<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
AMENDMENT 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 Section 14a-11(c) or Section 14a-12
MYCOGEN 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] $125 per Exchange Act Rules 0-11(c)(l)(ii), 14a-6(i)(1), or 14a-6(i)(2).
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] 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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price of 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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11 (a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
MYCOGEN CORPORATION
NOTICE OF ANNUAL MEETING
AND
PROXY STATEMENT
<PAGE>
MYCOGEN CORPORATION
NOVEMBER 15, 1995
To the Stockholders of MYCOGEN CORPORATION:
You are cordially invited to attend the Annual Meeting of the Stockholders
of Mycogen Corporation, to be held on Thursday, December 14, 1995 at 10:00 a.m.
at Mycogen Corporation's headquarters located at 5501 Oberlin Drive, San Diego,
CA 92121-1718.
Details of the business to be conducted at the Annual Meeting are given in
the attached Notice of Annual Meeting and Proxy Statement.
If you do not plan to attend the Annual Meeting, please sign, date, and
return the enclosed proxy promptly in the accompanying reply envelope. If you
decide to attend the Annual Meeting and wish to change your proxy vote, you may
do so automatically by voting in person at the Annual Meeting.
We look forward to seeing you at the Annual Meeting.
/s/ Jerry Caulder
San Diego, California Jerry Caulder
Chairman and Chief Executive Officer
YOUR VOTE IS IMPORTANT
In order to assure your representation at the meeting, you are requested to
complete, sign and date the enclosed proxy as promptly as possible and return it
in the enclosed envelope (to which no postage need be affixed if mailed in the
United States).
<PAGE>
MYCOGEN CORPORATION
5501 OBERLIN DRIVE
SAN DIEGO, CALIFORNIA 92121-1718
______________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------------------------------------
TO BE HELD DECEMBER 14, 1995
______________
To the Stockholders of MYCOGEN CORPORATION:
The Annual Meeting of Stockholders of Mycogen Corporation (the "Company")
will be held at the headquarters of Mycogen Corporation, 5501 Oberlin Drive, San
Diego, California 92121-1718 on Thursday, December 14, 1995 at 10:00 a.m. (the
"Annual Meeting") for the following purposes:
1. To elect the Board of Directors to serve until the next Annual Meeting
and until their successors are elected and qualified;
2. To approve the implementation of the 1995 Employee Stock Purchase
Plan, pursuant to which 250,000 shares of Common Stock will be
reserved for issuance;
3. To ratify the non-statutory stock option grants for 20,000 shares of
Common Stock made under the Company's Automatic Grant Program to each
of three non-employee Board members;
4. To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending August 31, 1996; and
5. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. Any stockholders of record at the close of
business on October 30, 1995 will be entitled to vote at the Annual Meeting and
at any adjournment thereof. The transfer books will not be closed. A list of
stockholders entitled to vote at the Annual Meeting will be available for
inspection at the offices of the Company. If you do not plan to attend the
Annual Meeting in person, please sign, date and return the enclosed proxy in the
envelope provided. If you attend the Annual Meeting and vote by ballot, your
proxy will be revoked automatically and only your vote at the Annual Meeting
will be counted. The prompt return of your proxy will assist us in preparing
for the Annual Meeting.
By Order of the Board of Directors
/s/ Carlton J. Eibl
Carlton J. Eibl as Secretary
San Diego, California
November 15, 1995
<PAGE>
MYCOGEN CORPORATION
5501 Oberlin Drive
San Diego, California 92121-1718
_______________________
PROXY STATEMENT
_______________________
For the Annual Meeting of Stockholders
To Be Held
December 14, 1995
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors (the
"Board of Directors") of Mycogen Corporation, a California corporation (the
"Company"), for use at the Annual Meeting of stockholders to be held on December
14, 1995 (the "Annual Meeting"). The Annual Meeting will be held at 10:00 a.m.
at the headquarters of Mycogen Corporation, 5501 Oberlin Drive, San Diego,
California 92121-1718. Stockholders of record on October 30, 1995 will be
entitled to notice of and to vote at the Annual Meeting.
This Proxy Statement and accompanying proxy (the "Proxy") were first mailed
to stockholders on or about November 15, 1995.
VOTING
On October 30, 1995, the record date for determination of stockholders
entitled to vote at the Annual Meeting, there were 19,466,821 shares of Common
Stock outstanding. Each stockholder is entitled to one vote for each share of
Common Stock held by such stockholder. Abstentions and broker non-votes are
counted as present for the purpose of determining the presence of a quorum for
the transaction of business at the Annual Meeting. In the election of
directors, the six candidates receiving the highest number of affirmative votes
will be elected. Proposals 2, 3 and 4 each require (i) the affirmative vote of
a majority of the shares present and entitled to vote and (ii) the affirmative
vote of a majority of the required quorum for approval. Thus, abstentions and
broker non-votes can have the effect of preventing approval of a proposal where
the number of affirmative votes, though a majority of the votes cast, do not
constitute a majority of the required quorum.
REVOCABILITY OF PROXIES
Any person giving a proxy has the power to revoke it at any time before its
exercise. It may be revoked by filing with the Secretary of the Company at the
Company's principal executive office, 5501 Oberlin Drive, San Diego, California
92121-1718, a notice of revocation or another signed proxy with a later date.
You may also revoke your proxy by attending the Annual Meeting and voting in
person.
SOLICITATION
The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing and mailing of this Proxy Statement, the Proxy
and any additional soliciting material furnished to stockholders. Copies of
solicitation material will be furnished to brokerage houses, fiduciaries and
custodians holding shares in their names that are beneficially owned by others
so that they may forward this solicitation material to such beneficial owners.
In addition, the Company may reimburse such persons for their costs of
forwarding the solicitation materials to such beneficial owners. The original
solicitation of proxies by mail may be supplemented by solicitation by
telephone, telegram or other means by directors, officers, employees or agents
of the Company. No additional compensation will be paid to these individuals
for any such services. Except as described above, the Company does not
presently intend to solicit proxies other than by mail.
FISCAL YEAR
All references herein to a particular year refer to the Company's fiscal
year which ends or ended August 31 of the year indicated.
1
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The persons named below are nominees for director to serve until the next
Annual Meeting and until their successors have been elected and qualified. The
Company's Bylaws provide that the authorized number of directors shall be
determined by resolution of the Board of Directors or by the stockholders at the
Annual Meeting. The authorized number of directors is currently between 5 and
9. The Board of Directors has selected 6 nominees, all of whom are currently
directors of the Company. Each person nominated for election has agreed to
serve if elected, and management has no reason to believe that any nominee will
be unavailable to serve. Unless otherwise instructed, the proxy holders will
vote the proxies received by them for the nominees named below. The 6
candidates receiving the highest number of affirmative votes of the shares
entitled to vote at the Annual Meeting will be elected directors of the Company.
NOMINEES
The following table sets forth information regarding the nominees.
<TABLE>
<CAPTION>
YEAR FIRST ELECTED
NAME/1/ POSITIONS AND OFFICES HELD DIRECTOR
<S> <C> <C>
Thomas J. Cable Director 1983
Jerry D. Caulder, Ph.D. Chairman, Chief Executive Officer and Director 1984
George R. Hill, Ph.D. Director 1993
Kenneth H. Hopping Director 1995
David H. Rammler, Ph.D. Director 1983
A. John Speziale, Ph.D. Director 1986
</TABLE>
_____________________________
/1/ All directors, except Jerry D. Caulder, are members of both the Audit
and Compensation Committees.
BUSINESS EXPERIENCE OF DIRECTORS
Mr. Cable, 56, has served as a director of the Company since September
1983. Mr. Cable was founder of the venture capital firm of Cable & Howse
Ventures, Inc. and has served as principal with that firm since 1982. Mr. Cable
is a director of Endosonics Corporation, a medical products company; Fischer
Imaging Corporation, a medical X-ray equipment company; and Ostex International,
a medical products company.
