<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
Neoprobe Corporation
------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No Fee Required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 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.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
1998 ANNUAL MEETING OF STOCKHOLDERS
April 9, 1998
Dear Stockholder:
You are cordially invited to attend the 1998 Annual Meeting of Stockholders
of Neoprobe Corporation which will be held at 10:00 a.m., Eastern Daylight Time,
on May 21, 1998 at The Wyndham Dublin Hotel, 600 Metro Place North, Dublin,
Ohio. The matters on the meeting agenda are described in the Notice of 1998
Annual Meeting of Stockholders and Proxy Statement which accompany this letter.
We hope you will be able to attend the meeting, but whatever your plans, we
ask that you please complete, execute, and date the enclosed proxy card and
return it in the envelope provided so that your shares will be represented at
the meeting.
Very truly yours,
/s/ John L. Ridihalgh
John L. Ridihalgh
Chairman of the Board and
Chief Scientific Officer
/s/ David C. Bupp
David C. Bupp
Chief Executive Officer and
President
<PAGE> 3
NEOPROBE CORPORATION
NOTICE OF 1998 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 21, 1998
TO THE STOCKHOLDERS OF
NEOPROBE CORPORATION:
The Annual Meeting of the Stockholders of Neoprobe Corporation, a Delaware
corporation (the "Company"), will be held at The Wyndham Dublin Hotel, 600 Metro
Place North, Dublin, Ohio, on May 21, 1998 at 10:00 a.m., Eastern Daylight Time,
for the following purposes:
1. To elect three directors, each to serve for a term of three years or
until their successors are duly elected and qualified; and
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 2, 1998 as
the record date for the determination of stockholders entitled to notice of and
to vote at the Annual Meeting and any adjournment thereof. A list of
stockholders will be available for examination by any stockholder at the Annual
Meeting and for a period of 10 days before the Annual Meeting at the executive
offices of the Company.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE SIGN, DATE,
AND RETURN THE ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED.
By Order of the Board of Directors
/s/ John L. Ridihalgh
John L. Ridihalgh
Chairman of the Board and
Chief Scientific Officer
/s/ David C. Bupp
David C. Bupp
Chief Executive Officer and
President
Dublin, Ohio
April 9, 1998
<PAGE> 4
NEOPROBE CORPORATION
----------------------------------
1998 ANNUAL MEETING OF STOCKHOLDERS
MAY 21, 1998
----------------------------------
PROXY STATEMENT
DATED APRIL 9, 1998
----------------------------------
GENERAL INFORMATION
Solicitation. This Proxy Statement is furnished to the stockholders of
Neoprobe Corporation, a Delaware corporation (the "Company"), in connection with
the solicitation by the Board of Directors of the Company (the "Board of
Directors") of proxies to be voted at the 1998 Annual Meeting of Stockholders of
the Company (the "Annual Meeting") to be held on May 21, 1998 and any
adjournment thereof. This Proxy Statement and the accompanying proxy card are
first being mailed to stockholders on or about April 9, 1998.
Company Address. The mailing address of the Company's principal executive
offices is 425 Metro Place North, Suite 300, Dublin, Ohio 43017.
Voting Rights. Stockholders of record at the close of business on April 2,
1998 are entitled to notice of and to vote at the Annual Meeting. As of that
date, there were 22,807,055 shares of Common Stock of the Company, par value
$.001 per share ("Common Stock"), outstanding. Each stockholder of record on
April 2, 1998 is entitled to one vote per share held with respect to all matters
which may be brought before the Annual Meeting.
Authorization. All shares represented by properly executed proxies received
by the Company pursuant to this solicitation will be voted in accordance with
the stockholder's directions specified on the proxy card. If no directions have
been specified by marking the appropriate squares on the accompanying proxy
card, the shares represented by such proxy will be voted in accordance with the
recommendation of the Board of Directors, which is FOR the election of David C.
Bupp, Julius R. Krevans and James F. Zid as directors, each to serve for a term
of three years. The proxy will also be voted at the discretion of the persons
acting under the proxy to transact such other business as may properly come
before the Annual Meeting and any adjournment thereof.
Revocation. Any stockholder returning the accompanying proxy has the power
to revoke it at any time before its exercise by giving notice of revocation to
the Company, by duly executing and delivering to the Company a proxy card
bearing a later date, or by voting in person at the Annual Meeting.
Tabulation. Under Section 216 of the General Corporation Law of the State
of Delaware ("GCL") and the By-laws of the Company, a quorum must be present at
the Annual Meeting in order for any valid action, including the election of
directors and voting on the other matters presented to the meeting, other than
adjournment, to be taken thereat. Section 216 of the GCL and the By-laws of the
Company provide that a quorum consists of a majority of the shares entitled to
vote at the Annual Meeting present in person or represented by proxy. Shares
represented by signed proxies that are returned to the Company will be counted
toward the quorum in all matters even though they are marked as "Abstain,"
"Against" or "Withhold Authority" on one or more or all matters or they are not
marked at all (see "Authorization"). Broker/dealers, who hold their customers'
shares in street name, may, under the applicable rules of the exchanges and
other self-regulatory organizations of which such broker/dealers are members,
sign and submit proxies for such shares and may vote such shares on routine
matters, which, under such rules, typically include the
<PAGE> 5
election of directors, but broker/dealers may not vote such shares on other
matters without specific instructions from the customer who owns such shares.
Proxies signed and submitted by broker/dealers which have not been voted on
certain matters as described in the previous sentence are referred to as broker
non-votes. Such proxies count toward the establishment of a quorum.
Under Section 216 of the GCL and the By-laws of the Company, directors are
elected by a plurality of the votes for the respective nominees. Therefore,
proxies that are marked "Withhold Authority" and broker non-votes, if any, will
not affect the election of directors.
