<PAGE>
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 [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Gensia Sicor Inc.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X]No fee required.
[_]Fee computed on table below per Exchange Act Rules 14a-6(i)(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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
--------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------------
(5) Total fee paid:
--------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
--------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO OF GensiaSicor(TM) APPEARS HERE]
19 Hughes
Irvine, California 92618
(949) 455-4700
May 5, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders which
will be held on June 16, 1999, at 1:30 p.m., at the principal executive
offices of Gensia Sicor Inc., located at 19 Hughes, Irvine, California.
The formal notice of the Annual Meeting and the Proxy Statement have been
made a part of this invitation.
After reading the Proxy Statement, please mark, date, sign and return, at an
early date, the enclosed proxy in the prepaid envelope to ensure that your
shares will be represented. YOUR SHARES CANNOT BE VOTED UNLESS YOU SIGN, DATE
AND RETURN THE ENCLOSED PROXY OR ATTEND THE ANNUAL MEETING IN PERSON.
A copy of the Company's Annual Report to Stockholders is also enclosed.
The Board of Directors and Management look forward to seeing you at the
meeting.
Sincerely yours,
/s/ CARLO SALVI
-----------------------------
Carlo Salvi
President and Chief Executive
Officer
<PAGE>
Gensia Sicor Inc.
----------------
Notice of Annual Meeting of Stockholders
to be held June 16, 1999
----------------
The Annual Meeting of Stockholders of Gensia Sicor Inc. (the "Company") will
be held at the Company's principal executive offices, located at 19 Hughes,
Irvine, California, on June 16, 1999, at 1:30 p.m., for the following
purposes:
1. To elect three Class I directors.
2. To consider and vote upon a proposal to amend and restate the Company's
Employee Stock Purchase Plan.
3. To consider and vote upon a proposal to amend and restate the Company's
1997 Long-Term Incentive Plan.
4. To consider and vote upon a proposal to amend the Company's Restated
Certificate of Incorporation to change the name from "Gensia Sicor Inc."
to "SICOR Inc."
5. To ratify the selection of Ernst & Young LLP as the Company's
independent auditors.
6. To transact such other business as may properly come before the Annual
Meeting and any adjournment of the Annual Meeting.
The Board of Directors has fixed the close of business on April 19, 1999, as
the record date for determining the stockholders entitled to notice of and to
vote at the Meeting and any adjournment of the Annual Meeting. A complete list
of stockholders entitled to vote will be available at the Secretary's office,
19 Hughes, Irvine, California, for ten days before the meeting.
WHETHER YOU INTEND TO BE PRESENT AT THE ANNUAL MEETING OR NOT, WE URGE YOU
TO MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY.
By order of the Board of Directors.
/s/ WESLEY N. FACH
----------------------
Wesley N. Fach
Secretary
May 5, 1999
<PAGE>
Gensia Sicor Inc.
----------------
PROXY STATEMENT
----------------
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Gensia Sicor Inc., a Delaware corporation ("Gensia
Sicor" or the "Company"), of proxies in the accompanying form to be used at
the Annual Meeting of Stockholders to be held at the Company's principal
executive offices, located at 19 Hughes, Irvine, California 92618 on June 16,
1999, and any adjournment of the Annual Meeting (the "Annual Meeting"). The
shares represented by the proxies received in response to this solicitation
and not revoked will be voted at the Annual Meeting. A proxy may be revoked at
any time before it is exercised by filing with the Secretary of the Company a
written revocation or a duly executed proxy bearing a later date or by voting
in person at the Annual Meeting. On the matters coming before the Annual
Meeting for which a choice has been specified by a stockholder by means of the
ballot on the proxy, the shares will be voted accordingly. If no choice is
specified, the shares will be voted FOR the election of the three nominees for
Class I director listed in this Proxy Statement and FOR approval of proposals
2, 3, 4 and 5 described in the Notice of Annual Meeting and in this Proxy
Statement.
Stockholders of record at the close of business on April 19, 1999 are
entitled to notice of and to vote at the Annual Meeting. As of April 19, 1999
the Company had 79,860,660 shares of Common Stock outstanding and entitled to
vote. Each holder of Common Stock is entitled to one vote for each share held
as of the record date.
Directors are elected by a plurality vote. Proposals 2, 3 and 5 will be
decided by the affirmative vote of a majority of shares present in person or
represented by proxy and entitled to vote on each such matter. Proposal 4 will
be decided by the affirmative vote of a majority of the outstanding shares of
the Company. Abstentions with respect to any matter are treated as shares
present or represented and entitled to vote on that matter and thus have the
same effect as negative votes. If shares are not voted by the broker who is
the record holder of the shares, or if shares are not voted in other
circumstances in which proxy authority is defective or has been withheld with
respect to any matter, these non-voted shares are not deemed to be present or
represented for purposes of determining whether stockholder approval of that
matter has been obtained.
The expense of printing and mailing proxy materials will be borne by the
Company. In addition to the solicitation of proxies by mail, solicitation may
be made by certain directors, officers and other employees of the Company by
personal interview, telephone or facsimile. No additional compensation will be
paid to such persons for such solicitation. The Company will reimburse
brokerage firms and others for their reasonable expenses in forwarding
solicitation materials to beneficial owners of the Company's Common Stock.
Employees of Georgeson & Co., Inc. will also solicit proxies at an anticipated
fee of approximately $7,500 plus reasonable out-of-pocket expenses.
This Proxy Statement and the accompanying form of proxy are being mailed to
stockholders on or about May 5, 1999.
IMPORTANT
Whether you intend to be present at the Annual Meeting or not, we
urge you to mark, date and sign the enclosed proxy and return it
at your earliest convenience in the enclosed postage-prepaid
return envelope. This will not limit your rights to attend or vote
at the Annual Meeting.
<PAGE>
ELECTION OF DIRECTORS
The Company has three classes of directors serving staggered three-year
terms. Class I and Class II each consist of three directors and Class III
consists of four directors. Three Class I directors are to be elected at the
Annual Meeting for a term of three years expiring at the Annual Meeting in
2002 or until each such director's successor shall have been elected and
qualified. The other directors of the Company will continue in office for
their existing terms, which expire in 2000 and 2001 for Class II and Class III
directors, respectively.
Composition of Board of Directors
A Shareholder's Agreement between the Company and Rakepoll Finance N.V.
("Rakepoll Finance") specifies that the Company shall use its best efforts to
cause the Board of Directors to consist of (i) two directors who are executive
officers of Gensia Sicor and not affiliated with Rakepoll Finance ("Management
Directors"), (ii) three directors designated by Rakepoll Finance ("Investor
Directors") and (iii) five independent directors to be designated jointly by
the Management Directors and the Investor Directors (the "Independent
Directors"). Gianpaolo Colla, appointed to the Board of Directors on March 17,
1999, has been nominated as a Class I Director for election at the Annual
Meeting in the capacity of a Management Director. Michael D. Cannon and Donald
E. Panoz, nominated for re-election at the Annual Meeting as Class I
Directors, would be an Investor and an Independent Director, respectively.
Carlo Ruggeri was appointed to the Board of Directors as an Independent
Director on March 17, 1999. Frank C. Becker and Carlo Salvi are the other
current Investor Directors; David F. Hale, Herbert J. Conrad and Carlos A.
Ferrer are the other current Independent Directors; and John W. Sayward is the
other current Management Director.
During the term of the Shareholder's Agreement, the number of Investor
Directors that Rakepoll Finance is entitled to designate will vary according
to its ownership interest in Gensia Sicor as a percentage of the number of
shares of Gensia Sicor Common Stock controlled directly or indirectly by
Rakepoll Finance and its affiliates immediately following the Stock Exchange
(its "Initial Interest"). See "Stock Ownership of Management and Certain
Beneficial Owners." If Rakepoll Finance's ownership interest in Gensia Sicor
is (i) 50% or above its Initial Interest, Rakepoll Finance shall have the
right to designate for nomination and approval three Investor Directors; the
Management Directors shall have the right to designate for nomination and
approval two Management Directors; and the five Independent Directors shall be
designated for nomination and approval jointly by the Management Directors and
the Investor Directors; (ii) 25% or above but less than 50% of its Initial
Interest, Rakepoll Finance shall have the right to designate for nomination
and approval two Investor Directors; and there shall be four Independent
Directors who shall be designated for nomination and approval jointly by the
Management Directors and the Investor Directors; (iii) 10% or above but less
than 25% of its Initial Interest, Rakepoll Finance shall have the right to
designate for nomination and approval one Investor Director; and there shall
be three Independent Directors who shall be designated for nomination and
approval jointly by the Management Directors and the Investor Directors. Once
Rakepoll Finance's interest has fallen below 10% of its Initial Interest,
Rakepoll Finance shall have no further right to designate any Investor
Directors or Independent Directors and the Management Directors shall have no
right to designate any Management Directors or Independent Directors.
Mr. Ferrer was elected as a Class II director pursuant to a securities
purchase agreement (the "Purchase Agreement") dated May 2, 1997 between the
Company and Health Care Capital Partners, L.P. ("HCCP"). The Purchase
Agreement requires the Company to have a designee of HCCP as a member of the
Company's board of directors or nominate a designee of HCCP for election to
the Company's board of directors so long as HCCP, or its related entities own
at least 50% of the convertible notes it purchased under the Purchase
Agreement or the Preferred Stock issuable upon conversion of such notes.
In accordance with the directions received from Rakepoll Finance, the
Management Directors and the Investor Directors pursuant to the Shareholder's
Agreement, the Board of Directors has nominated Messrs. Cannon, Panoz and Dr.
Colla, currently members of the Board of Directors of the Company, as Class I
directors. In the event any of such nominees becomes unable or unwilling to
accept nomination or election, the
2
<PAGE>
shares represented by the enclosed proxy will be voted for the election of the
balance of those named and such other person as the Board of Directors may
select in accordance with the terms of the Shareholder's Agreement. The Board
of Directors has no reason to believe that any such nominee will be unable or
unwilling to serve.
Unless authority to vote for directors is withheld, it is intended that the
shares represented by the enclosed proxy will be voted for the election of
Messrs. Panoz, Cannon and Colla as Class I directors.