Dr. Caulder, 53, joined the Company in September 1984, as President, Chief
Executive Officer and a director, and has served as Chairman of the Board since
July 1989. Dr. Caulder currently serves as Chairman and Chief Executive Officer
of the Company. Prior to joining the Company, Dr. Caulder spent over 15 years
with Monsanto Company ("Monsanto"). While at Monsanto, Dr. Caulder managed
various aspects of both the international and domestic business of Monsanto
Agricultural Products Company ("APC") serving as Director, Product Development
Worldwide; Director, Market Research Worldwide; and Director, Latin America.
His last position at Monsanto was as Director of New Business and Commercial
Development for biotechnology. Dr. Caulder is a director of Applied Genetics, a
health care company, and of Environmental Science & Engineering , an
environmental remediation company.
Dr. Hill, 54, has served as a director of the Company since April 1993.
Since 1987, Dr. Hill has served as a Senior Vice President of The Lubrizol
Corporation ("Lubrizol"). Prior to serving in that position, Dr. Hill served at
Lubrizol as Vice President of Research and Development (1984 through 1987) and
Assistant to the Vice President of Research and Development (1983 through 1984).
Dr. Hill is a director of the Lamson and Sessions Company and serves on the
Board of Directors of Lake Erie College, on the Advisory Committee of Case
Western Reserve University, the Visiting Committee of the University of Akron
and the Visiting Committees of Chemistry and Chemical Engineering at Case
Western University and Carnegie Mellon University, respectively.
2
<PAGE>
Mr. Hopping, 49, has served as a director of the Company since July, 1995.
Mr. Hopping has served as Vice President and Secretary of Lubrizol since 1991.
Prior to serving in that position, Mr. Hopping served as Senior Vice President
of Marketing and Product Development (1988-1991); Division Head, Corporate
Communications (1987-1988); General Manager, Houston Plants (1983-1987); and
Manager, Raw Materials Purchasing (1981-1983).
Dr. Rammler, 67, a founder of the Company, served as the Chairman of the
Board from the Company's inception until July 1989. Dr. Rammler is a general
partner of Vanguard Associates, a venture capital firm, and has served in that
position since 1981. Dr. Rammler is a director of Endosonics Corporation, a
medical products company, and a director of several private companies.
Dr. Speziale, 79, has served as a director of the Company since February
1986. Dr. Speziale has been a principal in A. John Speziale Associates, a
chemistry and agricultural consulting firm, since 1980. Prior to that time, Dr.
Speziale worked for 32 years with Monsanto serving in various research
positions, including Research Director of APC. Dr. Speziale is a director of EO
Systems, Inc., a privately held waste management company.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of four meetings during
the fiscal year ended August 31, 1995. The Company has an Audit Committee and a
Compensation Committee of the Board of Directors. The Company does not have a
Nominating Committee or a committee that performs the functions of a Nominating
Committee. The Audit Committee was established in 1987 and is primarily
responsible for reviewing the financial reporting process and the Company's
internal accounting controls, and approving the services performed by, and the
independence of, the Company's auditors. The Audit Committee currently consists
of Thomas J. Cable, George R. Hill, Kenneth H. Hopping, David H. Rammler and A.
John Speziale. The Audit Committee held a total of three meetings during the
fiscal year ended August 31, 1995. The Compensation Committee was established in
1985 and reviews and approves the Company's compensation policy. The
Compensation Committee currently consists of Thomas J. Cable, George R. Hill,
Kenneth H. Hopping, David H. Rammler and A. John Speziale. The Compensation
Committee held a total of four meetings during the fiscal year ended August 31,
1995.
All nominees for the Board of Directors attended seventy-five percent (75%)
or more of the aggregate meetings of the Board of Directors and the Board
Committees on which they served in 1995, except Dr. Rammler, who, due to a death
in his family, was unable to attend one Board of Director's meeting and the
Compensation and Audit Committee meetings held on the same day. Immediately
after the July 21, 1995 Board of Directors, Audit and Compensation Committee
meetings, the Company's Chief Executive Officer telephoned Dr. Rammler and
discussed with him the contents of those meetings.
DIRECTOR COMPENSATION
Non-employee members of the Board of Directors are each paid an annual
retainer fee of $12,000 plus reimbursement of all out-of-pocket costs incurred
in connection with their attendance at Board of Directors, Audit Committee or
Compensation Committee meetings. Each non-employee Board of Directors member
will automatically receive an option grant for 5,000 shares of Common Stock
under the Company's 1992 Stock Option Plan on the date of each Annual
Stockholders Meeting at which such non-employee board of directors member is re-
elected to the Board of Directors. Also, each individual who first becomes a
non-employee Director, whether through election by the stockholders or
appointment by the Board of Directors, will automatically be granted, at the
time of such initial election or appointment, a non-statutory stock option to
purchase 20,000 shares of Common Stock. Each automatic grant will have an
exercise price per share equal to the fair market value of the Common Stock on
the grant date. Accordingly, on April 20, 1994, the date of the 1994 Annual
Stockholders Meeting, Messrs. Cable, Hill, Rammler and Speziale each received an
automatic option grant for 5,000 shares with an exercise price of $9.50 per
share. On July 21, 1995 when Mr. Hopping first joined the Board of Directors,
he received an automatic option grant for 20,000 shares of Common Stock with an
exercise price of $8.25 per share. For a summary of the remaining terms and
conditions of these automatic grants, see "Proposal No. 2--Ratification of
Automatic Stock Option Grants" below.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends a vote FOR the nominees listed herein.
3
<PAGE>
PROPOSAL NO. 2
APPROVAL OF 1995 EMPLOYEE
STOCK PURCHASE PLAN
INTRODUCTION
The Company's stockholders are being asked to approve the implementation of
the 1995 Employee Stock Purchase Plan (the "1995 Purchase Plan"), pursuant to
which 250,000 shares of Common Stock will be reserved for issuance. The 1995
Purchase Plan is intended to serve as the successor to the Company's existing
1988 Employee Stock Purchase Plan (the "Predecessor Plan"). Accordingly, if the
stockholders approve the 1995 Purchase Plan, the Predecessor Plan, together with
all outstanding purchase rights thereunder, will terminate with the quarterly
purchase period ending on November 30, 1995, and no further shares of Common
Stock will be issued under the Predecessor Plan after that date. However, the
share reserve remaining under the Predecessor Plan after the November 30, 1995
purchase date (estimated to be 178,000 shares) will be transferred to the new
1995 Purchase Plan and will form part of the 250,000 shares reserved for
issuance thereunder.
The 1995 Purchase Plan is intended to provide eligible employees of the
Company and its participating affiliates with the opportunity to acquire a
proprietary interest in the Company through participation in a payroll-deduction
based employee stock purchase program. The 1995 Purchase Plan was adopted by
the Board of Directors on October 19, 1995 and will become effective on December
1, 1995 (the "Effective Date"), provided the 1995 Purchase Plan is approved by
the stockholders at the Annual Meeting.
The following is a summary of the principal features of the 1995 Purchase
Plan. The summary, however, does not purport to be a complete description of
all the provisions of the 1995 Purchase Plan. Any stockholder of the Company
who wishes to obtain a copy of the actual plan document may do so upon written
request to the Company's Secretary at the Company's principal executive offices
in San Diego, California.
SHARE RESERVE
250,000 shares of Common Stock have been reserved for issuance over the ten
(10) year term of the 1995 Purchase Plan. This share reserve is comprised of
(i) the estimated 178,000 shares of Common Stock which will remain available for
issuance under the Predecessor Plan following the close of the current purchase
period thereunder on November 30, 1995, plus (ii) an additional increase of
approximately 72,000 shares of Common Stock.