ELECTION OF DIRECTORS
NOMINEES FOR ELECTION AS DIRECTORS
The Company presently has nine directors on its Board of Directors,
comprised of three directors in each of three classes, with terms expiring at
the Annual Meeting in 1998, 1999 and 2000, respectively. At the Annual Meeting,
the three nominees to the Board of Directors receiving the highest number of
votes will be elected as directors to a term of three years expiring in 2001.
David C. Bupp, Julius R. Krevans and JamEs F. Zid have been nominated as
directors to serve for a term of three years.
The Company has no reason to believe that any of the nominees will not
stand for election or serve as a director. In the event any person nominated
fails to stand for election, the proxies will be voted for the election of such
other person as shall be designated by the persons named in the proxy. See
"General Information -- Tabulation."
THE BOARD OF DIRECTORS HAS NOMINATED THE FOLLOWING PERSONS TO SERVE AS DIRECTORS
OF THE COMPANY UNTIL THE 2001 ANNUAL MEETING:
DAVID C. BUPP, age 48, has served as President and a director of the
Company since August 1992 and as Chief Executive Officer since February 1998.
From August 1992 to May 1993, Mr. Bupp served as Treasurer of the Company. In
addition to the foregoing positions, from December 1991 to August 1992, he was
Acting President, Executive Vice President, Chief Operating Officer and
Treasurer, and from December 1989 to December 1991, he was Vice
President--Finance and Chief Financial Officer. From 1982 to December 1989, Mr.
Bupp was Senior Vice President, Regional Manager for AmeriTrust Company National
Association, a nationally chartered bank holding company, where he was in charge
of commercial banking operations throughout Central Ohio. Mr. Bupp has a B.A.
degree in Economics from Ohio Wesleyan University. Mr. Bupp completed a course
of study at Stonier Graduate School of Banking.
JULIUS R. KREVANS, M.D., age 73, has served as a director of the Company
since May 1994. Dr. Krevans served as Chancellor of the University of
California, San Francisco from July 1982 until May 1993, and now serves on the
faculty of that institution's School of Medicine. Prior to his appointment as
Chancellor, Dr. Krevans served as a Professor of Medicine and Dean of the School
of Medicine at the University of California, San Francisco from 1971 to 1982.
Dr. Krevans is a member of the Institute of Medicine, National Academy of
Sciences, and led its committee for the National Research Agenda on Aging until
1991. He is Chairman of the Bay Area Economic Forum, a member of the Medical
Panel of A.P. Giannini Foundation, and a member of the Board of Directors of the
Bay Area BioScience Center. Dr. Krevans has a B.S. degree and an M.D. degree,
both from New York University.
JAMES F. ZID, age 64, has served as a director of the Company since
November 1993. Mr. Zid also serves as a director for the Net Med Corporation.
Now retired, Mr. Zid was a partner from September 1981 until September 1993 (and
served as managing partner of the Columbus, Ohio office from September 1981 to
September 1992) of Ernst & Young and its predecessors. Mr. Zid has a B.S. degree
in Accounting from St. Joseph's College.
2
<PAGE> 6
DIRECTORS WHOSE TERMS CONTINUE UNTIL THE 1999 ANNUAL MEETING:
C. MICHAEL HAZARD, age 66, has served as a director of the Company since
May 1995. Mr. Hazard also serves as a director of Boston Private Bancorp., Inc.
Mr. Hazard has been Chairman, Chief Executive Officer and a director of
Westfield Capital Management Company, an investment management firm, since 1989.
Prior to founding Westfield Capital Management Company, he was Vice Chairman and
a director of Essex Investment Management Co., Inc. in Boston, Massachusetts
from 1977 to 1989. Mr. Hazard has a B.A. degree from Yale University and is a
graduate of the Wharton School Institute of Investment Banking, University of
Pennsylvania.
MICHAEL P. MOORE, M.D., PH.D., age 47, has served as a director of the
Company since May 1994. Dr. Moore has been Attending Physician, Breast Surgery,
Columbia Presbyterian Medical Center since June 1986. Dr. Moore has a B.S.
degree from Boston College, a Ph.D. degree from Loyola University of Chicago,
and an M.D. degree from The Loyola Stritch School of Medicine.
JOHN L. RIDIHALGH, PH.D., age 56, has served as a director of the Company
and Chairman of the Board since 1988 and as Chief Scientific Officer since
February 1998. He was President of the Company from 1984 to November 1991. Dr.
Ridihalgh served as Chief Executive Officer of the Company from 1984 to November
1991 and resumed the position from June 1992 until February 1998. From November
1991 to June 1992, Dr. Ridihalgh served as a consultant to the Company. From
1968 to 1974, Dr. Ridihalgh was a research scientist at Battelle Memorial
Institute. He founded a consulting firm to the nuclear industry in 1974 and a
manufacturer of long-distance telephone network access devices in 1981. He is
also the founder of a medical instrument development company and an animal
vaccine company which has licensed a number of vaccines for veterinary use. Dr.
Ridihalgh has a B.S. degree in Mathematics and a Ph.D. degree in Nuclear
Engineering, both from Iowa State University.
DIRECTORS WHOSE TERMS CONTINUE UNTIL THE 2000 ANNUAL MEETING:
MELVIN D. BOOTH, age 53, has served as a director of the Company since
May 1997. He has been President, Chief Operating Officer and a director of Human
Genome Sciences, Inc. since July 1995. Mr. Booth was with Syntex Corporation and
its subsidiaries from 1975 to 1995. Mr. Booth was the President of Syntex
Laboratories, Inc. from 1993 to 1995 and served as a Vice President of Syntex
Corporation from 1992 to 1995. From 1992 to 1993 he served as the President of
Syntex Pharmaceuticals Pacific. From 1991 to 1992 he served as an area Vice
President of Syntex, Inc. From 1986 to 1991 he served as the President of
Syntex, Inc., Canada. He has been active in U.S. pharmaceutical industry
organizations and is also a past Chairman of the Pharmaceutical Manufacturers
Association of Canada. Mr. Booth has a B.S. degree from Northwest Missouri State
University and holds a Certified Public Accountant certificate.
