it may
not be possible to attract candidates of a suitable calibre. Subject to the
authorization of Resolutions Six, Seven and Eight, further authorization for the
issuance of the securities by a vote of the security holders will not be
solicited prior to such issuance nor for the issuance of equity securities to
intending equity subscribers.
The resulting margin between the proposed increased authorized share capital and
the total number of outstanding equity securities, i.e. the sum of outstanding
shares, warrants and options, is proposed to be maintained at what the Board
considers to be a desirable commercial level bearing in mind the substantial
funding requirements projected for the acquisition of plant and equipment for
bulk production and sub-assembly of the components for the Company's automated
self-injector syringe, and the pre-marketing preparations for the launch of the
Company's Male Sexual Dysfunction "MSD" product and its Epinephrine product,
together with the proposed extension of the marketing activities for the
Company's wholly owned subsidiary, Carme International, a cosmetics company
based in Novato, California.
The Board of Directors is aware of the need to minimise possible dilution of
shareholders' funds and the proposed authorization of the increase in the number
of shares available for issue, although containing a certain potential element
of dilution of the rights of existing shareholders, has the objective of
improving shareholder value by increasing market capitalization.
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Adoption of Proposal
Adoption of Resolution Number Six requires the affirmative vote of a majority of
the holders present in person at the Meeting or, if a poll is taken, the holders
of a majority of the shares represented by proxy at the Meeting. The Board of
Directors believes that the Resolution is in the best interests of the Company
and its shareholders and, accordingly, recommends a vote "FOR" increasing the
number of authorized ordinary shares by 42,000,000.
PROPOSAL 7: Authorization to Allot Equity Securities
Under the terms of the Company's Articles of Association, the Board of Directors
is authorized to allot Ordinary shares, warrants for the purchase of Ordinary
shares, and options for the purchase of Ordinary shares (collectively, the
"Equity Securities") pursuant to Section 80 of the Companies Act 1985 (the
"Companies Act"). Ordinary shares under English law are similar to shares of
Common Stock of companies domiciled in the United States. Under the Companies
Act, Equity Securities may not be issued until after they have first been
allotted (authorized for issuance) by the Board of Directors. Allotment of
securities by the Board from the Company's authorized share capital requires the
grant of a general power of allotment by the Company's shareholders, an
additional step not generally required when companies domiciled in the United
States are issuing securities.
A general power of allotment was authorized by the shareholders of the Company
in November 1983 and has subsequently been renewed and extended to May 15, 2002.
This power of allotment, however, extends only to the number of Ordinary Shares
comprising the authorized share capital at the time of granting the power of
allotment to the Board.
Proposal Seven seeks shareholder approval of a grant of authority to the Board
of Directors to allot Equity Securities from the Company's authorized but
unissued Ordinary shares (including any additional shares created by Resolution
Number Six) either by the allotment of Ordinary shares or the allotment of
warrants and options for the purchase of Ordinary shares, through May 15, 2002
so as to be co-terminous with the proposed period for disapplication of rights
of pre-emption described in Resolution Number Eight, below.
Adoption of Proposal
Adoption of Resolution Number Seven requires the affirmative vote of a majority
of the holders present in person at the Meeting or, if a poll is taken, the
holders of a majority of the shares represented by proxy at the Meeting. The
Board of Directors believes that the Resolution is in the best interests of the
Company and its shareholders, and, accordingly, recommends a vote "FOR" renewing
its authority to allot Equity Securities through May 15, 2002.
PROPOSAL 8: Disapplication of Shareholders' Rights of Pre-emption
Shareholders of the Company have pre-emptive rights (subject to certain
exceptions) under Section 89 of the Companies Act to subscribe for newly issued
Equity Securities issued for cash before the securities can be offered to third
parties. The securities for which the Board is seeking disapplication are Equity
Securities as defined in Section 94 of the Companies Act.