In the event any change is made to the outstanding shares of Common Stock
by reason of any recapitalization, stock dividend, stock split, combination of
shares, exchange of shares or other change in corporate structure effected
without the Company's receipt of consideration, appropriate adjustments will be
made to (i) the class and maximum number of securities issuable under the 1995
Purchase Plan, including the class and maximum number of securities purchasable
per participant on any one purchase date, and (ii) the class and number of
securities subject to each outstanding purchase right and the purchase price
payable per share thereunder.
PLAN ADMINISTRATION
The 1995 Purchase Plan will be administered by the Compensation Committee
of the Board of Directors. The Compensation Committee, as Plan Administrator,
will have full authority to adopt such rules and procedures as it may deem
necessary for proper plan administration and to interpret the provisions of the
1995 Purchase Plan. All costs and expenses incurred in plan administration will
be paid by the Company without charge to participants.
OFFERING PERIODS AND PURCHASE PERIODS
The 1995 Purchase Plan will be implemented in a series of successive
purchase periods, each of six (6) months duration. The initial purchase period
will begin December 1, 1995 and end May 31, 1996, and subsequent purchase
periods will run from the first business day of June to the last business day in
November each year and from the first business day of December each year to the
last business day in May of the following year.
4
<PAGE>
ELIGIBILITY
Each individual who is expected on a regularly scheduled basis to work more
than 20 hours per week for more than five (5) months per calendar year in the
employ of the Company or any participating affiliate may join the 1995 Purchase
Plan on the start date of any purchase period following his or her completion of
one (1) month of continuous service with the Company or any affiliate.
Participating affiliates include any parent or subsidiary corporations of
the Company, whether now existing or hereafter organized, which elect, with the
approval of the Plan Administrator, to extend the benefits of the 1995 Purchase
Plan to their eligible employees. The Company, together with the following
subsidiaries, will be the initial participating employers in the 1995 Purchase
Plan: Agrigenetics, Inc.; Mycogen Crop Protection, Inc.; Mycogen Canada, Inc.;
and Mycogen Plant Sciences-Puerto Rico Corporation.
As of October 31, 1995, approximately 600 employees, including seven (7)
executive officers, would be eligible to participate in the 1995 Purchase Plan.
PURCHASE PROVISIONS
The participant will be granted a separate purchase right for each purchase
period in which he or she participates. The purchase right will be granted on
the start date of the purchase period and will be automatically exercised on the
last business day of that period.
Each participant may authorize period payroll deductions in any multiple of
one percent (1%) of his or her base salary, up to a maximum of fifteen percent
(15%). On the last business day of each purchase period, the accumulated
payroll deductions of each participant will automatically be applied to the
purchase of whole shares of Common Stock at the purchase price in effect for
that purchase period. However, no participant may purchase more than 375 shares
of Common Stock on any one purchase date.
PURCHASE PRICE
The purchase price per share at which Common Stock will be purchased on the
participant's behalf at the end of each purchase period will be equal to eighty-
five percent (85%) of the lower of (i) the fair market value per share of Common
-----
Stock on the last business day immediately preceding the start date of that
purchase period, or (ii) the fair market value per share of Common Stock on the
purchase date.
VALUATION
The fair market value per share of Common Stock on any relevant date will
be the closing selling price per share on such date on the Nasdaq National
Market. On October 31, 1995, the fair market value per share of Common Stock was
$13.38 per share.
SPECIAL LIMITATIONS
The 1995 Purchase Plan will impose certain limitations upon a participant's
rights to acquire Common Stock, including the following limitations:
(i) No purchase right may be granted to any individual who owns stock
(including stock purchasable under any outstanding purchase rights) possessing
five percent (5%) or more of the total combined voting power or value of all
classes of stock of the Company or any of its affiliates; and
(ii) No purchase right granted to a participant may permit such
individual to purchase Common Stock at a rate greater than $25,000 worth of such
Common Stock (valued at the time such purchase right is granted) for each
calendar year the purchase right remains outstanding at any time.
5
<PAGE>
TERMINATION OF PURCHASE RIGHTS
A participant may withdraw from a purchase period at any time, and any
payroll deductions collected on his or her behalf prior to such withdrawal will
automatically be applied to the purchase of Common Stock on the next semi-annual
purchase date. A participant's purchase right will immediately terminate upon
his or her loss of eligible employee status for any reason, and his or her
payroll deductions for the purchase period in which such loss of eligibility
occurs will be automatically refunded. However, the payroll deductions of a
participant who dies or becomes disabled during a purchase period may
alternatively, at the election of such individual or the representative of his
or her estate, be applied to the purchase of Common Stock on the next semi-
annual purchase date.
STOCKHOLDER RIGHTS
No participant will have any stockholder rights with respect to the shares
of Common Stock covered by his or her purchase right until the shares are
actually purchased on the participant's behalf. No adjustment will be made for
dividends, distributions or other rights for which the record date is prior to
the date of such purchase.
ASSIGNABILITY
No purchase right will be assignable or transferable other than in
connection with the participant's death and will be exercisable only by the
participant during his or her lifetime.
ACQUISITION
Should the Company be acquired by merger or by the sale of all or
substantially all of the Company's assets or the sale of securities representing
more than fifty percent (50%) of the Company's total outstanding voting
securities, then all outstanding purchase rights will automatically be exercised
immediately prior to the effective date of such acquisition. The purchase price
will be equal to eighty five percent (85%) of the lower of (i) the fair market
-----
value per share of Common Stock on the last business day immediately preceding
the start date of the purchase period in which such acquisition occurs or (ii)
the fair market value per share of Common Stock immediately prior to such
acquisition.
AMENDMENT AND TERMINATION
The 1995 Purchase Plan will terminate upon the earliest to occur of (i)
November 30, 2005, (ii) the date on which all available shares are issued, or
(iii) the date on which all outstanding purchase rights are exercised in
connection with an acquisition of the Company.
The Board of Directors may at any time alter, suspend or discontinue the
1995 Purchase Plan. However, the Board of Directors may not, without stockholder
approval, (i) materially increase the number of shares issuable under the 1995
Purchase Plan or the maximum number purchasable per participant on any one
purchase date, except in connection with certain changes in the Company's
capital structure; (ii) alter the purchase price formula so as to reduce the
purchase price; (iii) materially increase the benefits accruing to participants;
or (iv) materially modify the requirements for eligibility to participate in the
1995 Purchase Plan.
PLAN BENEFITS
The table on the following page shows, as to each of the executive officers
named in the Summary of Cash and Certain Compensation Table on page 13 and the
various indicated groups, the following information with respect to transactions
under the Predecessor Plan effected during the period from September 1, 1994 to
August 31, 1995: (i) the number of shares of Common Stock purchased under the
Predecessor Plan during that period, and (ii) the weighted average purchase
price paid per share of Common Stock in connection with such purchases.
6
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
NAME NUMBER OF SHARES WEIGHTED AVERAGE
PURCHASED PURCHASE PRICE
--------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Jerry D. Caulder
Chief Executive Officer 2,593 $ 7.51
--------------------------------------------------------------------------------------------------------------
Andrew C. Barnes
Executive Vice President 2,564 $ 7.53
--------------------------------------------------------------------------------------------------------------
Carlton J. Eibl
President, Chief Operating Officer and Secretary --- ---
--------------------------------------------------------------------------------------------------------------
James R. Glynn
Executive Vice President and Chief Financial Officer 505 $ 8.17
(resigned as of March 1995)
--------------------------------------------------------------------------------------------------------------
James W. Hopkins
Vice President --- ---
--------------------------------------------------------------------------------------------------------------
Albert D. Kern
Executive Vice President (resigned as of August 1995) 289 $ 7.12
--------------------------------------------------------------------------------------------------------------
Leo Kim
Executive Vice President and Chief Technical Officer 1,515 $ 8.17
--------------------------------------------------------------------------------------------------------------
All current executive officers as a group
(5 persons) 6,672 $ 7.67
--------------------------------------------------------------------------------------------------------------
All employees, including officers who are not
executive officers, as a group (107 persons) 35,662 $ 7.64
--------------------------------------------------------------------------------------------------------------
</TABLE>
FEDERAL INCOME TAX CONSEQUENCES
A participant in the 1995 Purchase Plan will recognize taxable income on
each purchase date equal to the amount by which the fair market value of the
shares of Common Stock purchased on his or her behalf on that date exceeds the
purchase price paid for those shares, and the Company will be entitled to a
corresponding income tax deduction in the same dollar amount for the taxable
year in which such purchase date occurs.