JOHN S. CHRISTIE, age 48, has been President of JMAC, Inc., an investment
holding company, since September 1995. From August 1988 until September 1995, he
was a Senior Vice President of Battelle Memorial Institute. Mr. Christie also
serves as a director of Karrington Health, Inc. Mr. Christie has a B.S. degree
in Business Administration from Miami University and an MBA from Emory
University.
J. FRANK WHITLEY, JR., age 55, has served as a director of the Company
since May 1994. Mr. Whitley was Director of Mergers, Acquisitions and Licensing
at The Dow Chemical Company ("Dow"), a multinational chemical company, from June
1993 to June 1997. After joining Dow in 1965, Mr. Whitley served in a variety of
marketing, financial, and business management functions. Mr. Whitley has a B.S.
degree in Mathematics from Lamar State University.
BOARD OF DIRECTORS MEETINGS
The Board of Directors held seven meetings in fiscal 1997 and each of the
directors attended at least 75 percent of the aggregate number of meetings of
the Board of Directors and committees (if any) on which he served.
3
<PAGE> 7
COMMITTEES
The Company has a standing Audit Committee and a standing Compensation
Committee. The Company does not have a committee whose functions include
nominating directors.
The Audit Committee (comprised of James F. Zid, John S. Christie and C.
Michael Hazard) recommends the firm to be employed by the Company as its
independent auditors; consults with the firm so chosen to be the independent
auditors with regard to the plan of audit; reviews, in consultation with the
independent auditors, their report of audit, or proposed report of audit and the
accompanying management letter, if any; and consults with the independent
auditors with regard to the adequacy of the internal accounting controls. The
Audit Committee held [two] meetings in fiscal 1997.
The Compensation Committee (comprised of J. Frank Whitley, Jr., Melvin D.
Booth, Julius R. Krevans and Michael P. Moore) establishes the compensation of
all employees and consultants of the Company, administers and interprets the
Company's Amended and Restated Stock Option and Restricted Stock Purchase Plan
and the 1996 Stock Incentive Plan and takes any action that is permitted to be
taken by a committee of the Board of Directors under the terms of such plan,
including the granting of options. The Compensation Committee held two meetings
in fiscal 1997.
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS,
DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
The following table sets forth, as of February 28, 1998, certain
information with respect to the beneficial ownership of shares of Common Stock
by (i) each person known to the Company to be the beneficial owner of more than
5 percent of the outstanding shares of Common Stock, (ii) each Director or
nominee for Director of the Company, (iii) each of the Named Executives (see
"Compensation of Management--Summary Compensation Table"), and (iv) the
Company's Directors and executive officers as a group.
NUMBER OF
SHARES
BENEFICIALLY PERCENT
BENEFICIAL OWNER OWNED(*) OF CLASS
- ------------------------------------- ------------ --------
Larry Anderson(a) --- (o)
Melvin D. Booth 4,000 (o)
Matthew F. Bowman 15,734(b) (o)
David C. Bupp 346,250(c) 1.5%
John S. Christie 700 (o)
William A. Eisenhardt 65,189(d) (o)
C. Michael Hazard 18,359(e) (o)
Julius R. Krevans 8,566(f) (o)
Michael P. Moore 12,566(g) (o)
John L. Ridihalgh 518,182(h) 2.2%
J. Frank Whitley, Jr. 5,066(i) (o)
James F. Zid 13,666(j) (o)
All directors and officers as a group 1,247,644(k) 4.8%
(16 persons)
Kenneth R. McGuire 1,567,100(l) 6.9%
Scudder Kemper Investments I 1,715,662(m) 7.5%
The Knowlton/Lee Group 1,789,580(n) 7.8%
4
<PAGE> 8
(*) Unless otherwise indicated, the beneficial owner has sole voting and
investment power over these shares subject to the spousal rights, if any,
of the spouses of those beneficial owners who have spouses.
(a) Mr. Anderson began his employment with the Company in December, 1996 and
ended his employment in October, 1997.
(b) This amount includes 15,734 shares issuable upon exercise of options which
are exercisable within 60 days, but does not include 89,466 shares issuable
upon exercise of options which are not exercisable within 60 days.
(c) This amount includes 306,864 shares issuable upon exercise of options which
are exercisable within 60 days, 1,686 shares in Mr. Bupp's account in the
Neoprobe Corporation 401(k) Plan (the "401(k) Plan") and 2,200 shares held
by Mr. Bupp's wife and daughters, as to which latter shares he disclaims
beneficial ownership, but it does not include 153,736 shares issuable upon
exercise of options which are not exercisable within 60 days. Mr. Bupp is
one of three trustees of the 401(k) Plan and may, as such, share
investment power over Common Stock held in such plan. The 401(k) Plan
holds an aggregate total of 12,494 shares of Common Stock. Mr. Bupp
disclaims any beneficial ownership of shares held by the 401(k) Plan that
are not allocated to his personal account.
(d) This amount includes 64,666 shares issuable upon exercise of options which
are exercisable within 60 days and 523 shares in Dr. Eisenhardt's account
in the 401(k) Plan, but it does not include 39,334 shares issuable upon
exercise of options which are not exercisable within 60 days. Dr.
Eisenhardt ended his employment with the Company in February, 1998.
(e) This amount includes 4,066 shares issuable upon exercise of options which
are exercisable within 60 days, 12,136 shares held by Westfield Performance
Fund, Limited Partnership, over which Mr. Hazard has voting and investment
power, and 2,157 shares held by Mr. Hazard's wife, as to which latter
shares he disclaims beneficial ownership, but does not include 12,034
shares issuable upon exercise of options which are not exercisable within
60 days.