Set forth below is information regarding the nominees for Class I director
and the continuing directors of Class II and Class III, including information
furnished by them as to their principal occupations at present and for the
past five years, certain directorships held by each, their ages as of April
19, 1999, and the year in which each became a director of the Company.
<TABLE>
<CAPTION>
Name Age
- ---- ---
<S> <C>
CLASS I
Donald E. Panoz............................................................ 64
Mr. Panoz has been Chairman of the Board of Directors of the Company
since February 1997, and served as Chief Executive Officer from November
1997 to August 1998. Mr. Panoz was a founder and principal shareholder
of Elan Corporation, plc ("Elan") and was Elan's Chairman of the Board
from 1970 to December 1996. Until January 1995, he held the position of
Chief Executive Officer of Elan. Mr. Panoz was a founder of Mylan
Laboratories and served as its President from 1960 to 1969. Mr. Panoz is
executive chairman of Fountainhead Holdings Ltd. (an investment holding
company) and of Fountainhead Development Corp., Inc., its principal U.S.
operating subsidiary. He also serves as non-executive chairman of Warner
Chilcott, plc (formerly Nale Laboratories, plc). Mr. Panoz continues to
serve on the board of Elan.
Michael D. Cannon.......................................................... 54
Mr. Cannon has been a director of the Company and Executive Vice
President of the Company since February 1997. Mr. Cannon has been
employed by SICOR-Societa Italiana Corticosteroidi S.p.A. ("Sicor")
since its founding in 1983 and has served as a member of the Board of
Directors of Sicor since 1994. Sicor is a wholly owned subsidiary of
Rakepoll Holding B.V. ("Rakepoll Holding"), which is owned by Gensia
Sicor. From 1986 to 1997 he was Director of Business Development of Alco
Chemicals Ltd., Swiss Branch ("Alco") in Lugano, Switzerland, which acts
as an agent and distributor of certain Sicor products. Mr. Cannon worked
in a variety of technical positions at SIRS S.p.A., a manufacturer of
bulk corticosteroids in Milan, Italy from 1970 to 1982.
Gianpaolo Colla............................................................ 61
Dr. Colla has been a Management Director and Executive Vice-President--
Italian Operations of the Company since March 1999. Dr. Colla has served
as Managing Director of Sicor S.p.A. and a member of its Board of
Directors since 1996, and has been associated with Sicor since its
founding in 1983. Dr. Colla also collaborated with the Elemond Group as
Strategic Operating Planning Coordinator from 1983 through 1994, and
prior to this period he was Director of Mergers and Acquisitions with
Fides (now KPMG) from 1982 through 1983. Dr. Colla has held a variety of
management positions including positions with The Coca-Cola Export
Corporation and Philco--Ford Corporation. Dr. Colla continues to serve
as member of the Statutory Audit Board for several significant Italian
companies. He is a Registered Statutory Auditor in Italy and graduated
from Milan's Catholic University with a degree in Economics and Business
Sciences.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Name Age
- ---- ---
<S> <C>
CLASS II
Carlos A. Ferrer........................................................... 45
Mr. Ferrer has been a director of the Company since May 1997. He has
been a member of Ferrer Freeman Thompson & Co. LLC ("FFT"), the general
partner of Health Care Capital Partners, a private investment fund,
since July 1995. From July 1978 until July 1995, Mr. Ferrer was employed
by CS First Boston Corporation, most recently as Managing Director and
Head of Global Health Care Investment Banking.
Carlo Salvi................................................................ 62
Mr. Salvi has been a director of the Company since February 1997. He was
appointed President and Chief Executive Officer of the Company in August
1998, and from November 1997 to August 1998 served as the Company's
Executive Vice President. Additionally, since February 1997 Mr. Salvi
has served as a Chairman of the Board of Directors and President of
Sicor. From September 1995 to February 1997 he was a consultant to Alco.
From 1986 to September 1995, Mr. Salvi was General Manager of Alco.
Carlo Ruggeri.............................................................. 50
Dr. Ruggeri has been a director of the Company since March 1999. He
served as President of Elan Pharma Inc., a subsidiary of Elan, from
January 1992 to June 1997. Between 1988 and 1991, he was chairman and
chief executive officer of Vega Biomedical Corp., a medical diagnostics
company, and was vice president of Sclavo, a medical diagnostics
company, from January 1986 to December 1987. Prior thereto, from 1979,
Mr. Ruggeri held various senior positions in sales and marketing in the
U.S. diagnostics industry.
CLASS III
Frank C. Becker............................................................ 63
Mr. Becker has been a director of the Company since June 1998. He
retired as Vice President, Chemical Research and Development for Abbott
Laboratories, a healthcare products and services company, in December
1997. Mr. Becker joined Abbott Laboratories in 1959. In January, 1998
Mr. Becker formed Greenfield Chemicals Inc. a sourcing and consulting
company supporting the pharmaceutical industry.
Herbert J. Conrad.......................................................... 66
Mr. Conrad has been a director of the Company since September 1993. From
April 1988 to August 1993, Mr. Conrad was President of the
Pharmaceuticals Division, and Senior Vice President, of Hoffmann-La
Roche Inc. Mr. Conrad was a member of the Board of Directors of
Hoffmann-La Roche and a member of its Executive Committee from December
1981 through August 1993. Mr. Conrad joined Hoffmann-La Roche in 1960
and held various positions over the years including Senior Vice
President of the Pharmaceuticals Division, Chairman of the Board of
Medi-Physics, Inc. and Vice President, Public Affairs and Planning
Division. Mr. Conrad is also a director of Biotechnology General Corp.
and Dura Pharmaceuticals, Inc. ("Dura") and UROCOR.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Name Age
- ---- ---
<S> <C>
CLASS III
David F. Hale.............................................................. 50
Mr. Hale is President, Chief Executive Officer and Director of Women
First HealthCare, Inc. Mr. Hale also serves as Chairman of LMA North
America. Mr. Hale served as President and Chief Executive Officer of the
Company from June 1987 to November 1997, and was Chairman of its Board
of Directors from May 1991 to February 1997. Prior to joining Gensia
Sicor, Mr. Hale was President and Chief Executive Officer of Hybritech
Incorporated, a biotechnology company which was acquired by Eli Lilly &
Company in 1986. Mr. Hale joined Hybritech in 1982 as Senior Vice
President of Marketing and Business Development, became Executive Vice
President and Chief Operating Officer later that year, President in 1983
and Chief Executive Officer in 1986. Before joining Hybritech, Mr. Hale
was Vice President and General Manager of BBL Microbiology Systems, a
division of Becton, Dickinson and Company. Earlier in his career, he
held several positions at Ortho Pharmaceutical Corporation, a division
of Johnson & Johnson, including Director of the Ortho Dermatological
Division and Director of Product Management. Mr. Hale serves on the
board of Dura and Collateral Therapeutics, Inc.
John W. Sayward............................................................ 47
Mr. Sayward has been a director of the Company since June 1998. He
joined Gensia Sicor in 1992 and was named Vice President, Finance, Chief
Financial Officer and Treasurer in February 1997. Prior to that he was
Division Vice President, Finance, Corporate Controller of Gensia Sicor
and Chief Financial Officer of Gensia Sicor Pharmaceuticals, Inc. From
1975 to 1992, Mr. Sayward was employed in a wide variety of financial
and accounting positions at Baxter Healthcare Corporation, serving as
Vice President of Finance and Business Development, I.V. Systems
Division from 1988 to 1992. From 1986 to 1988 he was Vice President and
Controller, Dade Diagnostics Division of Baxter. Mr. Sayward served in a
number of financial management positions at Baxter and American Hospital
Supply from 1975 to 1986. Mr. Sayward received his Masters of Management
degree from the Northwestern Kellogg School of Management.
</TABLE>
The Board of Directors held 10 meetings during 1998. Other than Mr. Hale,
who attended seven out of the 10 Board meetings, all Directors then in office
attended at least 75% of the aggregate number of meetings of the Board and of
the Committees on which such Directors serve during the periods of their
respective Board and Committee memberships.
The Board of Directors has appointed a Stock Option Committee, a
Compensation Committee, an Audit Committee, an Executive Committee and a
Nominating Committee.
The current members of the Stock Option Committee are Carlos A. Ferrer and
Herbert J. Conrad. The Stock Option Committee held three meetings during 1998.
The Stock Option Committee's function is to administer the Gensia Sicor Inc.
Amended and Restated 1990 Stock Plan (the "1990 Stock Plan") and the Gensia
Sicor Inc. 1997 Long-Term Incentive Plan (the "1997 Stock Plan"). See "Report
to Stockholders on Executive Compensation."
The current members of the Compensation Committee are Frank C. Becker,
Herbert J. Conrad and Carlo Salvi. The Compensation Committee held one meeting
during 1998. The Compensation Committee's functions are to determine and
supervise compensation to be paid to officers and directors of the Company.
See "Report to Stockholders on Executive Compensation."
The current members of the Audit Committee are Michael D. Cannon, Herbert J.
Conrad and Carlos A. Ferrer. The Audit Committee held one meeting during 1998.
The Audit Committee's functions are to monitor the effectiveness of the audit
effort, to supervise the Company's financial and accounting organization and
financial reporting and to select a firm of certified public accountants whose
duty it is to audit the books and accounts of the Company for the fiscal year
for which they are appointed.
5
<PAGE>
The current members of the Executive Committee are Carlos A. Ferrer, Donald
E. Panoz and Carlo Salvi. The Executive Committee held one meeting during
1998. The Executive Committee has been delegated the right to exercise all the
power and authority of the Board of Directors to the extent permitted by
Delaware law and the Company's Charter. Pursuant to the Purchase Agreement,
for so long as HCCP or its related entities own at least 50% of the
convertible notes it purchased under the Purchase Agreement or the Preferred
Stock issuable upon conversion of such notes, a designee of HCCP is entitled
to be a member of the Executive Committee and, if requested by HCCP, such
designee is entitled to be considered for membership on other committees of
the Board of Directors.
The members of the Nominating Committee are Carlo Salvi and David F. Hale.