ACCOUNTING TREATMENT
Under current accounting rules, the issuance of shares of Common Stock
under the 1995 Purchase Plan will not result in a compensation expense
chargeable against the Company's reported earnings.
STOCKHOLDER APPROVAL
The affirmative vote of a majority of the outstanding voting shares of the
Company present or represented and entitled to vote at the 1995 Annual Meeting,
together with the affirmative vote of a majority of the required quorum, is
required for approval of the 1995 Purchase Plan. Should such stockholder
approval not be obtained, then the 1995 Purchase Plan will not be implemented,
and no purchase rights will be granted and no stock issuances will be made under
the 1995 Purchase Plan. The Predecessor Plan will, however, continue to remain
in effect, and purchase rights may be granted and stock purchases may continue
to be made pursuant to the provisions of the Predecessor Plan until the
available reserve of Common Stock under the Predecessor Plan has been issued.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends that the stockholders vote FOR the
approval of the 1995 Purchase Plan. The Board believes that it is in the best
interests of the Company to continue a program of stock ownership for the
Company's employees in order to provide them with a meaningful opportunity to
acquire a substantial proprietary interest in the Company and thereby encourage
such individuals to remain in the Company's service and more closely align their
interests with those of the stockholders.
7
<PAGE>
PROPOSAL NO. 3
RATIFICATION OF AUTOMATIC
STOCK OPTION GRANT
INTRODUCTION
Stockholders are being asked to consider and vote upon a proposal to ratify
the stock option grants made to the following three non-employee members of the
Board of Directors: Thomas J. Cable, David H. Rammler and A. John Speziale.
The grants were made on July 21, 1995, and each grant is for 20,000 shares with
an exercise price of $8.25 per share. The affirmative vote of the shares
represented and entitled to vote at the Annual Meeting, together with the
affirmative vote of the required quorum, will be required to ratify such option
grants.
Pursuant to the Automatic Grant Program (the "Automatic Grant Program") for
non-employee members of the Board of Directors under the 1992 Stock Option Plan
and the predecessor 1983 Stock Option Plan, each individual who served as a non-
employee member of the Board of Directors after January 12, 1990, was entitled
to receive a one-time non-statutory stock option to purchase 20,000 shares of
Common Stock.
Directors Cable, Rammler and Speziale all were non-employee members of the
Board of Directors appointed after January 18, 1990, but such Directors never
received the one-time grant of 20,000 shares. Other non-employee board members
serving on the Board of Directors at that time received their one-time grant of
options to purchase 20,000 shares. Similar grants should have been made to
Directors Cable, Rammler and Speziale. In order to rectify this oversight, on
July 21, 1995, a make-up grant of an option to purchase 20,000 shares was made
to each of Directors Cable, Rammler and Speziale, subject to stockholder
ratification.
TERMS AND CONDITIONS
The terms and conditions of each grant are the same as for all other option
grants made under the Automatic Grant Program and may be summarized as follows:
. The exercise price per share is equal to one hundred percent (100%) of
the fair market value per share of Common Stock on the grant date.
. Each option will have a maximum term of ten (10) years measured from the
grant date and will not be transferrable other than in connection with
the optionee's death.
. Each option will become exercisable for the option shares in a series of
three (3) successive equal annual installments upon the optionee's
completion of each year of service as a Board member over the three (3)
year period measured from the grant date.
. The exercise price will become due upon exercise of the option and may
be paid in cash or in shares of Common Stock valued at fair market value
or may be paid through a same-day sale program pursuant to which the
purchased shares are sold immediately and a portion of the sale proceeds
are delivered to the Company in payment of the exercise price.
. The option will remain exercisable for a six-(6) month period following
the optionee's cessation of service on the Board of Directors for any
reason other than death. Should the optionee die while serving as a
member of the Board of Directors or within six (6) months after
cessation of service on the Board of Directors, then the option will
remain exercisable for a twelve (12) month period following the
optionee's death and may be exercised by the personal representative of
the optionee's estate or the person to whom the grant is transferred by
the optionee's will or the laws of inheritance. In no event, however,
may the option be exercised after the expiration date of the option
term. During the applicable exercise period, the option may not be
exercised for more than the number of shares (if any) for which the
option is exercisable at the time of the optionee's cessation of service
on the Board of Directors.
8
<PAGE>
. The option will become immediately exercisable for all the option shares
in the event the Company is acquired by merger or asset sale or in the
event of a hostile take-over of the Company effected through a tender
offer for more than fifty percent (50%) of the Company's outstanding
voting stock or one or more contested elections for membership on the
Board of Directors.
. Upon the successful completion of a hostile tender offer for securities
possessing more than fifty percent (50%) of the Company's outstanding
voting stock, the option, provided it has been outstanding for at least
six (6) months, may be surrendered to the Company for a cash
distribution per surrendered option share in an amount equal to the
excess of (A) the highest price per share of Common Stock paid in such
hostile tender offer over (B) the exercise price payable for such share.
FEDERAL INCOME TAX CONSEQUENCES
Options granted under the Automatic Grant Program are non-statutory
options. The Federal income tax treatment for non-statutory options is as
follows:
Non-statutory Options. Generally, no taxable income is recognized by an
optionee upon the grant of a non-statutory option. The optionee will in general
recognize ordinary income, in the year in which the option is exercised, equal
to the excess of the fair market value of the purchased shares on the exercise
date over the option price paid for such shares, and the optionee will be
required to satisfy the tax withholding requirements applicable to such income.
The Company is entitled to a business expense deduction equal to the amount
of ordinary income recognized by the optionee with respect to the exercised non-
statutory option. The deduction in general is allowed for the taxable year of
the Company in which ordinary income is recognized by the optionee in connection
with the acquisition of the option shares.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends that the stockholders vote FOR the
ratification of a grant of a non-statutory stock option to purchase 20,000
shares of Common Stock to each of Directors Cable, Rammler, and Speziale under
the Automatic Grant Program. Should the stockholders not ratify the July 21,
1995 automatic option grants, then those options will terminate without ever
becoming exercisable for any of the option shares.
9
<PAGE>
PROPOSAL NO. 4
RATIFICATION OF INDEPENDENT AUDITORS
The Company is asking the stockholders to ratify the selection of Ernst &
Young LLP as the Company's independent auditors for the year ending August 31,
1996. The affirmative vote of the holders of a majority of the shares
represented and voting at the Annual Meeting will be required to ratify the
selection of Ernst & Young LLP.
In the event the stockholders fail to ratify the appointment, the Board of
Directors will reconsider its selection. Even if the selection is ratified, the
Board of Directors, in its discretion, may direct the appointment of a different
independent auditing firm at any time during the year if the Board of Directors
feels that such a change would be in the Company's and its stockholders' best
interests.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting, will have the opportunity to make a statement, if they desire to
do so, and will be available to respond to appropriate questions.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends that the stockholders vote FOR the
ratification of the selection of Ernst & Young LLP to serve as the Company's
independent auditors for the year ending August 31, 1996.