(f) This amount includes 6,566 shares issuable upon exercise of options which
are exercisable within 60 days, but does not include 12,034 shares issuable
upon exercise of options which are not exercisable within 60 days.
(g) This amount includes 6,566 shares exercisable upon exercise of options
which are exercisable within 60 days, but does not include 12,034 shares
issuable upon exercise of options which are not exercisable within 60 days.
(h) This amount includes 377,331 shares issuable upon exercise of options which
are exercisable within 60 days, 1,660 shares held in Dr. Ridihalgh's
account in the 401(k) Plan and 14,750 shares held by Dr. Ridihalgh's wife,
as to which latter shares he disclaims beneficial ownership, but it does
not include 149,669 shares issuable upon exercise of options which are not
exercisable within 60 days.
(i) This amount includes 2,400 shares issuable upon exercise of options which
are exercisable within 60 days, but does not include 6,200 shares issuable
upon exercise of options which are not exercisable within 60 days.
(j) This amount includes 9,066 shares issuable upon exercise of options which
are exercisable within 60 days and 600 shares in Mr. Zid's IRA, but does
not include 12,034 shares issuable upon exercise of options which are not
exercisable within 60 days.
(k) This amount includes 913,154 shares issuable upon exercise of options which
are exercisable within 60 days (which includes 576,892 shares issuable upon
exercise by non-director executive officers) and 4,945 shares held in the
Company's 401(k) Plan. Certain executive officers of the Company are the
trustees of the 401(k) Plan and may, as such, share investment power over
Common Stock held in such plan. Each trustee disclaims any beneficial
ownership of shares held by the 401(k) Plan that are not allocated to his
personal account. The 401(k) Plan holds an aggregate total of 12,494 shares
of Common Stock. This amount also includes the 12,136 shares held by
Westfield Performance Fund, Limited Partnership, discussed in note (e)
above. This amount does not include 664,846 shares issuable upon the
exercise of options which are not exercisable within 60 days (including
162,405 shares issuable upon exercise by non-director executive officers).
(l) Mr. McGuire's address is 3000 North Clybourn, Hangar 34, Burbank,
California 91505. This amount includes 17,600 shares held by Mr. McGuire as
custodian under the Uniform Transfer to Minors Act of California for his
four children.
(m) Scudder Kemper Investment I's ("Scudder's") address is Scudder, Stevens &
Clark, Inc., Two International Place, Boston, Massachusetts, 02110. This
amount includes 762,162 shares over which Scudder has shared voting power
and sole investment power.
(n) This beneficial owner is a "group" within the meaning of Rule 13d-5 under
the Securities Exchange Act of 1934. The notice address of the group is c/o
Mr. Stanley Knowlton, Knowlton Brothers, Inc., 530 Fifth Avenue, New York,
New York 10036. The following are the members of the group: The Family
Partnership, L.P.; The Frontier Partnership, L.P.; The Darwin Partnership,
L.P.; Flagship Partners, Ltd.; Darwin Partners, Ltd.; Barker, Lee & Co.,
Limited Partnership; J.M.R. Barker Foundation; Quaker Hill Associates,
L.P.; Upland Associates, L.P.; Namakagon Associates, L.P.; Family Partners
& Co.; Frontier Partners & Co.; Knowlton Brothers, Inc.; Knowlton
Associates, Inc.; Hugh Knowlton Trust For The Benefit of Erica Knowlton;
Winthrop Knowlton; Stanley Knowlton; Christopher Knowlton; Robert R.
Barker; and Dwight E. Lee. This amount includes 144,600 shares issuable
upon exercise of Class E Redeemable Common Stock Purchase Warrants ("Class
E Warrants"). The Class E Warrants expired on November 12, 1996. The
Company does not know whether The Knowlton/Lee Group exercised its Class E
Warrants.
(o) Less than 1 percent.
5
<PAGE> 9
COMPENSATION OF MANAGEMENT
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning the annual
and long-term compensation of the chief executive officer of the Company and the
Company's other four most highly compensated executive officers during the last
fiscal year (the "Named Executives") for the Company's last three fiscal years.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
------
SECURITIES
ANNUAL COMPENSATION UNDERLYING
------------------- OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (SHARES) COMPENSATION
--------------------------- ---- ------ ----- -------- ------------
<S> <C> <C> <C> <C> <C>
John L. Ridihalgh, Ph.D., 1997 $270,433 $ 0 27,000 $ 3,654(b)
Chairman and Chief Executive Officer 1996 250,000 95,000 20,000 1,500(b)
1995 178,338 50,000 150,000 1,694(b)
David C. Bupp, 1997 $248,115 $ 0 25,600 $ 3,381(b)
President and Chief Operating Officer 1996 236,250 90,000 20,000 1,500(b)
1995 156,346 60,000 150,000 1,681(b)
Larry Anderson, 1997 $208,343 $ 0 0 $18,429(d)
Vice President, 1996 10,048 0 40,000 0(b)
Chief Financial Officer(c)
Matthew F. Bowman, 1997 $161,163 $28,000 7,200 $ 1,973(b)
Senior Vice President, 1996 85,846 36,156 40,000 0(b)
Marketing and Operations(e)
William A. Eisenhardt, Ph.D., 1997 $180,218 $ 6,563 12,000 $ 2,392(b)
Vice President, Research and 1996 167,286 59,051 10,000 1,500(b)
Development(f) 1995 157,635 31,030 42,000 1,547(b)
</TABLE>
(a) In February, 1998, Dr. Ridihalgh became the Chief Scientific Officer of the
Company and the Board appointed Mr. Bupp Chief Executive Officer of the
Company.