The Nominating Committee held no meetings during 1998. The Nominating
Committee's function is to select and nominate individuals to fill vacancies
in the Company's Board of Directors. The Nominating Committee will not
consider nominees recommended by security holders.
STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of April 19, 1999 as to shares
of Common Stock beneficially owned by (i) each director, (ii) the current
officers of the Company named in the Summary Compensation Table set forth
herein, (iii) the directors and executive officers of the Company as a group
and (iv) each person known by the Company to be the beneficial owner of more
than 5% of the outstanding shares of Common Stock of the Company. Except as
otherwise indicated and subject to applicable community property laws, each
person has sole investment and voting power with respect to the shares shown.
Ownership information is based upon information furnished by the respective
individuals or entities, as the case may be.
<TABLE>
<CAPTION>
Beneficial Ownership
of Common Stock
---------------------------------
Number of Percent
Shares (/1/) of Class (/2/)
------------ --------------
<S> <C> <C>
Rakepoll Finance N.V. ...................... 29,500,000 (/3/) 37.0%
Caracas baaiweg 201
P.O. Box 6085
Curacao, Netherlands Antilles
Health Care Capital Partners, L.P. ......... 6,613,756 (/4/) 8.3%
The Mill
10 Glenville Street
Greenwich, CT 06831
Salomon Smith Barney Holdings Inc. ......... 5,690,600 (/5/) 7.1%
Capital Research and Management Company..... 3,983,700 (/6/) 5.0%
Frank C. Becker............................. 23,297 (/7/) *
Michael D. Cannon........................... 80,605 (/8/) *
Gianpaolo Colla............................. 14,359 (/9/) *
Herbert J. Conrad........................... 59,364 (/10/) *
Carlos A. Ferrer............................ 6,641,353 (/11/) 8.3%
David F. Hale............................... 1,021,899 (/12/) 1.3%
Donald E. Panoz............................. 730,748 (/13/) *
Carlo Ruggeri............................... 17,191 (/14/) *
Carlo Salvi................................. 32,959,187 (/15/) 41.3%
John W. Sayward............................. 109,953 (/16/) *
Thomas M. Speace............................ 96,993 (/17/) *
Wesley N. Fach.............................. 62,417 (/18/) *
All directors and executive officers as a
group (12 persons)......................... 41,801,766 (/19/) 52.3%
</TABLE>
- --------
* Less than one percent
6
<PAGE>
(1) To the Company's knowledge, the persons named in the table have sole
voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them, subject to community property laws
where applicable and the information contained in the footnotes to this
table.
(2) For purposes of computing the percentage of outstanding shares held by
each person or group of persons named above on a given date, shares which
such person or group has the right to acquire within 60 days after such
date are deemed to be outstanding, but are not deemed to be outstanding
for the purposes of computing the percentage ownership of any other
person.
(3) Rakepoll Finance is a majority-owned direct subsidiary of Korbona
Industries Ltd., which is wholly owned by Mr. Salvi. The 29,500,000
shares are included in calculating the 32,916,076 shares owned by Mr.
Salvi.
(4) Represents shares which may be acquired within 60 days of April 19, 1999
pursuant to the conversion of convertible notes and exercise of warrants
owned by Health Care Capital Partners, L.P. ("HCCP") and its affiliates.
(5) Based on its Schedule 13G dated February 12, 1999, wherein Salomon Smith
Barney Holdings, Inc. ("SSBH") reported the beneficial ownership of
5,690,600 shares of Common Stock. The Schedule 13G states that the shares
are owned by subsidiaries of SSBH and that SSBH has shared power to vote
or direct the vote or the disposition of all 5,690,600 shares.
(6) Based on its Schedule 13G dated February 11, 1999, wherein Capital
Research and Management Company ("CGCI") reported the beneficial
ownership of 3,983,700 shares of Common Stock. The Schedule 13G reports
that CGC has sole dispositive power with respect to all such shares. The
Schedule 13G also states that the reported shares include 562,500 shares
resulting from the assumed conversion of warrants.
(7) Includes 6,297 shares which Mr. Becker has the right to acquire within 60
days of April 19, 1999 pursuant to the exercise of stock options.
(8) Includes 80,605 shares which Mr. Cannon has the right to acquire within
60 days of April 19, 1999 pursuant to the exercise of stock options.
(9) Includes 14,359 shares which Dr. Colla has the right to acquire within 60
days of April 19, 1999 pursuant to the exercise of stock options.
(10) Includes 59,364 shares which Mr. Conrad has the right to acquire within
60 days of April 19, 1999 pursuant to the exercise of stock options.
(11) Includes 6,613,756 shares which may be acquired within 60 days of April
19, 1999 pursuant to the conversion of convertible notes and exercise of
warrants owned by HCCP and its affiliates. Mr. Ferrer is a member of FFT,
the General Partner of HCCP. Mr. Ferrer disclaims beneficial ownership of
the notes and warrants held by HCCP. Also includes 27,597 shares which
Mr. Ferrer has the right to acquire within 60 days of April 19, 1999
pursuant to the exercise of options.
(12) Includes (i) 343,175 shares held by a trust as to which Mr. Hale has
shared voting and investment power and (ii) 42,000 shares held by Mr.
Hale as custodian for his minor children as to which Mr. Hale has sole
voting and investment power. Also, includes 516,701 shares which Mr. Hale
has the right to acquire within 60 days of April 19, 1999 pursuant to the
exercise of stock options.
(13) Includes (i) 200,000 shares Mr. Panoz has the right to acquire within 60
days of April 19, 1999 pursuant to the exercise of vested options, (ii)
300,000 shares which Mr. Panoz may have the right to acquire within 60
days of April 19, 1999 pursuant to the exercise of options that vest upon
the attainment of certain corporate objectives and (iii) 6,916 shares
which Mr. Panoz has the right to acquire within 60 days of April 19, 1999
pursuant to the exercise of warrants.
(14) Includes 1,591 shares which Mr. Ruggeri has the right to acquire within
60 days of April 19, 1999 pursuant to the exercise of options.
(15) Includes 29,500,000 shares owned by Rakepoll Finance, a majority-owned
direct subsidiary of Korbona Industries Ltd., which is wholly owned by
Mr. Salvi. Also includes (i) 440,000 shares owned by Nora Real Estate
N.A. and 50,000 shares owned by Alco, both of which are wholly owned by
Mr. Salvi,
7
<PAGE>
(ii) 220,236 shares which Mr. Salvi has the right to acquire within 60 days
of April 19, 1999 pursuant to the exercise of warrants, (iii) 2,222,222
shares which Mr. Salvi has the right to acquire within 60 days of April 19,
1999 pursuant to the conversion of convertible promissory notes and (iv)
86,257 shares which Mr. Salvi has the right to acquire within 60 days of
April 19, 1999 pursuant to the exercise of options.
(16) Includes 5,000 shares which Mr. Sayward has the right to acquire within
60 days of April 19, 1999 pursuant to the exercise of warrants and 83,287
shares which Mr. Sayward has the right to acquire within 60 days of April
19, 1999 pursuant to the exercise of options.
(17) Includes 93,373 shares which Mr. Speace has the right to acquire within
60 days of April 19, 1999 pursuant to the exercise of options.
(18) Includes 54,275 shares which Mr. Fach has the right to acquire within 60
days of April 19, 1999 pursuant to the exercise of options.
(19) Includes 8,170,795 shares which may be acquired within 60 days of April
19, 1999 pursuant to the exercise of options and warrants. Also includes
387,175 shares held by trusts for the benefit of family members of
directors and officers as to which such directors and officers have
voting and investment power.
8
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Executive Officers
Information is set forth below concerning the annual and long-term
compensation for services in all capacities to the Company for the fiscal
years ended December 31, 1996, 1997 and 1998, of (i) those persons who were at
December 31, 1998 (a) the Chief Executive Officer and (b) the other four most
highly compensated executive officers of the Company whose salary and bonus
exceeded $100,000 (the "Named Executive Officers") and (ii) the Company's
former Chief Executive Officer, Donald E. Panoz, who resigned as Chief
Executive officer effective August 11, 1998, but who remains Chairman of the
Board.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation Awards
--------------------------
Annual Compensation Awards
---------------------------------------------- --------------------------
Restricted Securities All Other
Name and Principal Other Annual Stock Underlying Compen-
Position Year Salary($) Bonus($) (/1/) Compensation($) Awards($) Options(#) sation($)
------------------ ---- --------- -------------- --------------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Carlo Salvi............. 1998 $ 59,000 (/2/) -- -- -- 150,000 --
President and 1997 $ 59,000 (/2/) -- -- -- -- --
Chief Executive Officer
Michael D. Cannon....... 1998 $312,018 (/3/) -- -- -- 140,000 $ 3,168 (/5/)
Executive Vice 1997 $235,000 (/3/) -- -- $66,263 (/4/) -- $ 3,240 (/5/)
President and
President and Chief
Operating Officer
of Gensia Sicor
Pharmaceuticals Inc.
John W. Sayward......... 1998 $225,212 -- -- 40,000 $106,871 (/5/)(/6/)
Executive Vice 1997 $191,090 -- -- $38,653 (/7/) 40,000 $ 1,636 (/5/)
President, 1996 $126,050 -- -- $16,247 (/7/) 35,000 $ 1,203 (/5/)
Finance, Chief Financial
Officer and Treasurer
Thomas M. Speace........ 1998 $184,442 -- -- -- 30,000 $ 1,701 (/5/)
Vice President, 1997 $172,500 -- -- $30,818 (/7/) 30,000 $ 1,625 (/5/)
International 1996 $172,500 -- -- $26,043 (/7/) 10,000 $ 1,537 (/5/)
Business Development
Wesley N. Fach.......... 1998 $169,213 -- -- -- 30,000 $ 1,273 (/5/)
Vice President, Senior 1997 $161,419 -- -- $21,795 10,000 $ 1,315 (/5/)
Legal Counsel and 1996 $128,679 -- -- $13,937 -- $ 1,173 (/5/)
Secretary
Donald E. Panoz......... 1998 $156,250 (/8/) -- $200,000 (/9/) -- -- --
Former Chief Executive 1997 $ 31,252 (/8/) -- $157,527 -- 500,000 --
Officer
</TABLE>
- --------
(1) Bonuses will be awarded with respect to 1998, as of April 19, 1999 the
amount of the bonuses was not calculable.