10
<PAGE>
ADDITIONAL INFORMATION
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of September 30, 1995 for each person known to
the Company to be the beneficial owner of more than five percent (5%) of the
Company's Common Stock. Unless otherwise indicated, each of the stockholders
listed below has sole voting and investment power with respect to the shares
beneficially owned.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIAL OWNER BENEFICIALLY OWNED PERCENT OWNED/1/
---------------------------------------------------------------------------------------
<S> <C> <C>
The Lubrizol Corporation /2/ 7,868,008 37.2%
29400 Lakeland Boulovard
Wickliffe, OH 44092
The State of Wisconsin Investment Board 1,808,800 8.5%
PO Box 7842
Madison, WI 53707
Kubota Corporation 1,111,200 5.3%
1-3, Nihombashi-Muromachi
3-Chome
Chuo-Ku, Tokyo 103, Japan
---------------------------------------------------------------------------------------
</TABLE>
1 Percentage of beneficial ownership is calculated pursuant to SEC Rule 13d-
3(d)(1) and assumes conversion into Common Stock of 3,113 shares of Series
A Preferred Stock at a conversion rate of approximately 557 shares of
Common Stock for each share of Series A Preferred Stock.
2 Dr. Hill, a member of the Board of Directors, is a Senior Vice President
of Lubrizol and Mr. Hopping, also a member of the Board of Directors, is
Vice President and Secretary of Lubrizol.
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS
Name Age Position Held With the Company
- --------------------------------------------------------------------------------------
<S> <C> <C>
Andrew C. Barnes 42 Executive Vice President
James A. Baumker 44 Vice President and Chief Financial Officer
Jerry D. Caulder 53 Chairman, Chief Executive Officer and
Director
Carlton J. Eibl 35 President, Chief Operating Officer and
Secretary
James W. Hopkins 61 Vice President
Leo Kim 53 Executive Vice President and Chief
Technical Officer
Naomi D. Whitacre 47 Vice President
- --------------------------------------------------------------------------------------
</TABLE>
RESPONSIBILITIES AND BUSINESS EXPERIENCE OF EXECUTIVE OFFICERS
Mr. Barnes, a founder of the Company, currently serves as Executive Vice
President responsible for the Company's crop protection business unit, Mycogen
Crop Protection, Inc., which includes the Company's biopesticide division and
Soilserv, Inc. Prior to joining the Company, Mr. Barnes served as President of
Zymogenetics Corporation, a genetic engineering company, and managed that
company's initial growth and financing. Mr. Barnes began his career as a
project and process
11
<PAGE>
engineer with G.D. Searle & Co. and then served as a biotechnology licensing
associate for Stanford University's Office of Technology Licensing.
Mr. Baumker joined the Company in August 1987 as Controller of the Company
and currently serves as Vice President and Chief Financial Officer. From June
1995 to September 1995, Mr. Baumker served as the Company's Chief Accounting
Officer. Prior to joining the Company, Mr. Baumker served as Project Manager,
Latin America, for Monsanto Agricultural Company (1983-1987) and Accounting
Manager, Asia Pacific, for Monsanto International (1978-1982).
Dr. Caulder is being considered for the position of director of the
Company. See "Election of Directors--Business Experience of Directors" for a
discussion of Dr. Caulder's business experience.
Mr. Eibl joined the Company in December 1992 and currently serves as
President, Chief Operating Officer and Secretary, and is responsible for
overseeing the Company's operations and resources. From December 1992 to
September 1995, Mr. Eibl served as Executive Vice President and Secretary of the
Company. Prior to joining the Company, Mr. Eibl was employed as a corporate
attorney with the law firms of, respectively, Brobeck, Phleger & Harrison in San
Diego from 1989 through 1992 and Paul Weiss Rifkind Wharton & Garrison in New
York from 1985 through 1989.
Mr. Hopkins joined the Company in December 1992 as part of the Company's
acquisition of Agrigenetics and currently serves as Vice President responsible
for the Company's seed business unit, Mycogen Plant Sciences. Prior to joining
the Company, Mr. Hopkins was President - International Division of Agrigenetics
which was a division of Lubrizol (1988-1992). Prior to serving in that position,
Mr. Hopkins served at GroAgri Seed Company as President (1981-1988), Assistant
General Manager (1976-1981), General Sales Manager (1972-1976) and District
Sales Manager (1970-1972).
Dr. Kim joined the Company in September 1986 and currently serves as
Executive Vice President and Chief Technical Officer. Prior to joining the
Company, Dr. Kim was employed by Shell Oil Company for 18 years in a variety of
positions, including Principal Scientist involved in agricultural biotechnology,
Research and Development Director-Biomedical, Research and Development Director-
Interferon and Manager Biological Chemistry in Shell's Agricultural Research
Center.
Ms. Whitacre joined the Company in January of 1993 and currently serves as
Vice President responsible for overseeing the Company's Human Resources
department. Prior to joining the Company, Ms. Whitacre served as Assistant Vice
President at Glendale Federal Bank (1990-1993), and Human Resources Manager at
Wavetek Corporation (1985-1990).
12
<PAGE>
EXECUTIVE COMPENSATION
Summary of Cash and Certain Other Compensation
The following table provides certain summary information concerning the
compensation earned by the Company's Chief Executive Officer, each of the other
four most highly compensated executive officers of the Company and the two most
highly compensated former executive officers of the Company for services
rendered in all capacities to the Company and its subsidiaries for the fiscal
years ended August 31, 1993, 1994 and 1995.
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation Awards
-----------------------------------------------------------------------------------
Securities
Restricted Underlying All Other
Name and Stock Options/ Compensation
Principal Position Year Salary Bonus Award(s)/1/ SARs/2/
($) ($) ($) (#)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jerry Caulder/3/ 1995 $ 285,000 --- $ 116,880 100,000 $ 2,000/5/
Chief Executive Officer 1995 --- --- --- 260,000/4/ ---
1994 $ 285,000 $ 27,594 --- --- $ 2,000/5/
1993 $ 285,000 --- $ 65,000 100,000 ---
1993 --- --- --- 40,000 ---
Carlton J. Eibl/3/ 1995 $ 150,000 --- $ 58,440 150,000 $ 2,000/5/
President, Chief Operating 1995 --- --- --- 80,000/4/ ---
Officer and Secretary 1994 $ 150,000 --- --- --- $ 2,000/5/
1993 $ 112,500 $ 10,000 --- 50,000 ---
1993 --- --- --- 30,000 ---
Andrew C. Barnes 1995 $ 165,000 --- $ 58,440 50,000 $ 2,000/5/
Executive Vice President 1995 --- --- --- 160,000/4/ ---
1994 $ 165,000 --- --- --- $ 2,000/5/
1993 $ 165,000 --- $ 65,000 50,000 ---
1993 --- --- --- 25,000 ---
James R. Glynn 1995 $ 82,500 --- --- 160,000/4,6/ $503,325/7/
(resigned as of March 1995 1994 $ 165,000 --- --- --- $ 2,000/5/
from the positions of 1993 $ 165,000 $ 36,000 $ 65,000/6/ 50,000/6/ ---
Executive Vice President 1993 --- --- --- 25,000/6/ ---
and Chief Financial
Officer)
James W. Hopkins 1995 $ 136,290 --- $ 29,220 50,000 $ 2,000/5/
Vice President 1995 --- --- --- 30,000/4/ ---
Albert D. Kern 1995 $ 170,287 --- $ 58,440 50,000 $181,500/8/
(resigned as of August 1995 1995 --- --- --- 160,000/4/ ---
from the position of 1994 $ 165,000 --- --- --- $ 2,000/5/
Executive Vice President) 1993 $ 165,000 --- $ 65,000 50,000 ---
1993 --- --- --- 25,000 ---
Leo Kim 1995 $ 165,000 --- $ 58,440 50,000 $ 1,430/5/
Executive Vice President 1995 --- --- --- 135,000/4/ ---
Chief Technical Officer 1994 $ 165,000 --- --- --- $ 2,000/5/
1993 $ 165,000 --- $ 65,000 50,000 ---
1993 --- --- --- 25,000 ---
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
/1/ Restricted Stock holdings at the end of the 1995 fiscal year were as
follows:
<TABLE>
<CAPTION>
Name # of Shares Value
---------------------------------------------------------
<S> <C> <C>
Jerry D. Caulder 15,000 $ 153,750
Andrew C. Barnes 10,000 $ 102,500
Carlton J. Eibl 5,000 $ 51,250
James W. Hopkins 2,500 $ 25,625
Albert D. Kern (resigned as of 10,000 $ 102,500
August 1995)
Leo Kim 10,000 $ 102,500
---------------------------------------------------------
</TABLE>
The shares of restricted stock will vest upon the named officers'
completion of three (3) years of service, measured from the award date.