(b) Amounts of matching contribution under the Company's 401(k) Plan. Eligible
employees may make voluntary contributions and the Company may, but is not
obligated to, make matching contributions based on 20 percent of the
employee's contribution, up to five percent of the employee's salary.
Contributions by employees are invested by an independent plan
administrator in mutual funds and contributions, if any, by the Company are
made in the form of shares of Common Stock. The 401(k) Plan is intended to
qualify under section 401 of the Code, which provides that employee and
Company contributions and income earned on contributions are not taxable to
the employee until withdrawn from the plan, and that Company contributions
will be deductible by the Company when made.
(c) Mr. Anderson began his employment with the Company in December, 1996 and
ended his employment in October, 1997.
(d) This amount includes $825 of matching contribution as described in footnote
(b) to this table and $17,604 related to reimbursement of moving expenses.
(e) Mr. Bowman began his employment with the Company in June, 1996.
(f) Dr. Eisenhardt ended his employment with the Company in February, 1998.
6
<PAGE> 10
OPTION GRANTS IN LAST FISCAL YEAR
The following table presents certain information concerning stock options
granted to the Named Executives during the last fiscal year (1997).
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS GRANT DATE VALUE
----------------------------------------------------------------------- ------------------
PERCENT OF TOTAL
NUMBER OF SECURITIES OPTIONS GRANTED
UNDERLYING OPTIONS TO EMPLOYEES IN EXERCISE PRICE EXPIRATION GRANT DATE
NAME GRANTED (SHARES)(b) FISCAL YEAR PER SHARE DATE(a) PRESENT VALUE $(c)
---- ------------------- ----------- --------- ------- ------------------
<S> <C> <C> <C> <C> <C>
John L. Ridihalgh 27,000 6.3% $13.375 02/03/07 $210,600
David C. Bupp 25,600 6.0% $13.375 02/03/07 $199,680
Larry Anderson(d) --- --- n/a n/a n/a
Matthew F. Bowman 7,200 1.7% $13.375 02/03/07 $ 56,160
William A. Eisenhardt(e) 12,000 2.8% $13.375 02/03/07 $ 93,600
</TABLE>
(a) The options terminate on the earlier of the Expiration Date, nine months
after death or disability, 90 days after termination of employment without
cause or immediately upon termination of employment for cause or by
resignation.
(b) Vests as to one-third of these shares on each of the first three
anniversaries of the date of grant.
(c) The per share weighted average fair value of these stock options during
1997 was $7.80 on the date of grant using the Black Scholes option pricing
model with the following assumptions: an expected life of 4 years, an
average risk-free interest rate of 6.36%, volatility of 72% and no expected
dividend rate.
(d) Mr. Anderson began his employment with the Company in December, 1996 and
ended his employment in October, 1997.
(e) Dr. Eisenhardt ended his employment with the Company in February, 1998.
FISCAL YEAR END OPTION NUMBERS AND VALUES
The following table sets forth certain information concerning the number
and value of unexercised options held by the Named Executives at the end of the
last fiscal year (December 31, 1997).
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END: AT FISCAL YEAR-END:
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------------------- -------------------------
<S> <C> <C>
John L. Ridihalgh 368,332 / 133,668 $550,000 / $350,000
David C. Bupp 298,332 / 132,268 $348,000 / $350,000
Larry Anderson(a) --- / --- --- / ---
Matthew F. Bowman 13,334 / 33,866 --- / ---
William A. Eisenhardt(b) 60,665 / 43,335 $ 48,995 / $ 98,005
</TABLE>
(a) Mr. Anderson began his employment with the Company in December, 1996 and
ended his employment in October, 1997.
(b) Dr. Eisenhardt ended his employment with the Company in February, 1998.
7
<PAGE> 11
COMMON SHARE PERFORMANCE
The following graph compares the cumulative total return on the Company's
Common Shares to the cumulative total returns of the Nasdaq Stock Market Index
(U.S.) and the Nasdaq Pharmaceutical Index (an index of pharmaceutical and
biotechnology companies the securities of which are traded on the Nasdaq
National Market) since December 31, 1992. The graph is based upon an assumed
investment of $100.00 in each of the Company's Common Shares, the Nasdaq Stock
Market Index (U.S.) and the Nasdaq Pharmaceutical Index on December 31, 1992 and
dividend reinvestment thereafter.
Neoprobe Corporation
Common Stock Performance Graph
- --------------------------------------------------------------------------------
Date Neoprobe Corporation Nasdaq Stock Market Nasdaq
Common Stock Index (U.S.) Pharmaceuticals Index
- --------------------------------------------------------------------------------
12/31/92 100.00 100.00 100.00
- --------------------------------------------------------------------------------
12/31/93 104.17 115.40 83.50
- --------------------------------------------------------------------------------
12/31/94 25.00 132.53 73.82
- --------------------------------------------------------------------------------
12/31/95 268.76 129.07 56.16
- --------------------------------------------------------------------------------
12/31/96 256.26 185.67 101.67
- --------------------------------------------------------------------------------
12/31/97 100.00 225.16 101.82
- --------------------------------------------------------------------------------
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Background. The Company is in its early growth phase and it has not yet
begun to mature as a business which can set compensation policies based on
traditional statistical measures of growth and profitability such as sales, net
earnings and return on assets. The management of the Company must identify and
focus on the key initiatives and corporate milestones that will, when achieved,
allow it to attain profitable operations and growth. The purpose of the
Company's compensation philosophy is to attract and provide proper incentives to
high-quality, experienced managers and employees who will establish and attain
these key initiatives and milestones.
Biotechnology is an industry where growth and success depend upon
attracting highly-trained and qualified personnel. As a group, bio-technology
companies employ higher proportions of personnel with earned doctorate degrees
and other advanced degrees in the sciences as well as physicians and surgeons.