(2) Represents 100,000,000 Italian lira, the amount received by Mr. Salvi as
Chairman of the Board of Sicor. Mr. Salvi does not receive a salary as
President and Chief Executive Officer of the Company.
(3) Includes 15,000,000 Italian lira (approximately $8,850) Mr. Cannon
receives in compensation for his services as a director of Sicor. Mr.
Cannon joined the Company in February 1997 and his salary for 1997
reflects a partial year of employment.
(4) Represents the aggregate of the fair market value of the shares of
restricted stock as of the date of grant ($5.75 per share) less the
aggregate consideration paid therefor ($.01 per share). All shares have
vested.
(5) Represents amounts paid by the Company for life insurance premiums.
9
<PAGE>
(6) Includes a $105,000 retention bonus which Mr. Sayward received in exchange
for waiving certain provisions of his severance agreement with the
Company, which amount, after deduction for taxes and through agreement
with the Company, was applied towards the purchase of shares of Common
Stock.
(7) For 1996, represents the aggregate of the fair market value of the shares
of restricted stock as of the date of grant ($4.00 per share) less the
aggregate consideration paid therefor ($.01 per share). For 1997,
represents the aggregate of the fair market value of the shares of
restricted stock as of the date of grant ($5.75 per share) less the
aggregate consideration paid therefor ($.01 per share).
(8) Mr. Panoz became Chief Executive Officer of the Company in November 1997
and resigned effective August 13, 1998. His 1997 and 1998 salaries each
reflect a partial year of employment. Mr. Panoz elected to receive his
1998 salary on a deferred basis in the form of shares of Common Stock.
(9) Represents $200,000 of annual salary payable to Mr. Panoz in his capacity
as non-executive Chairman of the Board, of which Mr. Panoz has received
$16,667 and elected to receive the balance of on a deferred basis in the
form of shares of Common Stock.
Compensation of Directors
The members of the Board of Directors who are not employees of the Company
receive an annual retainer of $10,000 and they are reimbursed for reasonable
expenses incurred in connection with meetings of the Board of Directors and
its committees. In addition, continuing non-employee directors (other than Mr.
Panoz) receive automatic grants of options to purchase 7,500 shares of the
Company's Common Stock at the conclusion of each annual meeting of
stockholders, and new non-employee directors receive a similar one-time grant
of options to purchase 25,000 shares of the Company's Common Stock.
In connection with Mr. Panoz agreeing to act as the non-executive Chairman
of the Board of the Company and to provide certain other services to the
Company, the Company agreed to pay Mr. Panoz an annual fee of $200,000 for two
years and granted Mr. Panoz options to purchase 500,000 shares of the
Company's Common Stock at an exercise price of $4.288 per share. Of these
options, 200,000 shares are fully vested, and the remaining 300,000 shares
will vest in increments of 100,000 shares for each $100,000,000 increase in
the Company's market capitalization, prior to February 28, 2000, over
$700,000,000. The agreement may be terminated by either party on 30 days'
advance notice in writing; however if the Company terminates the agreement, it
will pay Mr. Panoz the difference between $200,000 and any amounts previously
paid. In addition, if Mr. Panoz' agreement is not earlier terminated and the
Company's market capitalization, prior to February 28, 2000, exceeds
$1,000,000,000, Mr. Panoz will be paid a bonus of $1,000,000, payable in equal
annual installments over a ten-year period, in cash or, at the option of the
Company, in stock of the Company.
Mr. Salvi, as Chairman of the Board of Sicor is entitled to receive
100,000,000 Italian Lira (approximately $59,000) per year. Michael Cannon, as
a member of the Sicor Board of Directors, is entitled to receive 15,000,000
Italian Lira (approximately $8,850) per year. In addition on April 24, 1998,
in recognition of their services as Executive Vice Presidents of the Company,
Mr. Salvi was granted options to purchase 150,000 shares, and Mr. Cannon was
granted options to purchase 125,000 shares, of the Company's Common Stock. The
above options are exercisable at an exercise price of $4.625 per share and
vest over a period of four years, with a vesting start date of February 28,
1997. Mr. Sayward was granted options to purchase 40,000 shares of Common
Stock in recognition of his services as Chief Financial Officer. Mr. Sayward's
options are exercisable at an exercise price of $3.75 per share and vest over
a period of four years, with a vesting start date of March 1, 1997.
Mr. Becker has entered into an agreement whereby he will serve as a
consultant to the Company for which he will be compensated at the rate of
$1,000 per day for a minimum of 100 days per year.
10
<PAGE>
Severance Agreements
In November 1997 Mr. Hale resigned as President and Chief Executive Officer
of the Company. Pursuant to the terms of a severance agreement entered into
with the Company, in December 1997 and January 1998 Mr. Hale was issued a
total of 184,161 shares of Common Stock. In addition, all options held by Mr.
Hale were permitted to continue to vest over an 18-month period, at the end of
which all remaining options would become immediately exercisable.
In February 1998 Mr. Sayward agreed to waive certain provisions of his
severance agreement with the Company in exchange for a retention bonus of
approximately $105,000 which Mr. Sayward agreed to invest, after deduction of
taxes, in the Company's stock.
In March 1998 Patrick D. Walsh resigned as President and Chief Operating
Officer of the Company's Gensia Sicor Pharmaceuticals, Inc. subsidiary and as
a director of the Company. In connection with his resignation, Mr. Walsh
entered into a Settlement Agreement and Release pursuant to which he received
approximately $180,000 in cash and approximately $226,000 in shares of Common
Stock in August 1998. Mr. Walsh also had the balance of his loan ($100,000
plus accrued interest of approximately $19,000) forgiven as a result of the
Company's achievement of certain milestones. In addition, all options held by
Mr. Walsh continued to vest until March 1999.
The Company is a party to certain Severance Agreements (the "Severance
Agreements") with Messrs. Fach, Sayward and Speace. Pursuant to the Severance
Agreements, (i) if, within the first 12-month period after the occurrence of a
"Change in Control" of the Company, (a) the officer voluntarily resigns for
"Good Reason" or (b) the Company terminates the officer's employment for any
reason other than "Cause" or "Disability," or (ii) if the Company terminates
the officer's employment because his position has been eliminated in
connection with a restructuring or reduction in force, as determined by the
Company, (or in the case of Mr. Fach, upon the termination of his employment
with the Company), the officer will be entitled to receive a severance payment
during the "Continuation Period" at an annual rate equal to the sum of (i) the
employee's base compensation at the annual rate in effect on the date when the
termination of his employment with the Company is effective plus (ii) the
arithmetic mean of the employee's annual bonuses for the last three calendar
years completed prior to the date when the termination of his employment with
the Company is effective. Further, the Continuation Period is treated as
employment for purposes of determining the employee's vesting in any stock
options and shares of restricted stock granted to him by the Company.
The "Continuation Period" is defined as the period commencing on the
effective date of the employee's termination of employment and ending on the
earlier of (i) the date nine months after the date when the employment
termination was effective or (ii) the date of the employee's death. If,
however, the employee is not employed in a new position comparable to his
position with the Company on the date nine months after his employment
termination was effective, then the Continuation Period is extended to the
date when the employee becomes employed in such a position, but in no event by
more than three months.
"Change in Control" is defined as the occurrence of any of the following
events: (i) the first purchase of shares of the Company's Common Stock
pursuant to a tender offer or exchange offer (other than an offer by the
Company) for all, or any part, of such Common Stock; (ii) any acquisition of
voting securities of the Company by any person or group, which theretofore did
not beneficially own voting securities, representing more than 30% of the
voting power of all outstanding voting securities of the Company, if such
acquisition results in such entity, person or group owning beneficially
securities representing more then 30% of the voting power of all outstanding
voting securities of the Company; (iii) approval by the Company's stockholders
of a merger in which the Company does not survive as an independent publicly
owned corporation, a consolidation, or a sale, exchange or other disposition
of all, or substantially all, of the Company's assets; or (iv) a change in the
composition of the Company's Board of Directors during any period of two
consecutive years such that individuals who at the beginning of such period
were members of the Board cease for any reason to constitute at least a
majority thereof, unless the election, or the nomination for election by the
Company's stockholders, of each new Director
11
<PAGE>
was approved by a vote of at least two-thirds of the Directors then still in
office who were Directors at the beginning of the period.
"Good Reason" means that the employee: (i) has been demoted or has incurred
a material reduction in his authority or responsibility as an employee of the
Company; (ii) has incurred a reduction in his total compensation (including
benefits) as an employee of the Company; (iii) has not received a
contemporaneous increase in his total compensation (including benefits) which
is commensurate with increases in total compensation (including benefits)
received by a majority of executive-level employees of the Company with duties
and responsibilities substantially comparable to those of the employee; (iv)
has not received a bonus commensurate with bonuses (if any) received by a
majority of executive-level employees of the Company with duties and
responsibilities substantially comparable to those of the employee; or (v) has
been notified that his principal place of work as an employee of the Company
will be relocated by a distance of 50 miles or more.
"Cause" means (i) a willful act by the employee which constitutes misconduct
or fraud and which is injurious to the Company or (ii) conviction of, or a
plea of "guilty" or "no contest" to, a felony.
Stock Options
The following tables summarize option grants and exercises during 1998 to or
by the Chief Executive Officer, the former Chief Executive Officer and the
Named Executive Officers, and the value of the options held by such persons at
the end of 1998. The Company does not grant Stock Appreciation Rights.