However, in the event the Company is acquired by merger or asset sale or
there is a hostile take-over of the Company by tender offer for twenty-five
percent (25%) or more of the outstanding Common Stock or a proxy contest
for Board membership, then each restricted stock award which has been
outstanding for at least six (6) months will immediately vest in full.
/2/ Two option grants are shown in years 1995 and 1993 because the chart is
based on a fiscal year beginning September 1 and ending August 31.
Previously, the Company's fiscal year began January 1 and ended December 31
and options were granted only once during such period. Therefore, year 1995
includes option grants occurring in 1994 and 1995, year 1994 shows no
option grants, and year 1993 includes option grants from 1992 and 1993.
/3/ Dr. Caulder was President of the Company in fiscal years 1993-1995. Mr.
Eibl became President and Chief Operating Officer in September 1995.
/4/ These options were granted on December 21, 1994 pursuant to an option
cancellation/regrant program for all full-time employees of the Company.
Under the program, each named officer exchanged his outstanding options
with exercise prices in excess of $8.50 for new options for the same number
of shares with an exercise price of $8.50 per share, the fair market value
of the Common Stock on the date of the new grant. Each option granted to an
executive officer is immediately exercisable for all the option shares, but
any shares purchased under the option will be subject to repurchase by the
Company, at the original exercise price paid per share, upon the optionee's
cessation of service prior to vesting in those shares. The shares subject
to each December 21, 1994 grant will vest in 36 successive equal monthly
installments upon the optionee's completion of each month of service over
the 36-month period measured from the date of the new grant.
/5/ These figures reflect contributions made by the Company on behalf of the
named executive officer under the Company's 401(k) Plan.
/6/ These awards were extinguished upon Mr. Glynn's resignation from the
Company in March 1995.
/7/ This figure represents an $825 contribution made by the Company under its
401(k) Plan, plus $502,500 as a severance payment consisting of the
following granted to Mr. Glynn, who on March 1, 1995, terminated his
employment with the Company: (i) $55,000 paid on March 1, 1995; (ii)
$72,500 to be paid on January 1, 1997; (iii) $72,500 to be paid on July 1,
1997; and (iv) $302,500 to be paid in equal bimonthly payments of $6,875
beginning March 15, 1995.
/8/ This figure represents (i) a $2,000 contribution made by the Company under
its 401(k) Plan, (ii) a $12,500 consulting fee (see "Certain Relationships
and Related Transactions" for details), and (iii) $167,000 as a severance
payment granted to Dr. Kern, who on August 1, 1995, resigned as an officer
of the Company.
14
<PAGE>
Stock Options and Stock Appreciation Rights
The following table contains information concerning the grant of stock
options and stock appreciation rights ("SARs") under the Company's 1992 Stock
Option Plan (and the Company's predecessor 1983 Stock Option Plan) to the named
executive officers:
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation for
Individual Grants Option Term
-----------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g)
Securities
Underlying Percent of
Options/ Total Options/
SARs SARs Granted Exercise or
Name Granted/1/ to Employees Base Price/2/ Expiration 5%/3/ 10%/3/
(#) in Fiscal Year ($/Share) Date ($) ($)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jerry D. Caulder 100,000/4/ 3.2% $8.25 7-21-05 $ 518,838 $1,314,837
260,000/5/ 8.4% $8.50 12-21-04 $1,389,857 $3,522,171
Andrew C. Barnes 50,000/4/ 1.6% $8.25 7-21-05 $ 259,419 $ 657,419
160,000/5/ 5.1% $8.50 12-21-04 $ 855,297 $2,167,490
Carlton J. Eibl 150,000/4/ 4.8% $8.25 7-21-05 $ 778,257 $1,972,256
80,000/5/ 2.6% $8.50 12-21-04 $ 427,648 $1,083,745
James R. Glynn 160,000/5,6/ 5.1% $8.50 12-21-04 $ 855,297 $2,167,490
(resigned as of
March 1995)
James W. Hopkins 50,000/4/ 1.6% $8.25 7-21-05 $ 259,419 $ 657,419
30,000/5/ 1.0% $8.50 12-21-04 $ 160,368 $ 406,404
Albert D. Kern, 50,000/4/ 1.6% $8.25 7-21-05 $ 259,419 $ 657,419
(resigned as of 160,000/5/ 5.1% $8.50 12-21-04 $ 855,297 $2,167,490
August 1995)
Leo Kim 50,000/4/ 1.6% $8.25 7-21-05 $ 259,419 $ 657,419
135,000/5/ 4.3% $8.50 12-21-04 $ 721,657 $1,828,819
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/1/ The Compensation Committee, as Plan Administrator, may grant two types of
stock appreciation rights in connection with option grants made under the
Stock Option Plan: (i) tandem rights which require the holder to elect
between the exercise of the underlying option for shares of Common Stock
and the surrender of such option for a distribution from the Company,
payable in cash or shares of Common Stock, based upon the appreciated value
of the option shares; and (ii) limited rights which provide the optionee
with a 30-day period following the successful completion of a hostile
tender offer for twenty-five percent (25%) or more of the outstanding
Common Stock in which to surrender the option to the Company for a cash
distribution equal to the excess of the tender offer price per share of the
vested shares of Common Stock subject to the surrendered option over the
option exercise share otherwise payable for such shares. To date the Plan
Administrator has not granted any tandem stock appreciation rights to the
Company's executive officers, but each of their options does include a
limited stock appreciation right. The shares subject to each option will
immediately vest in the event the Company is acquired by a merger or asset
sale, unless the Company's repurchase rights with respect to those shares
are transferred to the acquiring entity. Each option has a maximum term of
10 years, subject to earlier termination in the event of the optionee's
cessation of service with the Company.
/2/ The exercise price may be paid in cash, in shares of Common Stock valued at
fair market value on the exercise date or through a cashless exercise
procedure involving a same-day sale of the purchased shares. If shares of
Common Stock are used to pay the option price, the option holder surrenders
to the Company a sufficient number of fully paid shares of
15
<PAGE>
Common Stock, valued at the fair market value on the exercise date, to
fully pay the option price on the options being exercised. The Company may
also finance the option exercise by loaning the optionee sufficient funds
to pay the exercise price for the purchased shares and the federal and
state tax liability incurred in connection with such exercise. The optionee
may be permitted, subject to the approval of the Plan Administrator, to
apply a portion of the shares purchased under the option (or to deliver
existing shares of Common Stock) in satisfaction of such tax liability. The
Plan Administrator also has the authority to reprice outstanding options
through the cancellation of those options and the grant of replacement
options with an exercise price equal to the lower fair market value of the
option shares on the regrant date.
/3/ There is no assurance provided to any executive officer or any other holder
of the Company's securities that the actual stock price appreciation over
the 10-year option term will be at the assumed five percent (5%) and ten
percent (10%) levels or at any other defined level. Unless the market price
of the Common Stock does in fact appreciate over the option term, no value
will be realized from the option grants made to the executive officers.