In order to attract and hold these employees, the Company must provide them with
a sufficient base of cash compensation, as well as opportunities to participate
in the Company's growth. This leads the Company to a compensation philosophy
oriented towards the use of variable compensation and long-term incentives. It
is the Company's philosophy that this program be offered to all employees
commensurate with their responsibilities. To make the high compensation of key
personnel worthwhile to the shareholders, a high proportion of annual
compensation should be at risk against the attaining of key accomplishments and
milestones and a high portion of the total compensation must be at risk against
the return to the long-term shareholders of the Company who have funded its
growth.
Base Salary. Base pay is only one element of key personnel's compensation
package and it is targeted to be at or below the midpoint of a representative
list of small growing biotechnology companies similar to the Company (the "Peer
Group").
8
<PAGE> 12
Variable Compensation. Variable compensation has an important role in the
Company's compensation philosophy. It is used to create incentives to attain key
initiatives and milestones in the short to medium term and to place a portion of
compensation at risk against the attaining of those targets. The Committee sets
a total amount of variable compensation based on a percentage of base salary.
The total amount available is targeted above the midpoint of the variable
compensation of the Peer Group but the amount paid is based on the elements of
corporate financial performance and the achievement of specific near-term
objectives judged to be important to the Company and established in advance by
the Compensation Committee. For example, during 1997 those targets included
receiving marketing approval in the U.S. and Europe for the Company's first
radiolabeled targeting agent, budgeted revenue and net income amounts and
various individual employee performance goals.
Long-Term Incentive Compensation. Stock options provide the principal
vehicle for long-term incentive compensation. Options are issued under the
Company's Amended and Restated Stock Option and Restricted Stock Purchase Plan
and the 1996 Stock Incentive Plan. The target levels for option grants are set
at or above the midpoint of the Peer Group. By their nature, options directly
compensate employees to the extent that long-term investors achieve high rates
of return. Options are also a key element in being able to obtain and retain
experienced and skilled employees. All options are granted at or above the
market price of the Company's Common Stock as of the date of grant. Many options
have significant vesting conditions in addition to longevity such as the
attainment of corporate and individual goals. The options are granted to all
levels of employees in order to provide incentives and to minimize cash
compensation.
Chief Executive Officer Compensation. Dr. Ridihalgh's 1997 compensation
consisted of base salary, variable compensation and stock options. During 1996,
Dr. Ridihalgh entered into a new Employment Agreement, the terms of which are
described under the heading "Employment Agreements." Dr. Ridihalgh's base salary
under the contract was set in line with the philosophy described above. During
1997, Dr. Ridihalgh was granted options to purchase 27,000 shares of stock, the
terms of which are described above under the heading "Employment Agreements."
During 1998, the Committee intends to grant variable compensation opportunities
and stock options to Dr. Ridihalgh in accordance with the philosophy outlined
above. In February, 1998, Dr. Ridihalgh became the Chief Scientific Officer of
the Company and the Board appointed Mr. Bupp Chief Executive Officer of the
Company.
Internal Revenue Code Provisions. Under Section 162(m) of the Code,
compensation paid by the Company to a Named Executive which is in excess of
$1,000,000 in a year will be nondeductible by the Company for purposes of
determining its federal taxable income unless such compensation is paid under a
performance-based plan which is approved by the stockholders of the Company.
Under the Internal Revenue Service regulations promulgated under Section 162(m),
the Company's Amended and Restated Stock Option and Restricted Stock Purchase
Plan and the 1996 Stock Incentive Plan should be deemed to be performance-based
compensation plans and amounts realized by the Named Executives under such plans
should continue to be deductible by the Company. Because of the favorable
treatment of the Company's plans and the remoteness of the possibility that base
compensation and cash variable compensation levels will exceed $1,000,000 during
fiscal 1998 and the years thereafter, the Committee did not consider the impact
of Section 162(m) on its decisions concerning compensation.
Compensation Committee: J. Frank Whitley, Jr., Melvin D. Booth, Julius R.
Krevans and Michael P. Moore.
EMPLOYMENT AGREEMENTS
John L. Ridihalgh is employed under a three-year employment agreement
effective January 1, 1996. The agreement provides for a base salary of $250,000,
$262,500 and $275,500 for the calendar years 1996, 1997 and 1998, respectively.
Dr. Ridihalgh will be paid a bonus of $12,500 upon the occurrence of any of the
following three events during the term of the employment: entering into a
strategic alliance for the marketing of any RIGScan(R) products in the United
States; obtaining United States Food and Drug Administration ("FDA") approval
for a Product License Application ("PLA") for a RIGScan product; or obtaining
equivalent regulatory approval for a RIGScan product from the European
regulatory authorities. Other bonuses are payable at the discretion of the Board
of Directors based on the performance of the Company and Dr. Ridihalgh. The
employment agreement provides for a two year non-competition agreement after the
end of the term of employment. Dr. Ridihalgh is a shareholder in Cira
Technologies, Inc. ("Cira") which is developing a process for treating chronic
infectious diseases using activated cellular therapy. The Company waived any
claim that the stock ownership of Dr. Ridihalgh in Cira and his
9
<PAGE> 13
participation in the management thereof are violations of the employment
agreement. If a change in control event occurs with respect to the Company and
the employment of Dr. Ridihalgh is concurrently or subsequently terminated (i)
without cause (cause is defined as any willful breach of a material duty by Dr.
Ridihalgh in the course of his employment or willful and continued neglect of
his duty as an employee), (ii) the term of the agreement expires or (iii) Dr.