Pre-emptive rights can be disapplied with respect to a specific allotment of
securities by a special resolution of shareholders. Obtaining disapplication of
pre-emptive rights at the time of each individual proposed stock issuance is
time-consuming and costly. To reduce such costs, minimize the delays associated
with convening special meetings of shareholders, and provide the Company with
sufficient flexibility in the issuance of equity securities on such terms and
conditions as the Board considers to be in the best interests of the Company and
its shareholders, the Board of Directors is asking the Company's shareholders to
disapply their pre-emptive rights with respect to the allotment for issuance of
all authorized but unissued and unreserved Ordinary shares (including any
additional shares created by Resolution Number Six through May 15, 2002, the
maximum period for which pre-emptive rights may be disapplied). If the Company's
shareholders approve Resolution Number Eight, the
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Company will not subsequently solicit shareholder approval prior to any
allotment on or before May 15 2002, for the issuance of such securities.
Approval of Resolution Number Eight, if resulting in any subsequent issuance of
Ordinary shares to persons who are not presently shareholders of the Company,
would reduce the percentage of the Company's shares owned by its current
shareholders. The Company has no present intention of effecting further share
issues in a single transaction, or to a small number of persons resulting in one
or more of such persons becoming a principal shareholder of the Company with the
attendant ability to exercise significant influence over the Company's affairs.
Adoption of Proposal
Adoption of Resolution Number Eight requires the affirmative vote of
three-quarters of the holders present in person at the Meeting or, if a poll is
taken, the holders of not less than three-quarters of the shares represented by
proxy at the Meeting. The Board of Directors believes that the Resolution is in
the best interests of the Company and its shareholders and, accordingly,
recommends a vote "FOR" the disapplication of shareholders' rights of
pre-emption with respect to the allotment for issuance of all authorized but
unissued Ordinary shares through May 15, 2002.
Proposal 9: Modification of Employees' Share Option Plan
A Share option scheme for employees ("the No. 1 Plan") was approved at an
Extraordinary General Meeting of Shareholders on December 20, 1985.
It is now proposed to modify the No. 1 Plan by deleting sub-clause 9.2 and
substituting a fresh clause as set out in Resolution 9 under "Notice of Annual
Meeting" above. The proposed new sub-clause is designed modify the terms and
conditions of the Plan in preparation for the submission of Resolution 10 for
approval.
Adoption of Proposal
Adoption of Resolution Number Nine requires the affirmative vote of
three-quarters of the holders present in person at the Meeting or, if a poll is
taken, the holders of not less than three-quarters of the shares represented by
proxy at the Meeting. The Board of Directors believes that the Resolution is in
the best interests of the Company and its shareholders and, accordingly,
recommends a vote "FOR" the modification of the No. 1 Plan in order to
facilitate the validation of Resolution 10, below.
Proposal 10: Extension of Term of Employees' Share Option Plan
The No. 1 Plan as approved by Shareholders referred in Proposal 9, lapsed on
December 20, 1995. In the opinion of the Board, it is of overriding importance
for the Company to be able to retain, recruit and incentivize suitable personnel
who will be responsible for developing the Company's existing and potential
products and effecting subsequent commercialization.
It is therefore proposed that the availability of grants to be made under the
No. 1 Plan be extended to December 1, 2005.
Adoption of Proposal
Adoption of Resolution Number Ten requires the affirmative vote of a majority of
the holders present in person at the Meeting or, if a poll is taken, the holders
of a majority of the shares represented by proxy at the Meeting. The Board of
Directors believes that the Resolution is in the best interests of the Company
and its shareholders, and, accordingly, recommends a vote "FOR" effecting the
availability of grants of options under the No.1 Plan through December 1, 2005.
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Proposal 11: Increase in the Number of Options Available Under the
Employees' Share Option Plan
The existing number of options which the Board is empowered to grant under Share
Option Scheme for Employees ("the No. 1 Plan") as approved by shareholders at
the Annual General Meeting of December 16, 1992, is 2 million.
At present a total of 2,827,500 unexercised options under the No. 1 Plan have
been granted, including 1,808,000 subject to approval under Proposal 14 below.