/4/ These options were granted on July 21, 1995. Each option granted to an
executive officer is immediately exercisable for all the option shares, but
any shares purchased under the option will be subject to repurchase by the
Company, at the original exercise price paid per share, upon the optionee's
cessation of service prior to vesting in those shares. The shares subject
to each July 21, 1995 grant will vest in 36 successive equal monthly
installments upon the optionee's completion of each month of service over
the 36-month period measured from the date of the new grant.
/5/ These options were granted on December 21, 1994 pursuant to an option
cancellation/regrant program for all full-time employees of the Company.
Under the program, each named officer exchanged his outstanding options
with exercise prices in excess of $8.50 for new options for the same number
of shares with an exercise price of $8.50 per share, the fair market value
of the Common Stock on the date of the new grant. Each option granted to an
executive officer is immediately exercisable for all the option shares, but
any shares purchased under the option will be subject to repurchase by the
Company, at the original exercise price paid per share, upon the optionee's
cessation of service prior to vesting in those shares. The shares subject
to each December 21, 1994 grant will vest in 36 successive equal monthly
installments upon the optionee's completion of each month of service over
the 36-month period measured from the date of the new grant.
/6/ These options were extinguished upon Mr. Glynn's resignation from the
Company in March 1995.
16
<PAGE>
Option/SAR Exercises and Holdings
The following table provides information, with respect to the named
executive officers, concerning the exercise of options and/or SARs held as of
the end of the 1995 fiscal year:
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexcercised Value of Unexercised
Options/SARs In-the-Money Options/SARs at
at August 31, 1995 August 31, 1995
--------------------------------------------------------------------------
Shares Acquired Value
Name on Exercise Realized Exercisable/1/ Unexercisable Exercisable Unexercisable
(#) ($) (#) (#) ($) ($)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jerry D.Caulder --- $ --- 457,000 --- $1,111,670 $ ---
Andrew C. Barnes --- $ --- 287,000 --- $ 696,670 $ ---
Carlton J. Eibl --- $ --- 230,000 --- $ 440,000 $ ---
James W. Hopkins --- $ --- 58,333 21,667 $ 114,583 $ 37,917
Albert D. Kern --- $ --- 250,848 --- $ 524,948 $ ---
(resigned as of August
1995)
Leo Kim --- $ --- 185,000 --- $ 336,250 $ ---
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/1/ The exercisable options are immediately exercisable for all of the option
shares, but any shares purchased under the option will be subject to
repurchase by the Company at the option exercise price. As of August 31,
1995, the number of unvested shares held by each named executive officer is
as follows: Dr. Caulder 302,222; Mr. Barnes 174,444; Mr. Eibl 212,222; Mr.
Hopkins 73,333; Dr. Kern 174,44; and Dr. Kim 155,000. Mr. Glynn's options
are not listed as they were extinguished upon his resignation in March
1995. See "Stock Options and Stock Appreciation Rights."
Security Ownership of Directors and Management as of September 30, 1995
The following table provides information, as of September 30, 1995, with
respect to the Directors and named executive officers, concerning the amount and
nature of beneficial ownership of Common Stock, assuming conversion of all
outstanding shares of Series A Preferred Stock into Common Stock.
<TABLE>
<CAPTION>
Amount and Nature of
Title of Class Name of Beneficial Owner Beneficial Ownership Percent of Class +
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock Andrew C. Barnes 368,672/1/ 1.7%
Common Stock Thomas J. Cable 24,999/2/ *
Common Stock Jerry D. Caulder 541,951/3/ 2.5%
Common Stock Carlton J. Eibl 236,316/4/ 1.1%
Common Stock James R. Glynn (resigned as of March 1995) 2,587 *
Common Stock George R. Hill --- /5/ *
Common Stock James W. Hopkins 60,833/6/ *
Common Stock Kenneth H. Hopping --- /7/ *
Common Stock Albert D. Kern (resigned as of August 1995) 271,137/8/ 1.3%
Common Stock Leo Kim 209,921/9/ 1.0%
Common Stock David H. Rammler 128,293/10/ *
Common Stock A. John Speziale 28,333/11/ *
Common Stock Directors and executive officers as a group 1,873,042/12/ 8.3%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
______________________________
* Less than one percent (1%).
+ Percentage of beneficial ownership is calculated pursuant to SEC Rule 13d-
3(d)(1), and assumes conversion into Common Stock of 3,113 shares of Series
A Preferred Stock at a conversion rate of approximately 557 shares of
Common Stock for each share of Series A Preferred Stock.
/1/ This figure includes 81,672 shares held by the Andrew C. Barnes Family
Trust and 287,000 shares of Common Stock issuable upon exercise of options
held by Mr. Barnes, which are currently exercisable or will become
exercisable within sixty days of September 30, 1995.
/2/ This figure includes 24,999 shares of Common Stock issuable upon exercise
of options held by Mr. Cable, which are currently exercisable or will
become exercisable within sixty days of September 30, 1995.
/3/ This figure includes 68,926 shares held by the Jerry D. Caulder Family
Trust and 457,000 shares of Common Stock issuable upon exercise of options
held by Dr. Caulder, which are currently exercisable or will become
exercisable within sixty days of September 30, 1995.
/4/ This figure includes 230,000 shares of Common Stock issuable upon exercise
of options held by Mr. Eibl, which are currently exercisable or will become
exercisable within sixty days of September 30, 1995.
/5/ This figure does not include 14,999 shares of Common Stock issuable upon
exercise of options held by Dr. Hill, which are currently exercisable or
will become exercisable within sixty days of September 30, 1995, as
Lubrizol has beneficial ownership of such shares. Dr. Hill assigns to
Lubrizol all options received in connection with Dr. Hill's service as a
member of the Company's Board of Directors. It also does not include an
aggregate of 6,134,067 shares of Common Stock and 3,113 shares of Series A
Preferred Stock, which are convertible into 1,733,941 shares of Common
Stock, owned by Lubrizol. Dr. Hill is a Senior Vice President of Lubrizol.
See "Certain Relationships and Related Transactions".
/6/ This figure includes 58,333 shares of Common Stock issuable upon exercise
of options held by Mr. Hopkins, which are currently exercisable or will
become exercisable within sixty days of September 30, 1995.
/7/ This figure does not include an aggregate of 6,134,067 shares of Common
Stock and 3,113 shares of Series A Preferred Stock, which are convertible
into 1,733,941 shares of Common Stock, owned by Lubrizol. Mr. Hopping is a
Vice President and Secretary of Lubrizol. See "Certain Relationships and
Related Transactions."
/8/ This figure includes 20,000 shares held by the Albert D. Kern Family Trust
and 250,848 shares of Common Stock issuable upon exercise of options held
by Dr. Kern, which are currently exercisable or will become exercisable
within sixty days of September 30, 1995.
/9/ This figure includes 185,000 shares of Common Stock issuable upon exercise
of options held by Dr. Kim, which are currently exercisable or will become
exercisable within sixty days of September 30, 1995.
/10/ This figure includes 24,999 shares of Common Stock issuable upon exercise
of options held by Dr. Rammler, which are currently exercisable or will
become exercisable within sixty days of September 30, 1995.
/11/ This figure includes 24,999 shares of Common Stock issuable upon exercise
of options held by Dr. Speziale, which are currently exercisable or will
become exercisable within sixty days of September 30, 1995.
/12/ This figure excludes all shares held by entities affiliated with Dr. Hill
and Mr. Hopping as described in footnotes (5) and (7) above, but includes
1,543,178 shares of Common Stock which are currently exercisable or will
become exercisable within sixty days of September 30, 1995 issuable upon
exercise of options held by all directors and executive officers as a
group.
18
<PAGE>
Employment Contracts, Termination of Employment Agreements and Change of
Control Arrangements
In October 1995, the Company entered into Employment/Severance Agreements
with the following named executive officers: Messrs. Caulder, Barnes, Eibl and
Kim. The agreements provide that upon involuntary termination of the named
executive officer's employment (other than for cause or in connection with a
change of control of the Company) the named executive officer is entitled to (i)
salary continuation payments for 24 months in the case of Dr. Caulder and Mr.