Option Grants in Fiscal 1998
<TABLE>
<CAPTION>
Individual Grants (/1/) Potential
----------------------------------------------- Realizable Value at
Percent of Assumed Annual
Number of Total Options Rates of Stock
Securities Granted to Appreciation for
Underlying Employees in Exercise or Option Term (/2/)
Options Fiscal Year Base Expiration -------------------
Name Granted(#) 1998 Price($/sh) Date 5%($) 10%($)
---- ---------- ------------- ----------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Carlo Salvi............. 150,000 13.9% $4.625 4/24/08 $436,296 $1,105,658
Michael D. Cannon....... 125,000 11.6% $4.625 4/24/08 $363,580 $ 921,382
15,000 1.4% $ 3.75 6/15/08 $ 35,376 $ 89,648
John W. Sayward......... 40,000 3.7% $ 3.75 6/15/08 $ 94,334 $ 239,061
Thomas M. Speace........ 30,000 2.8% $ 3.75 6/15/08 $ 70,751 $ 179,296
Wesley N. Fach.......... 10,000 0.9% $ 3.75 6/15/08 $ 23,584 $ 59,765
Donald E. Panoz......... -- -- -- -- -- --
</TABLE>
- --------
(1) Generally, options become exercisable ratably on a daily basis over a
four-year period and vest in full in the event of a change in control with
respect to the Company and in the event of the death of the optionee. The
exercise price per share of options granted in 1998 represented the fair
market value of the underlying shares on the date of grant. Generally,
options granted have a term of 10 years, subject to earlier termination in
certain events related to termination of employment.
(2) The 5% and 10% assumed rates of appreciation are mandated by the rules of
the Securities and Exchange Commission and do not represent the Company's
estimate or projection of the future Common Stock price.
12
<PAGE>
Aggregated Option Exercises in Fiscal 1998
and Value of Options At End of Fiscal 1998
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at End Options at End of
of Fiscal 1998 (#) Fiscal 1998($) (/1/)
Shares ---------------------- --------------------
Acquired On Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($) Unexercisable Unexercisable
---- ------------ ------------ ---------------------- --------------------
<S> <C> <C> <C> <C>
Carlo Salvi............. -- -- 68,910/81,090 /
Michael D. Cannon....... -- -- 57,448/82,552 /$11,715
John W. Sayward......... -- -- 54,521/60,479 $ 5,485/$36,995
Thomas M. Speace........ -- -- 71,741/45,359 $11,377/$27,746
Wesley N. Fach.......... -- -- 44,134/25,866 $ 9,802/$10,688
Donald E. Panoz......... -- -- 300,000/200,000 $72,900/$48,600
</TABLE>
- --------
(1) Calculated on the basis of the fair market value of the underlying
securities at December 31, 1998 ($4.531), minus the exercise price.
REPORT TO STOCKHOLDERS ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors of the Company (the
"Committee") and the Stock Option Committee are pleased to present their
report on executive compensation. This report is provided by the Committee to
assist stockholders in understanding the Committee's objectives and procedures
in establishing the compensation of the Company's executive officers and
describes the basis on which compensation determinations for 1998 were made by
the Committee. In making its determination, the Committee has relied, in part,
on geographic and competitive considerations, independent surveys of
compensation of management of companies in the pharmaceutical industry,
including companies included in the Nasdaq Pharmaceutical Stock Index used in
the Company's Stock Price Performance Graph set forth in this proxy statement,
and recommendations of management.
Compensation Philosophy and Objectives
The Committee believes that compensation of the Company's executive officers
should:
. Encourage creation of stockholder value and achievement of strategic
corporate objectives.
. Integrate compensation with the Company's annual and long-term corporate
objectives and strategy, and focus executive behavior on the fulfillment
of those objectives.
. Recognize individual initiative, effort and accomplishment.
. Provide a competitive total compensation package that enables the Company
to attract and retain, on a long-term basis, high caliber personnel.
. Provide a total compensation opportunity that is competitive with
companies in the pharmaceutical industry, taking into account relative
company size, stage of development, performance and geographic location
as well as individual responsibilities and performance.
. Align the interests of management and stockholders and enhance
stockholder value by providing management with longer term incentives
through equity ownership by management.
Key Elements of Executive Compensation
In 1998, the Company focused upon continuing the transition of its business
from a biotechnology focus to that of an operating international
pharmaceutical company. This was accomplished by investing in the long term
13
<PAGE>
value of Gensia Sicor Pharmaceuticals, Inc. in the United States and the bulk
pharmaceutical, finished pharmaceutical and research and development operating
companies in Italy, Mexico and Switzerland.
The Compensation Committee has determined that compensation of executive
officers will be based, in part, on the Company's achievements of its
objectives established with the Board of Directors, the individual
contributions and achievements of each executive officer and the profitability
of the Company. The Company's existing compensation structure for executive
officers generally includes a combination of base salary, bonus, and stock
options.
Base Salary
Compensation levels are largely determined through comparisons with
companies of similar size and complexity in the pharmaceutical industry and
companies with which the Company competes for key personnel. Cash compensation
for the Company's executive officers is generally targeted at the median of
the companies reviewed. In establishing base salaries for 1998 the Committee
considered, among other things, the Company's achievements in advancing its
products and accomplishing other business objectives, and the individual
contributions and achievements of each executive officer. Actual compensation
is based on an evaluation of job responsibilities for the position,
comparisons of compensation levels, Company achievements and individual
performance. Individual performance is evaluated by reviewing organizational
and management development progress against individual contributions and
achievements and the degree to which teamwork and Company values are fostered.
At the beginning of fiscal 1998, goals were established for the Company and
approved by the Board of Directors. Goals set for 1998 included obtaining
approval of certain ANDAs and the filing of key additional ANDAs at Gensia
Sicor Pharmaceuticals; raising additional financial resources for the Company;
and achieving a developmental milestone at Metabasis Therapeutics, Inc. in its
collaboration with Sankyo Co., Ltd. Compensation levels for the executive
officers are competitive within a range that the Committee considers to be
reasonable and necessary.
Bonus
The Committee may award bonuses under its Key Employee Incentive Plan at the
end of the fiscal year based on the Company's achievements and the
individual's contributions to those achievements, if it deems such an award to
be appropriate. This award may be in the form of restricted stock in lieu of
cash. The Company also takes into account the profitability of the Company on
a worldwide basis in awarding such bonuses. Although the Company did not
achieve the profitability goals set by the Committee at the beginning of 1998,
the Committee believed that the failure to achieve such goals was due, at
least in part, to factors beyond the control of the Company's executive
officers and employees, such as write-offs associated with divestiture of the
Company's Gensia Automedics, Inc. subsidiary. Accordingly, the Committee
decided in April 1999 to award bonuses for 1998 at a significantly reduced
level to certain executive officers and employees.
Stock Options
The Company's 1990 Stock Plan and 1997 Long Term Incentive Plan are
administered by the Company's Stock Option Committee, which is a committee of
outside directors of the Company. The Stock Option Committee believes that by
providing those persons who have substantial responsibility for the management
and growth of the Company with an opportunity to increase their ownership of
Company stock, the best interest of stockholders and executives will be
closely aligned. Therefore, executive officers, as well as all employees, are
eligible to receive stock options from time to time, giving them the right to
purchase shares of Common Stock of the Company at a specified price. The
number of stock options granted to executive officers, including the Chief
Executive Officer, is based on the Company's achievements during the year and
the individual's contributions to those achievements individual performance
and a review of data on the range of aggregate annual option grants compared
to the number of shares of stock outstanding for officers with similar duties
and titles at pharmaceutical companies taking into account differences in such
companies' stock prices, stage of development, achievements and the like.
14
<PAGE>
1998 CEO Compensation
The Compensation Committee believes that, in evaluating the Chief Executive
Officer's performance, the achievement of the Company's business objectives,
as well as the use of traditional performance standards, such as revenues,
profits and return on equity, are appropriate. The Company achieved a number
of its corporate objectives for 1997, and Mr. Panoz, as Chief Executive
Officer, played a key role in achieving those objectives. Some of these
achievements were as follows: obtaining approval of five ANDAs, filing key
additional ANDAs at Gensia Sicor Pharmaceuticals, Inc., raising additional
financial resources for the Company, and achieving a developmental milestone
at Metabasis Therapeutics, Inc. in its collaboration with Sankyo Co., Ltd. The
Board of Directors determined that these achievements were critical to the
Company's future growth and could assist the Company in enhancing stockholder
value and determined to compensate Mr. Panoz for his role in achieving these
accomplishments. Accordingly, the Board voted to pay Mr. Panoz a salary at an
annual rate of $200,000 for the period during which he served as Chief
Executive Officer in 1998. Mr. Panoz received an additional $200,000 annual
salary for serving as Chairman of the Board of Directors. Mr. Panoz elected to
receive approximately $339,000 of this aggregate amount on a deferred basis in
shares of Common Stock of the Company.
Mr. Salvi, the Company's Chief Executive Officer since August 1998, has
elected to forgo a salary as Chief Executive Officer during 1998, and to be
compensated solely in the form of appreciation, if any, in the value of his
shares of Company Common Stock and options. In April 1998, in recognition of
Mr. Salvi's contributions as Executive Vice President, the Stock Option
Committee granted Mr. Salvi options to purchase an aggregate of 150,000 shares
of Common Stock.
Miscellaneous
Section 162(m) of the Internal Revenue Code was enacted in 1993 and took
effect for fiscal years beginning in 1994. Section 162(m) disallows the
deductibility by the Company of any compensation over $1 million per year paid
to each of the chief executive officer and the four other most highly
compensated executive officers, unless certain criteria are satisfied. The
Board of Directors has approved the amendment of the Company's 1990 Stock Plan
to, among other things, qualify for an exemption from the $1 million limit on
deductions under Section 162(m) with respect to option grants under the 1990
Stock Plan. The 1997 Long-Term Incentive Plan, which replaced the 1990 Stock
Plan in February 1997 also qualifies for such exemption with respect to grants
under such plan.
This Compensation Committee Report shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent the Company specifically
incorporates this report by reference, and shall not otherwise be deemed filed
under such Acts.
<TABLE>
<CAPTION>
Compensation Committee Stock Option Committee
<S> <C>
Herbert J. Conrad Herbert J. Conrad
Carlo Salvi Carlos A. Ferrer, Frank C. Becker
</TABLE>
Compensation Committee Interlocks and Insider Participation
The members of the Stock Option Committee were Herbert J. Conrad and Carlos
A. Ferrer. The members of the Compensation Committee during 1998 were Herbert
J. Conrad, Carlo Salvi and Frank C. Becker. Mr. Salvi is the Company's
President, Chief Executive Officer and principal stockholder. For a
description of certain business relationships between the Company and Mr.