The Company is now proposing to launch its pre-marketing and subsequent
distribution plans for its Male Sexual Dysfunction ("MSD") and Epinephrine and
Kinetin products. The engagement of additional personnel with the requisite
scientific, marketing and administrative expertise will be an essential element
in these proposed activities.
The Board believes that the increase of 4 million, from 2 million to 6 million,
in the number of options available for issuance to existing and to proposed new
employees of the requisite calibre is an essential requirement in the proposed
development and commercialization of the Company's products.
Adoption of Proposal
Adoption of Resolution Number Eleven requires the affirmative vote of a majority
of the holders present in person at the Meeting or, if a poll is taken, the
holders of a majority of the shares represented by proxy at the Meeting. The
Board of Directors believes that the Resolution is in the best interests of the
Company and its shareholders, and, accordingly, recommends a vote "FOR" renewal
through December 1, 2005, of its authority to increase the number of options
available for issuance under the No. 1 Plan to 6 million.
Proposal 12: Extension of Term of Non-Executive Directors and Consultants
Share Option Plan
The No. 2 Plan as approved by Stockholders at the Annual General Meeting of May
21, 1987 is due to lapse on May 20, 1997.
In the view of the Directors, it is advisable for the No. 1 and No. 2 Plans to
be co-terminous and therefore subject to approval of Resolutions 6, 7, 8, 9, 10
and 11, sub-clause 2.7 of the Plan should be deleted and replaced by a
sub-clause specifying that any grant under the Plan should be made on or before
December 1, 2005.
Adoption of Proposal
Adoption of Resolution Number Twelve requires the affirmative vote of a majority
of the holders present in person at the Meeting or, if a poll is taken, the
holders of a majority of the shares represented by proxy at the Meeting. The
Board of Directors believes that the Resolution is in the best interests of the
Company and, accordingly, recommends a vote "FOR" an extension of the terms of
the No. 2 Plan to December 1, 2005.
Proposal 13: Increase in Number of Options available under the
Non-Executive Directors and Consultants Share Option Plan
A Share Option Scheme for Non-Executive Directors and Consultants ("the No. 2
Plan") was approved by Shareholders on May 21, 1987. At the Annual General
Meeting of Shareholders on December 16, 1992 the number of options available for
issuance under the No. 2 Plan was increased to 2 million. In order to be able to
attract potential Board members of a suitable calibre and to incentivize certain
of the Company's existing and proposed consultants, it is now proposed that the
availability for the issuance of options of the No. 2 Plan be increased by 2
million to 4 million
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Adoption of Proposal
Adoption of Resolution Number Thirteen requires the affirmative vote of a
majority of the holders present in person at the Meeting or, if a poll is taken,
the holders of a majority of the shares represented by proxy at the Meeting. The
Board of Directors believes that the Resolution is in the best interests of the
Company and its shareholders, and, accordingly, recommends a vote "FOR" renewal
through December 1, 2005, of its authority to increase the number of options
available for issuance under the No. 2 Plan to 4 million.
Proposal 14: Retrospective Approval of Options Granted Under
the Employees Share Option Scheme
As indicated in Proposal 10, the terms and conditions of the No. 1 Plan
lapsed on December 20, 1995.
It has been an essential part of the Company's policy to incentivize its
employees and therefore grants of options totalling 1,808,000 in number have
been issued to date on a provisional basis, dependent upon retrospective
sanction by shareholders in General Meeting. Such incentivization that enables
employees to hold options, which in accordance with the terms and conditions of
the No. 1 Plan are exercisable at prices not less than those ruling 21 days
prior to the date of grant, is in the Board's view a matter of the greatest
importance to the Company.
Adoption of Proposal
Adoption of Resolution Number Fourteen requires the affirmative vote of
three-quarters of the holders present in person at the Meeting or, if a poll is
taken, the holders of not less than three-quarters of the shares represented by
proxy at the Meeting. The Board of Directors believes that the Resolution is in
the best interests of the Company and its shareholders and, accordingly,
recommends a vote "FOR" the retrospective approval of options granted on a
provisional basis subsequent to December 20, 1995.