Ridihalgh resigns because his authority, responsibilities or compensation have
materially diminished, a material change occurs in his working conditions or the
Company breaches the agreement, Dr. Ridihalgh will be paid a severance payment
equal to twice his annual base salary (less amounts paid as Dr. Ridihalgh's
salary and benefits that continue for the remaining term of the agreement if his
employment is terminated without cause). A change in control includes (a) the
acquisition, directly or indirectly, by a person (other than the Company or an
employee benefit plan established by the Board of Directors) of beneficial
ownership of 15 percent or more of the Company's securities with voting power in
the next meeting of holders of voting securities to elect the Directors; (b) a
majority of the Directors elected at any meeting of the holders of the Company's
voting securities are persons who were not nominated by the Company's then
current Board of Directors or an authorized committee thereof; (c) the
stockholders of the Company approve a merger or consolidation of the Company
with another person, other than a merger or consolidation in which the holders
of the Company's voting securities issued and outstanding immediately before
such merger or consolidation continue to hold voting securities in the surviving
or resulting corporation (in the same relative proportions to each other as
existed before such event) comprising eighty percent (80%) or more of the voting
power for all purposes of the surviving or resulting corporation; or (d) the
stockholders of the Company approve a transfer of substantially all of the
assets of the Company to another person other than a transfer to a transferee,
eighty percent (80%) or more of the voting power of which is owned or controlled
by the Company or by the holders of the Company's voting securities issued and
outstanding immediately before such transfer in the same relative proportions to
each other as existed before such event. Dr. Ridihalgh's compensation will
continue for the full term of the agreement if his employment is terminated
without cause.
In June 1996, the Company and Dr. Ridihalgh also entered into a restricted
stock purchase agreement under which Dr. Ridihalgh purchased 50,000 shares of
Common Stock for a purchase price equal to the par value of $.001 per share. Dr.
Ridihalgh may not transfer or sell any of the restricted shares unless and until
they vest. Dr. Ridihalgh will forfeit any portion of the restricted shares that
has not vested (and the Company will refund the purchase price paid) on the
earliest of the termination of his employment under the employment agreement for
any reason unless the Company is, at the time of termination for death or
disability, actively engaged in negotiations that could reasonably be expected
to lead to a change in control (as defined above) or the tenth anniversary of
the date of the employment agreement. The restricted shares that have not
previously been forfeited will vest if and when there is a change in control of
the Company (as defined above). Except for these restrictions on transfer and
possibilities of forfeiture, Dr. Ridihalgh has all other rights with respect to
the restricted shares, including the right to vote such shares and receive cash
dividends. The Company has not recognized any expense under the employment
agreement due to the contingent nature of the vesting provision and the risk of
forfeiture.
Upon the extension of the employment agreement in February 1995, Dr.
Ridihalgh was granted options to purchase 150,000 shares of Common Stock at an
exercise price of $2.50 per share (the then current market price). Such options
terminate on the earlier of 10 years after the date of grant, nine months after
death, six months after termination of employment due to disability or two years
after any other termination of employment. The options will vest in three equal
tranches, one of which will vest upon the occurrence of any of the following
three events: entering into a strategic alliance for the marketing of any
RIGScan products in the United States; obtaining FDA approval for a PLA for a
RIGScan product; or obtaining equivalent regulatory approval for a RIGScan
product from the European regulatory authorities. All previously unvested option
shares will vest if there is a change in control (as defined therein) and half
of the previously unvested option shares will vest upon termination of Dr.
Ridihalgh's employment by the Company without cause. In February 1997, Dr.
Ridihalgh was granted options to purchase 27,000 shares of Common Stock at an
exercise price of $13.375 per share. Such options terminate on the earlier of 10
years after the date of grant, nine months after death or disability, 90 days
after termination of employment without cause, or immediately upon termination
of employment by resignation. The options will vest as to one-third of the
shares originally subject to the option on each anniversary of the date of
grant. All previously unvested option shares will vest if there is a change of
control (as defined above).
10
<PAGE> 14
David C. Bupp is employed under a three-year employment agreement effective
January 1, 1996. The employment agreement provides for a base salary of
$225,000, $236,300 and $248,000 for the calendar years 1996, 1997 and 1998,
respectively. Other than the compensation provisions, Mr. Bupp's employment
agreement has substantially the same terms as Dr. Ridihalgh's agreement (see
above). In June 1996, the Company and Mr. Bupp entered into a restricted stock
purchase agreement under which Mr. Bupp purchased 30,000 shares of Common Stock
for a purchase price equal to the par value of $.001 per share. The vesting
provisions and other terms of the restricted stock purchase agreement are
substantially the same as Dr. Ridihalgh's restricted stock purchase agreement
(see above). Upon the extension of the employment agreement in February 1995,
Mr. Bupp was granted options to purchase 150,000 shares of Common Stock on the
same terms as the options granted to Dr. Ridihalgh in February 1995 (see above).
In February 1997, Mr. Bupp was granted options to purchase 25,600 shares of
Common Stock on the same terms as the options granted to Dr. Ridihalgh in
February 1997 (see above).
DEPARTURE OF NAMED EXECUTIVE
Dr. Eisenhardt ended his employment with the Company effective February 16,
1998. Related to Dr. Eisenhardt's departure, the Company agreed to pay him
$87,480 in salary and $14,583 related to accrued but unused vacation. The
Company will also incur certain fees related to Dr. Eisenhardt's transition to a
position with another Company.
COMPENSATION OF NON-EMPLOYEE DIRECTORS
Non-employee Directors who are not affiliated with a principal stockholder
of the Company receive a quarterly retainer of $2,500 and a fee of $1,000 for
each board meeting attended, as well as reimbursement for travel expenses
incurred in connection with attending meetings. Each such Director will also be
granted an option to purchase 5,000 shares of Common Stock which vest over a
four-year period and have an exercise price equal to no less than the market
price at the time of grant. Other Directors do not receive any compensation for
their services as Directors.
Members of committees of the Board of Directors receive $500 per committee
meeting for committee meetings held in conjunction with regular board meetings,
and $800 per committee meeting for committee meetings not held in conjunction
with regularly scheduled board meetings.