Salvi, see "Certain Transactions Relationship with Alco Chemicals, Ltd." and
"Other Transactions."
15
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The following graph illustrates a comparison of the cumulative total
stockholder return (change in stock price plus reinvested dividends) of the
Company's Common Stock with the CRSP Total Return Index for The Nasdaq Stock
Market (U.S. and Foreign) (the "Nasdaq Composite Index") and the CRSP Total
Return Index for Nasdaq Pharmaceutical Stocks (the "Nasdaq Pharmaceutical
Index"). The comparisons in the graph are required by the Securities and
Exchange Commission and are not intended to forecast or be indicative of
possible future performance of the Company's Common Stock.
[STOCK PRICE PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
12/31/93 12/30/94 12/29/95 12/31/96 12/31/97 12/31/98
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Gensia Sicor.............. $100.00 $17.17 $21.21 $18.69 $23.49 $18.31
Nasdaq Composite.......... 100.00 97.00 136.23 166.79 203.98 281.69
Nasdaq Pharmaceutical..... 100.00 75.26 138.04 138.47 142.98 183.02
</TABLE>
Assumes a $100 investment on December 31, 1993 in each of the Company's
Common Stock, the securities comprising the Nasdaq Composite Index, and the
securities comprising the Nasdaq Pharmaceutical Index.
The Nasdaq Pharmaceutical Index includes all companies listed on The Nasdaq
Stock Market within SIC Code 283. A list of those companies included in the
Nasdaq Pharmaceutical Index may be obtained by contacting Wesley N. Fach,
Secretary, at (949) 455-4700.
16
<PAGE>
CERTAIN TRANSACTIONS
Relationship with Alco Chemicals, Ltd.
Alco, an affiliate of Rakepoll Finance and wholly owned by Carlo Salvi, acts
as a non-exclusive sales agent for certain bulk pharmaceutical products
produced by certain subsidiaries of the Company, in exchange for a commission
of 4% of sales. The parties will determine, from time to time, those bulk
pharmaceutical products for which Alco will act as a sales agent. In 1998,
total commissions paid by the Company to Alco amounted to approximately $2.1
million.
In March 1998, the Company's wholly-owned subsidiary, Genchem Pharma, Ltd.,
acquired a research and development facility from Alco for approximately $1.7
million.
Other Transactions
In October 1994, the Company made a relocation loan to Mr. Walsh, the former
President and Chief Operating Officer of Gensia Sicor Pharmaceuticals, Inc. On
June 1, 1998, this loan of $100,000, together with accrued interest of
approximately $19,000, was forgiven in connection with Mr. Walsh's resignation
from the Company in March 1998 and as a result of the Company's achievement of
certain milestones.
On June 26, 1996 the Company made an interest-free relocation loan to Gene
F. Tutwiler, the Company's former Executive Vice President for Research and
Development and the current President and Chief Operating Officer of Metabasis
Therapeutics, Inc., a majority-owned subsidiary of the Company. Dr. Tutwiler
is indebted to the Company in the principal amount of $100,000 with respect to
the loan. The loan is secured by real property and is due on June 25, 2001.
The loan was assigned to Metabasis in December 1997 in connection with the
Company's assignment of certain of its assets to Metabasis. Commencing July 1,
1996 Metabasis has agreed to forgive 25% of the loan each year Dr. Tutwiler
continues to be employed by Metabasis.
In December 1997 the Company's wholly owned subsidiary, Sicor, acquired a
50% equity interest in Diaspa S.p.A. ("Diaspa"), a private Italian
pharmaceutical company specializing in bulk fermentation products, for
approximately $2.7 million. Mr. Salvi, a director and the Company's President,
Chief Executive Officer and principal stockholder, owned a 50% beneficial
ownership interest in Diaspa. In June 1998 SICOR acquired the remaining 50%
interest in Diaspa for approximately $5.7 million in cash, including a $1.4
million payment to be made to a third party for the release of an option on
the Diaspa shares. Including additional capital investments of approximately
$1.5 million, the total purchase price for Diaspa was approximately $10
million.
In December 1998 Mr. Salvi purchased $10 million in 8% Convertible Notes due
in January 2001. These notes are convertible into 2,222,222 shares of Common
Stock at a $4.50 conversion price at the option of Mr. Salvi prior to December
31, 2000.
The Company believes that the foregoing transactions were in its best
interests. It is the Company's current policy that all transactions by the
Company with officers, directors, 5% stockholders or their affiliates will be
entered into only if such transactions are approved by a majority of the
disinterested directors, and are on terms no less favorable to the Company
than could be obtained from unaffiliated parties.
17
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PROPOSAL 2
APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE
GENSIA SICOR INC. EMPLOYEE STOCK PURCHASE PLAN
In order to provide employees of the Company with an opportunity to purchase
Common Stock through payroll deductions, the Board of Directors originally
adopted the Gensia Sicor Inc. Employee Stock Purchase Plan in 1992 under which
300,000 shares of Common Stock were reserved for issuance. The plan was
amended and restated in 1996, 1997 and 1998 to reserve an additional 300,000
shares for issuance. On February 10, 1999, the Board of Directors amended and
restated the plan (as amended and restated, the "ESPP") to reserve an
additional 100,000 shares for issuance under the ESPP, subject to the approval
of the Company's stockholders at the Annual Meeting. As of April 19, 1999, an
aggregate of 105,235 shares were available for issuance under the ESPP.
Under the ESPP, an aggregate of 700,000 shares of Common Stock (which number
includes the 100,000 share increase that stockholders are being asked to
approve) have been reserved for issuance, subject to anti-dilution
adjustments. Any full-time employee will be eligible to participate in the
ESPP after he or she has been continuously employed by the Company for three
consecutive months. Eligible employees may elect to contribute up to 12% of
their total compensation during each six-month offering period, subject to
certain statutory limits. At the end of each six-month offering period, the
Company will apply the amount contributed by the participant during the
offering period to purchase whole shares of Common Stock, but not more than
1,000 shares. Shares of Common Stock are purchased for 85% of the lower of (i)
the market price of the Common Stock immediately before the beginning of the
purchase period or (ii) the market price of such Common Stock on the last
business day of the purchase period. All expenses incurred in connection with
the implementation and administration of the ESPP will be paid by the Company.
Federal Income Tax Consequences
The ESPP is intended to qualify as an "employee stock purchase plan" under
section 423 of the Code. No income is recognized by a participant at the time
a right to purchase Company Common Stock is granted. Likewise, no taxable
income is recognized at the time of the purchase, even though the purchase
price reflects a discount from the market value of the shares at that time.
A participant must recognize taxable income upon a disposition of shares
acquired under the ESPP. The tax treatment may be more favorable if the
disposition occurs after the holding-period requirements of section 423 have
been satisfied. To satisfy the holding-period requirements of section 423,
shares acquired under the Plan cannot be disposed of within two years after
the first day of the offering period during which the shares are purchased.
They also cannot be disposed of within one year after they are purchased.
If the holding period is met, the participant recognizes ordinary income
equal to the lower of (a) the excess of the fair market value of the shares on
the date of the disposition over the actual purchase price or (b) 15% of the
fair market value of the shares immediately before the applicable offering
period. The Company will not be entitled to any deduction under these
circumstances.
The excess, if any, of the fair market value of the shares on the date of
the disposition over the sum of the purchase price plus the amount of ordinary
income recognized (as described above) will be taxed as a long-term capital
gain. If a taxable disposition produces a loss (i.e., the fair market value of
the shares on the date of the disposition is less than the purchase price) and
the disposition involves certain unrelated parties, then the loss will be a
long-term capital loss.
If the holding period is not met, the entire difference between the purchase
price and the market value of the shares on the date of purchase will be taxed
to the participant as ordinary income in the year of disposition. The Company
will generally be entitled to a deduction for the same amount.
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The excess, if any, of the market value of the shares on the date of
disposition over their market value on the date of purchase will be taxed as a
capital gain (long term or short-term, depending on how long the shares have
been held). If the value of the shares on the date of disposition is less than
their value on the date of purchase, then the difference will result in a
capital loss (long-term or short-term, depending upon the holding period),
provided the disposition involves certain unrelated parties. Any such loss
will not affect the ordinary income recognized upon the disposition.
The Board of Directors recommends a vote FOR the adoption of the amendment
and restatement of the Gensia Sicor Inc. Employee Stock Purchase Plan.
PROPOSAL 3
APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE
GENSIA SICOR INC. 1997 LONG-TERM INCENTIVE PLAN
At the special meeting of stockholders approving the Stock Exchange, the
stockholders of the Company also approved the adoption of the Gensia Sicor
Inc. Long-Term Incentive Plan under which 2,000,000 shares of Common Stock
were reserved for issuance. At the Annual Meetings of Stockholders held on
September 9, 1997 and June 15, 1998, the stockholders of the Company approved
an amendment to such plan to reserve an additional 2,000,000 shares of Common
Stock under such plan. On February 10, 1999, the Board of Directors further
amended and restated the plan (as amended and restated, the "1997 Stock Plan")
to reserve an additional 1,600,000 shares for issuance under the plan, subject
to the approval of the Company's stockholders at the Annual Meeting. The 1997
Stock Plan replaced the Company's 1990 Stock Plan (the "1990 Stock Plan")
effective February 26, 1997 and any shares not subject to exercise under the
1990 Stock Plan or which are not exercised because of forfeiture or
termination of options granted under the 1990 Stock Plan are added to the
shares available under the 1997 Stock Plan.
Description of 1997 Stock Plan
Purpose
The purpose of the 1997 Stock Plan is to promote the interests of the
Company and its stockholders by encouraging key individuals to acquire stock
or to increase their proprietary interest in the Company. By providing the
opportunity to acquire stock or receive other incentives, the Company seeks to
attract and retain those key employees upon whose judgment, initiative and
leadership the success of the Company largely depends. While the maximum
number of shares available for award is modest in comparison to the total
number of shares of the Company Common Stock outstanding, the Company's Board
of Directors believes that the 1997 Stock Plan will constitute an important
means of compensating key employees.