Proposal 15: Modification of Articles of Association
- Approval of Board Meetings by Telephonic Communication
The present Board consists of six Directors. The US Directors are based in four
different states and those in the UK at two different locations. The practical
aspects and timing problems of arranging a quorum of members of the Board to be
present in order to cover the numerous administrative functions that arise on a
number of occasions, for example the issuance of shares that have been
subscribed and the grant of options, represent a problem that can only be dealt
with in the majority of cases by telephonic communication.
The Board nevertheless appreciates that on matters of substance all Directors
should be required, in so far as it is practicable, to be present in person at
Board Meetings. It is therefore proposed that the Company's Articles of
Association be modified by deleting Article 118, which defines a quorum of
Directors to be present and establishes the voting procedure, and replacing it
by a new Article 118 which, inter alia, authorizes the Directors to conduct
Board Meetings by telephonic communication.
Adoption of Proposal
Adoption of Resolution Number Fifteen requires the affirmative vote of
three-quarters of the holders present in person at the Meeting or, if a poll is
taken, the holders of not less than three-quarters of the shares represented by
proxy at the Meeting. The Board of Directors believes that the Resolution is in
the best interests of the Company and its shareholders and, accordingly,
recommends a vote "FOR" the substitution of a new Article 118 in the Company's
Articles of Association.
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Proposal 16: Retrospective Approval of Matters Resolved by the Board
by Means of Telephonic Communication
Proposal 15 above has indicated the communication problems of Board members
operating in widely differing locations and with significant timing differences,
particularly in the case of the fairly numerous routine administrative matters
that may necessitate Board approval, but do not warrant the time and expense
involved in convening a full Board meeting.
Whilst the Board is confident that all of the resolutions that have been settled
by telephonic communication prior to the approval of Proposal 15 above, have
been conducted in a responsible and bona fide manner, consistent with the best
interests of the Company and its stockholders, it is now considered advisable to
seek shareholder approval for this former course of conduct as if the new
Article 118, as referred to in Proposal 15 above, had been in effect at the time
of the said Board Meetings held by telephonic communication.
Adoption of Proposal
Adoption of Resolution Number Sixteen requires the affirmative vote of
three-quarters of the holders present in person at the Meeting or, if a poll is
taken, the holders of not less than three-quarters of the shares represented by
proxy at the Meeting. The Board of Directors believes that the Resolution is in
the best interests of the Company and its shareholders and, accordingly,
recommends a vote "FOR" the retrospective approval of Board Resolutions resolved
earlier by means of telephonic communication.
Financial Statements
As discussed in "Proposal 1: Financial Statements" above, the Company's Annual
Report to shareholders for the fiscal year ended December 31, 1996 containing
the audited consolidated balance sheet as of the end of the year and audited
consolidated statements of operations, and shareholders' equity and source and
application of funds for the fiscal year is being mailed with this Proxy
Statement to shareholders entitled to notice of the Annual Meeting and is
incorporated herein by reference.
Shareholders' Proposals
The Company will, in future Proxy Statements of the Board, include shareholder
proposals complying with the applicable rules of the US Securities and Exchange
Commission and any applicable US state laws. In order for a proposal by a
shareholder to be included in the proxy statement of the Board relating to the
Annual Meeting of shareholders to be held in 1998 that proposal must be received
in writing by the Secretary of the Company at the Company's registered office no
later than December 12, 1997.
Annual Report on Form 10-K
Shareholders may obtain copies of the Company's Annual Report on Form 10-K as
filed with the Securities and Exchange Commission ("the SEC") by writing to the
Company at the above mailing address directed to the attention of the Secretary,
or to the Company at 62A Weldon Parkway, Maryland Heights, Missouri 63043.
By Order of the Board of Directors
PAUL ANTHONY LOGAN
April 9, 1997 Secretary
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