CERTAIN TRANSACTIONS
11
<PAGE> 15
Dr. Richard Olsen, an emeritus professor of veterinary pathobiology at OSU,
and Dr. John Ridihalgh, Chairman of the Company, invented a process for treating
chronic infectious and/or autoimmune diseases using activated cellular therapy,
conducted tests of their invention on animals and filed an application for a
United States patent thereon. In March 1996, Dr. Ridihalgh and the Company,
represented by a committee of independent directors, agreed that a newly
organized corporation, Cira, would exploit the process. The Company received 10
percent of the originally issued shares in Cira and the remainder was divided
among Drs. Ridihalgh and Olsen and their colleagues. The Company and Cira also
executed a Technology Option Agreement, under which Cira granted the Company an
option to acquire exclusive worldwide licenses to Cira's activated cellular
therapy for the treatment of human immunodeficiency virus infected patients and
chronic infectious and/or autoimmune disease in humans and the Company agreed to
support a Phase I clinical trial of this process on up to 40 patients at a cost
not to exceed $500,000. The Company and Cira also cross licensed improvements in
activated cellular therapy. In addition to technology rights, the Company
obtained an option to increase its interest in Cira by 15%. The exercise price
of this option is 15% of the fair market value of Cira's outstanding securities
on the earlier of the third anniversary of a license agreement under the
Technology Option Agreement, or the commencement of a pivotal clinical trial
study, subject to a minimum of $1.95 million and a maximum of $4.5 million.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
This disclosure relates to events occurring in 1997. One transaction in
Company securities was reported to the Securities and Exchange Commission on an
untimely Form 4 for Joseph Bianchine. Mr. Bianchine was the Company's
Vice-President - Clinical Research and Medical Director until October 9, 1997.
The Company does not know of any other failures to make filings required by
Section 16 on a timely basis by any of its directors, executive officers or
beneficial owners of 10% or more of its equity securities.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P. served as the Company's independent accountants
for the fiscal year 1997 which ended December 31, 1997, and has audited the
Company's financial statements for each of the past three fiscal years. At the
suggestion of management, the Audit Committee has recommended the retention of
Coopers & Lybrand L.L.P. as the Company's independent accountants for the 1998
fiscal year.
A representative of Coopers & Lybrand L.L.P. is expected to be present at
the Annual Meeting. The representative will have an opportunity to make a
statement if he so desires and is expected to be available to respond to
appropriate questions of stockholders.
OTHER BUSINESS
The Board of Directors does not intend to present, and has no knowledge
that others will present, any other business at the meeting. If, however, any
other matters are properly brought before the meeting, it is intended that the
persons named in the enclosed proxy will vote the shares represented thereby in
accordance with their best judgment.
COST OF SOLICITATION OF PROXIES
The cost of this solicitation will be paid by the Company. The Company may
request persons holding shares in their names for others to forward soliciting
materials to their principals to obtain authorization for the execution of
proxies, and the Company will reimburse such persons for their expenses in so
doing.
12
<PAGE> 16
STOCKHOLDER PROPOSALS
A stockholder proposal intended for inclusion in the proxy statement and
form of proxy for the Annual Meeting of Shareholders of the Company to be held
in 1999 must be received by the Company before December 10, 1998, at its
executive offices, Attention: John Schroepfer.
A stockholder who wishes to nominate a candidate for election to the Board
of Directors must follow the procedures put forth in Article III, Section 2 of
the Company's By-Laws. A copy of these procedures is available upon request from
the Company at 425 Metro Place North, Suite 300, Dublin, Ohio 43017-1367,
Attention: John Schroepfer. In order for a stockholder to nominate a candidate
for the Board of Directors election at the 1999 Annual Meeting, notice of the
nomination must be delivered to the Company's executive offices, Attention: John
Schroepfer, before December 10, 1998.
13
<PAGE> 17
NEOPROBE CORPORATION THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints John L. Ridihalgh and David C. Bupp,
and each of them, severally, with full power of substitution, as proxies
for the undersigned, and hereby authorizes them to represent and to vote,
as designated below, all of the shares of Common Stock, par value $.001
per share, of Neoprobe Corporation held of record by the undersigned on
April 2, 1998, at the Annual Meeting of Stockholders to be held on May
21, 1998, or any adjournment thereof, with all the power the undersigned
would possess if present in person.
THE BOARD OF DIRECTORS RECOMMENDS ADOPTION OF ALL PROPOSALS AND THE
ELECTION OF ALL NOMINEES.
1. To elect as directors the nominees named below for a term of one
year and until their successors are duly elected and qualified.
NOMINEES: DAVID C. BUPP, JULIUS R. KREVANS AND JAMES F. ZID
[ ] FOR all nominees listed above (except as marked to the
contrary) [ ] WITHHOLD AUTHORITY to vote for all nominees listed
above
(INSTRUCTIONS: To withhold authority to vote for any individual
nominee, strike a line through the nominee's name listed above.)
(Continued, to be dated and signed, on the other side.)
(Continued from the other side)
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting of Stockholders or
any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED IN FAVOR OF ALL PROPOSALS AND FOR THE ELECTION OF ALL NOMINEES
LISTED ABOVE.
The undersigned hereby acknowledges receipt with this Proxy of a copy of
the Notice of Annual Meeting and Proxy Statement dated April 9, 1998 and a
copy of the Company's 1997 Annual Report to Stockholders.
Date: , 1998
--------------------------------
Signature
--------------------------------
Signature (if held jointly)
IMPORTANT: Please sign exactly
as name or names appear to the
left. When shares are held by
joint tenants, both should sign.
When signing as attorney,
executor, administrator, trustee
or guardian, please give full
title as such. Corporations
should sign in their full
corporate name by their
president or other authorized
officer. If a partnership,
please sign in partnership name
by an authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