Shares Subject to 1997 Stock Plan
There are 5,600,000 shares of Company Common Stock (which number includes
the 1,600,000 share increase that stockholders are being asked to approve)
reserved for issuance under the 1997 Stock Plan. The 1997 Stock Plan replaced
the 1990 Stock Plan. Under the 1990 Stock Plan, 6,383,334 shares of Company
Common Stock have been reserved for issuance. The 1990 Stock Plan provided for
the grant of both incentive stock options to employees only and nonstatutory
stock options to employees, directors and independent consultants. The 1990
Stock Plan also provided for direct sale of shares to employees, directors and
outside consultants. If any options granted under the 1990 Stock Plan for any
reason expire or are canceled or otherwise terminated without having been
exercised in full, the shares allocable to the unexercised portion of such
options again become available for new grants under the 1997 Stock Plan. If
shares issued under the 1990 Stock Plan are forfeited, they also become
available for new grants under the 1997 Stock Plan.
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Outstanding Grants
As of April 19, 1999, options to purchase an aggregate of 4,179,219 shares
of Company Common Stock at a weighted average exercise price of $4.656 per
share were outstanding under both the 1990 Stock Plan and the 1997 Stock Plan.
The foregoing numbers do not include options granted to former employees. As
of April 19, 1999, approximately 460 employees, ten directors and 36
consultants or advisors were eligible to participate in both plans. On April
19, 1999, the closing price of the Company's Common Stock on the Nasdaq
National Market was $4.00 per share. In general, all employee stock options
have been granted with exercise prices equal to the fair market value of the
Company's Common Stock on the date of grant, as determined by the Stock Option
Committee in accordance with the provisions of the plans. On February 10,
1999, however, Messrs. Cannon, Fach, Speace and Sayward were granted non-
qualified options with a fair market value of $5.063 and an exercise price of
$4.531. Of all options granted, 3,366,040 shares have been exercised. As of
April 19, 1999, 1,814,079 shares of Company Common Stock had been issued for
direct sale under the plans. As of April 19, 1999, a total of 1,691,031 shares
of Company Common Stock were available for future awards under the 1997 Stock
Plan. No shares remain available for grant under the 1990 Stock Plan.
As of April 19, 1999, the following persons or groups had in total received
options to purchase shares or shares of Company Common Stock under either the
1990 Stock Plan or the 1997 Stock Plan: (i) the Chief Executive Officer and
the other officers or former officers named in the Summary Compensation Table:
Mr. Salvi, 150,000 shares; Mr. Cannon, 150,000 shares; Mr. Sayward, 125,000
shares; Mr. Speace, 125,100 shares; Mr. Fach, 78,000 shares; and Mr. Panoz,
500,000 shares; (ii) each nominee for election as director not listed in the
Summary Compensation Table: Dr. Colla, 25,000 shares; (iii) all current
executive officers of the Company as a group: 653,100 shares; (iv) all current
directors who are not officers as a group: 773,500 shares; (v) each associate
of any of such current directors, executive officers or nominees: no shares;
(vi) each person who has received five percent of options granted other than
those included above: no shares; and (vii) all employees and consultants of
the Company as a group: 3,898,912. The foregoing numbers do not include
options that were surrendered in connection with the grant of restricted stock
awards.
Administration
The 1997 Stock Plan is administered by the Stock Option Committee (the
"Committee"), composed of directors who are disinterested persons under Rule
16b-3 of the Exchange Act ("Rule 16b-3") or Code Section 162(m) and smaller
committees of directors as established by the Company's Board. In the case of
grants to persons who are not also insiders for purposes of Section 16 of the
Exchange Act, the 1997 Stock Plan may be administered by officers who are not
directors. The Company's Board may fill vacancies from time to time to remove
or add members.
The Committee selects those employees of the Company or its subsidiaries who
will be eligible to receive awards under the 1997 Stock Plan. The 1997 Stock
Plan provides that the Committee may grant to eligible individuals any
combination of nonqualified stock options, incentive stock options, restricted
stock, stock appreciation rights, performance awards, stock payments or
dividend equivalents. Each grant will be memorialized in a separate agreement
with the person receiving the grant. This agreement will indicate the type and
terms of the award.
Non-employee Director Grants
Non-employee directors are eligible to receive nonqualified stock options
under the 1997 Stock Plan in the sole discretion of the Company's full Board.
These grants are designed to comply with the provisions of Rule 16b-3 and are
made at the conclusion of each regular annual meeting of stockholders to
selected incumbent non-employee directors who will continue to serve on the
Company's Board thereafter. The shares of Company Common Stock may be issued
for past service by the non-employee directors and without payment of any
purchase price. New non-employee directors may receive initial grants of
nonqualified stock options unless they had received an initial grant at the
conclusion of the annual stockholder meeting in the same calendar year.
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Total shares available to non-employee directors may not exceed 15% of the
maximum number of shares available under the 1997 Stock Plan.
Stock Options
Nonqualified stock options provide the right to purchase shares of Company
Common Stock at a price which is not less than 85% of the fair market value of
Company Common Stock subject to the option on the
effective date of the grant. These options are granted for a term which may
not exceed ten years.
Incentive stock options comply with the provisions of the Code and are
subject to restrictions contained in the Code. Incentive stock options are
granted with an exercise price of not less than 100% of the fair market value
of the Company Common Stock subject to the option on the date of grant and
will extend for a term of up to ten years. Incentive stock options granted to
persons who own more than 10% of the combined voting power of the Company's
outstanding securities must be granted at prices which are not less than 110%
of fair market value on the date of grant and may not extend for more than
five years from the date of grant.
The option exercise price must be paid in full at the time of exercise. The
price may be paid in cash or, as acceptable to the Committee, by loan made by
the Company to the participant, by arrangement with a broker where payment of
the option price is guaranteed by the broker, by the surrender of shares of
the Company owned by the participant exercising the option and having a fair
market value on the date of exercise equal to the option price, or by any
combination of the foregoing equal to the option price.
Options for employees have such other terms and are exercisable in such
manner and at such times as the Committee may determine. As noted below, all
awards under the 1997 Stock Plan vest fully and immediately upon death,
disability or upon a change in control. In addition, an option agreement for
an employee may provide for accelerated exercisability in the case of other
events as determined by the Committee.
The Committee may, at any time prior to exercise and subject to consent of
the participant, amend, modify or cancel any options previously granted and
may or may not substitute in their place options at a different price and of a
different type under different terms or in different amounts.
Restricted Stock
Restricted stock may be granted or sold to employees for prices determined
by the Committee and subject to such restrictions as may be appropriate.
Typically restricted stock is forfeited and is resold to the Company at cost
in the event that "vesting" is not achieved by virtue of seniority or
performance or other criteria. In general, restricted shares may not be sold,
transferred or hypothecated until restrictions are removed or expire.
Purchasers of restricted stock, unlike recipients of options, have voting
rights and receive dividends, if any, prior to the time when the restrictions
lapse.
Stock Appreciation Rights
Stock appreciation rights ("SARs") may be granted in tandem with stock
options or separately. If SARs are granted in tandem with options, the options
may be either nonqualified or incentive stock options. SARs granted by the
Committee in tandem with stock options will provide for payments to grantees
based upon increases in the price of Company Common Stock over the exercise
price of the related option. The SARs will provide that the holder of the SARs
may exercise the SARs or the option in whole or in part, but the aggregate
exercise may not cover more than the aggregate number of shares upon which the
value of the SARs is based. SARs granted in tandem with options may not extend
beyond the term of the related option. SARs will be transferable only to the
extent that the related option is transferable. The Committee may elect to pay
SARs in cash or in Company Common Stock or in a combination of cash and
Company Common Stock.
SARs which are issued separately from options will provide for payments
based upon increases in the price of Company Common Stock over the fair market
value of Company Common Stock or the book value of
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Company Common Stock on the date of grant. The Committee will determine
whether fair market value or book value will be the appropriate measure. As
with other SARs, upon exercise the Committee may determine to pay the SARs in
cash or in Company Common Stock or in a combination of cash and Company Common
Stock.
Performance Awards, Common Stock Payments and Dividend Equivalents
Performance awards may be granted by the Committee on an individual basis.
Generally these awards will be paid in cash and will be based upon specific
agreements.
The Committee may approve a payment in Company Common Stock to any employee
who otherwise may be entitled to a cash payment other than base salary (e.g.,
a bonus). Similarly, the Committee may award shares as dividend equivalents
with respect to grants of options or SARs.
Section 162(m)
In order to permit maximum deductibility of compensation relating to awards
of stock options and SARs, a limitation has been imposed upon the number of
such awards which may be made under the 1997 Stock Plan. Specifically, no more
than 250,000 (350,000 in the event of an option repricing) shares of Company
Common Stock shall be subject to stock options and SARs that are granted
annually under the 1997 Stock Plan to any one employee. A maximum of 5,600,000
shares has been authorized for award under the 1997 Stock Plan plus shares
which are not subject to grants under the 1990 Stock Plan as of the effective
date, and shares which become available because options under the 1990 Stock
Plan are forfeited or terminate.
Other Provisions
The 1997 Stock Plan contains customary provisions relating to adjustments
for increases or decreases in the number and kind of Company securities.
Furthermore, all awards under the 1997 Stock Plan vest fully and immediately
upon death, disability or upon a change in control. "Change in control"
includes tender offers, mergers, sales of substantially all Company assets,
change in a majority of the Company Board over a two-year period and the
acquisition of more than 30% of the outstanding shares of Company Common Stock
by a person who did not previously own 30% of such stock.
The 1997 Stock Plan will expire ten years after its initial effective date,
unless it is terminated before then by the Company's Board of Directors.
The Company's Board of Directors may amend, suspend or terminate the 1997
Stock Plan at any time without further action of the Company's stockholders
except with respect to the accelerated vesting or share adjustment provisions
and as required by applicable law.
Federal Income Tax Consequences
The following discussion of the federal income tax consequences of the 1997
Stock Plan as it relates to nonqualified stock options, incentive stock
options and share awards is intended to be a summary of applicable federal
law. State and local tax consequences may differ.
Options
Incentive stock options and nonqualified stock options are treated
differently for federal income tax purposes. Incentive stock options are
intended to comply with the requirements of Section 422 of the Code.
Nonqualified stock options need not comply with such requirements.
An optionee is generally not taxed on the grant or exercise of an incentive
stock option. The difference between the exercise price and the fair market
value of the shares on the exercise date will, however, be a
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preference item for purposes of the alternative minimum tax. If an optionee
holds the shares acquired upon exercise of an incentive stock option for at
least two years following grant and at least one year following exercise, the
optionee's gain, if any, upon a subsequent disposition of such shares is a
long-term capital gain (or loss). The measure of the gain is the difference
between the proceeds received on disposition and the optionee's basis in the
shares (which generally equals the exercise price). If an optionee disposes of
stock acquired pursuant to exercise of an incentive stock option before
satisfying the one and two-year holding periods described above, the optionee
will recognize both ordinary income and capital gain (or loss) in the year of
disposition. The amount of the ordinary income will be the lesser of (i) the
amount realized on disposition less the optionee's adjusted basis in the stock
(usually the option price) or (ii) the difference between the fair market
value of the stock on the exercise date and the option price. The balance of
the consideration received on such a disposition will be long-term capital
gain if the stock had been held for at least one year following exercise of
the incentive stock option. The Company is not entitled to an income tax
deduction on the grant or exercise of an incentive stock option or on the
optionee's disposition of the shares after satisfying the holding period
requirement described above. If the holding periods are not satisfied, the
Company will be entitled to a deduction in the year the optionee disposes of
the shares, in an amount equal to the ordinary income recognized by the
optionee.
An optionee is not taxed on the grant of a nonqualified stock option. On
exercise, however, the optionee recognizes ordinary income equal to the
difference between the option price and the fair market value of the shares on
the date of exercise. The Company is entitled to an income tax deduction in
the year of exercise in the amount recognized by the optionee as ordinary
income. Any gain on subsequent disposition of the shares is a long-term
capital gain if the shares are held for at least one year following exercise.
The Company does not receive a deduction for this gain.
Share Awards
If a participant is awarded or purchases shares, the amount by which the
fair market value of the shares on the date of award or purchase exceeds the
amount paid for the shares will be taxed to the participant as ordinary
income. The Company will be entitled to a deduction in the same amount
provided it makes all required withholdings on the compensation element of the
sale or award. The participant's tax basis in the shares acquired is equal to
the share's fair market value on the date of acquisition. Upon a subsequent
sale of any shares, the participant will realize capital gain or loss (long-
term or short-term, depending on whether the shares were held for more than
one year before the sale) in an amount equal to the difference between his or
her basis in the shares and the sale price.
If a participant is awarded or purchases shares that are subject to a
vesting schedule, the participant is deemed to receive an amount of ordinary
income equal to the excess of the fair market value of the shares at the time
they vest over the amount (if any) paid for such shares by the participant.
The Company is entitled to a deduction equal to the amount of the income
recognized by the participant.
Code Section 83(b) permits a participant to elect, within 30 days after the
transfer of any shares subject to a vesting schedule to him or her, to be
taxed at ordinary income rates on the excess of the fair market value of the
shares at the time of the transfer over the amount (if any) paid by the
participant for such shares. Withholding taxes apply at that time. If the
participant makes a Section 83(b) election, any later appreciation in the
value of the shares is not taxed as ordinary income, but instead is taxed as
capital gain when the shares are sold or transferred.
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1997 Stock Plan Benefits
The Committee has full discretion to determine the number, type and value of
awards to be granted to key employees under the 1997 Stock Plan. Therefore,
the benefits and amounts that will be received by each of the named executive
officers, the executive officers as a group and all other key employees are
not determinable.
The Board of Directors recommends a vote FOR the adoption of the amendment
and restatement of the Gensia Sicor Inc. 1997 Long-Term Incentive Plan.
PROPOSAL 4
APPROVAL OF NAME CHANGE
By resolution adopted on February 10, 1999, the Company's Board of Directors
proposed the adoption by the Company's stockholders of an amendment and
restatement of the Company's Certificate of Incorporation, pursuant to which
the Company's name would be changed from "Gensia Sicor Inc." to "SICOR Inc."
The Company adopted its current name in February 1997 in connection with the
Company's stock exchange with Rakepoll Holding B.V. Since that date, the
Company has expanded and modified its corporate objectives and strategy. In
view of the foregoing, the Board believes that a change of the Company's name
to SICOR Inc. would more appropriately reflect the Company's revised corporate
objectives and strategy, and has accordingly directed that the proposed
amendment of the Company's Restated Certificate of Incorporation be submitted
to a vote of the stockholders at the Annual Meeting.
The Board of Directors unanimously recommends a vote FOR
approval of the proposal to amend Gensia Sicor Inc.'s Restated Certificate of
Incorporation.
PROPOSAL 5
RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors, upon recommendation of the Audit Committee, has
appointed the firm of Ernst & Young LLP ("Ernst & Young") as the Company's
independent auditors for the fiscal year ended December 31, 1999, subject to
ratification by the stockholders. Representatives of Ernst & Young are
expected to be present at the Company's Annual Meeting. They will have an
opportunity to make a statement, if they desire to do so, and will be
available to respond to appropriate questions.
The Board of Directors recommends a vote FOR ratification of the appointment
of Ernst & Young LLP.
STOCKHOLDER PROPOSALS
Proposals of stockholders submitted pursuant to Rule 14a-8 under the
Securities and Exchange Act of 1934, as amended (the "Exchange Act") and
intended to be presented for consideration at the Company's 2000 Annual
Meeting of Stockholders must be received by the Company not later than January
4, 2000 in order to be considered for inclusion in the Company's proxy
materials for that meeting.
The Company's bylaws also establish an advance notice procedure with respect
to certain stockholder proposals and director nominations. If a stockholder
wishes to have a stockholder proposal considered at the Company's next annual
meeting, the stockholder must give timely notice of the proposal in writing to
the Secretary of the Company. To be timely, a stockholder's notice of the
proposal must be delivered to, or mailed and received at the executive offices
of the Company not less than 50 days nor more than 75 days prior to the
proposed date of the annual meeting of 2000; provided, however, that if less
than 65 days notice or prior public disclosure of the date of the annual
meeting is given or made to stockholders, notice of the proposal to be timely
must be received no later than the 15th day following the day on which such
notice of the date of the annual meeting is mailed or public disclosure of the
meeting date is given.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), the Company's directors, executive officers, and any
persons holding more than 10% of the Company's Common Stock are required to
report their initial ownership of the Company's Common Stock and any
subsequent changes in that ownership to the SEC. Specific due dates for these
reports have been established and the Company is required to identify in this
Proxy Statement those persons who failed to timely file these reports. In
1998, all directors, executive officers and 10% stockholders timely filed all
such reports.
OTHER MATTERS
The Board of Directors knows of no other business that will be presented at
the Annual Meeting. If any other business is properly brought before the
Annual Meeting, it is intended that proxies in the enclosed form will be voted
in accordance with the judgment of the persons voting the proxies.
Any stockholder or stockholder's representative who, because of a
disability, may need special assistance or accommodation to allow him or her
to participate at the Annual Meeting may request reasonable assistance or
accommodation from the Company by contacting Gensia Sicor Inc., 19 Hughes,
Irvine, California 92618, (949) 455-4700. To provide the Company sufficient
time to arrange for reasonable assistance or accommodation, please submit all
requests by May 28, 1999.
Whether you intend to be present at the Annual Meeting or not, we urge you
to return your signed proxy promptly.
By order of the Board of Directors.
/s/ WESLEY N. FACH
----------------------
Wesley N. Fach
Secretary
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GENSIA SICOR, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING ON JUNE 16, 1999
JOHN W. SAYWARD and WESLEY N. FACH, or each of them, each with the power
of substitution, are hereby authorized to represent as proxies and vote all
shares of stock of Gensia Sicor, Inc. (the "Company") the undersigned is
entitled to vote at the Annual Meeting of Stockholders of the Company to be held
at 19 Hughes, Irvine, California on June 16, 1999 at 1:30 p.m. or at any
postponement or adjournment thereof, and instructs said proxies to vote as
follows:
Shares represented by this proxy will be voted as directed by the
stockholder. If no such directions are indicated, the proxies will have
authority to vote FOR the election of the three nominees for Class I Directors
and FOR Items 2, 3, 4 and 5.
(continued and to be signed on reverse side)
The Board of Directors recommends a vote FOR the election of the three nominees
for class I Directors and FOR Items 2, 3, 4 and 5.
Important: Please mark boxes to give voting instructions. [X]
[ ]
WITHHELD FOR ALL
1. ELECTION OF DIRECTORS For all From all Except
nominees nominees as marked
Nominees: Donald E. Panoz [_] [_] [_]
Michael D. Cannon
Gianpaolo Colla
(INSTRUCTION: To withhold authority to vote
for any individual nominee, write that nominee's
name in the space provided below.)
________________________________________________
2. To approve the amendment and restatement FOR AGAINST ABSTAIN
of the ESPP: [_] [_] [_]
3. To approve the amendment and restatement FOR AGAINST ABSTAIN
of the 1997 Stock Plan: [_] [_] [_]
4. To approve an amendment of Gensia Sicor FOR AGAINST ABSTAIN
Inc.'s Restated Certificate Of Incorporation [_] [_] [_]
to change the name of "Gensia Sicor Inc." to
"SICOR Inc.":
5. To ratify the appointment of Ernst & Young FOR AGAINST ABSTAIN
LLP as the Company's independent auditors: [_] [_] [_]
PLEASE MARK, SIGN, DATE AND MAIL THIS
PROXY CARD PROMPTLY, USING THE
ENCLOSED ENVELOPE.
Signature(s)__________________________
Dated: _________________________, 1999
Please sign exactly as your name or
name(s) appear on this proxy. When
signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If
shares are held jointly, each holder
should sign.