Eibl and 12 months in the case of the other named executive officers at the
officer's then current base salary and average bonus paid for the preceding two
years, (ii) health care coverage for a three year period in the case of Dr.
Caulder and Mr. Eibl and a two year period in the case of the other named
executive officers and (iii) immediate vesting of restricted stock and stock
options. Termination "other than for cause" means termination of employment for
any reason other than for one or more alleged acts of fraud, embezzlement,
misappropriation of proprietary information or any other alleged misconduct
adversely affecting the business reputation of the Company in a material manner.
Upon involuntary termination other than for cause after a change of control of
the Company, the named executive officers are entitled to the following: (i) in
the case of Dr. Caulder and Mr. Eibl, a lump-sum severance payment equal to the
lesser of (A) two times Dr. Caulder's and Mr. Eibl's annual base salary plus
average bonus paid for the preceding two years or (B) the excess of 2.99 times
the average W-2 wages for the five calendar years preceding the change in
control minus the value of any accelerated vesting of options and shares of
restricted stock, (ii) in the case of the other named executive officers, a
lump-sum severance payment equal to the lesser of (A) such individual's annual
base salary plus average bonus paid for the preceding two years or (B) the
excess of 2.99 times the average W-2 wages for the five calendar years preceding
the change in control minus the value of any accelerated vesting of options and
shares of restricted stock, (iii) health care coverage for a five year period in
the case of Dr. Caulder and Mr. Eibl and a three year period in the case of the
other named executive officers and (iv) immediate vesting of restricted stock
and stock options. The agreements with Messrs. Caulder, Barnes, Eibl and Kim
expire on December 31, 1998.
Two executive officers of the Company, who had entered into
Employment/Severance Agreements with the Company in February 1993, resigned in
fiscal year 1995. Mr. Glynn received $502,500 as total severance with the
Company and cancellation of all outstanding stock options held by him, which
severance consisted of the following: (i) $55,000 paid on March 1, 1995; (ii)
$72,500 to be paid on January 1, 1997; (iii) $72,500 to be paid on July 1, 1997;
and (iv) $302,500 to be paid in equal bimonthly payments of $6,875 beginning
March 1, 1995. Mr. Glynn also received as part of his severance with the Company
medical, dental and life insurance coverage for calendar years 1995 and 1996.
Dr. Kern received $167,000 as severance with the Company on August 1, 1995 and
medical, dental and life insurance coverage for three (3) years following his
termination.
As indicated in footnote (1) to the table under the heading "Stock Options
and Stock Appreciation Rights," the shares subject to option grants made to date
under the Company's 1992 Stock Option Plan (and the Company's predecessor 1983
Stock Option Plan) will immediately vest upon a merger in which the Company is
not the surviving entity, a sale of substantially all of the Company's assets in
liquidation or dissolution of the Company or a reverse merger in which the
Company is the surviving entity but in which fifty percent (50%) or more of the
Company's outstanding voting stock is transferred to person or persons different
from those who held such stock immediately prior to the merger, unless the
Company's repurchase rights with respect to those shares are transferred to the
successor entity.
The Compensation Committee, as Plan Administrator of the Company's 1992
Stock Option/Stock Issuance Plan, has the authority to provide for the
accelerated vesting of the shares of Common Stock subject to outstanding options
held by the Chief Executive Officer and the other four most highly-compensated
executive officers, whether granted under that plan or the predecessor 1983
plan, in the event their employment is involuntarily terminated after a
Corporate Transaction or Change in Control which does not otherwise trigger the
accelerated vesting of their option shares. The following definitions will be in
effect for purposes of such accelerated vesting:
Corporate Transaction: an acquisition of the Company by merger or
----------------------
consolidation, by sale of substantially all of the Company's assets or
by reverse merger in which the Company is the surviving entity but in
which more than fifty percent (50%) of the Company's outstanding
voting stock is transferred to person or persons different from those
who held such stock immediately prior to the merger.
Change in Control: (i) an acquisition by any person (other than the
-----------------
Company or its affiliates) of more than fifty percent (50%) of the
outstanding Common Stock pursuant to a tender or exchange offer made
directly to the Company's shareholders which the Board does not
recommend such shareholders to accept or (ii) a change in the
individuals comprising the majority of the Board effected over a
period of 24 months or less through one or more proxy-contested
elections for Board membership.
19
<PAGE>
Involuntary Termination: the termination of the officer's employment
-----------------------
with the Company, whether initiated by the officer or the Company, in
connection with (A) a change in such individual's position with the
Company which materially reduces his level of responsibility, (B) a
reduction in his level of compensation or (C) a significant relocation
of such individual's primary place of employment.
Compensation Committee Interlocks and Insider Participation
In the Company fiscal year 1995, Thomas J. Cable, George R. Hill and A.
John Speziale served as the Company's Compensation Committee. Mr. Rammler served
on the Compensation Committee since April 20, 1995 and Mr. Hopping served on the
Compensation Committee since July 21, 1995. No member of the Compensation
Committee was at any time during the 1995 fiscal year or at any other time an
officer or employee of the Company.
No executive officer of the Company served on the board of directors or
compensation committee of any entity which has one or more executive officers
serving as a member of the Company's Board of Directors or Compensation
Committee.
The following Compensation Committee Report on Executive Compensation, the
Compensation Committee Report on 1994 Cancellation and Regrant of Options and
the Performance Graph on page 25 should not be considered to be part of this
proxy statement and any current or future cross references to this proxy
statement in filings with the Securities and Exchange Commission under either
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, shall not include the Compensation Committee Report on Executive
Compensation, the Compensation Committee Report on 1994 Cancellation and Regrant
of Options, or the Performance Graph reproduced below.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following is the report delivered by the Compensation Committee of the
Board of Directors with respect to the principal factors considered by such
Committee in determining the compensation of the Company's executive officers.
This report comments on the factors considered in determining compensation paid
to the executive officers in fiscal year 1995 and in setting compensation for
fiscal year 1996. Messrs. Cable, Hill and Speziale served as the Compensation
Committee during all of 1995. Dr. Rammler served on the Compensation Committee
since April 20, 1995 and Mr. Hopping served on the Compensation Committee since
July 21, 1995.
As members of the Compensation Committee of the Board of Directors, it is
our duty to set the base salary of the Company's executive officers and to
administer the Company's Stock Option Plan under which grants may be made to
them and other key employees. In addition, we approve the individual bonus
programs for the executive officers each fiscal year.
GENERAL COMPENSATION POLICY. Our fundamental policy is to provide
competitive compensation to the Company's executive officers based upon their
contribution to the success of the Company in achieving its corporate objectives
and enhancing stockholder value.
This year the Company completed and presented to the Compensation Committee
an extensive analysis of executive compensation pay practices within the seed
and biotechnology industries. The study included a review of compensation paid
to executives of 21 agricultural seed companies and over 250 biotechnology
companies located in the United States. The compensation information was
compiled from five independent salary surveys, including a specially designed
compensation survey focused on a group of competitor companies having one or
more of the following attributes: related industry, similar revenue size,
technology orientation and comparable employee headcount. Six of the Company's
competitors identified in the "Performance Graph" included in this proxy
statement - Biosys, Calgene, Crop Genetics International Corporation, DNA Plant
Technology Corporation, Ecogen, Inc., and Ecoscience Corporation - were
represented in this survey. The Compensation Committee supported the methodology
used in the study, namely evaluating compensation for executives in relation to
competitor organizations and developing a weighted market average for each of
the executives. The Compensation Committee will use this information to make
changes to the total cash compensation program to be determined when the Company
becomes profitable.
It is our objective to have a substantial portion of each officer's
compensation contingent upon the Company's performance as well as upon his or
her own level of performance. Accordingly, each executive officer's
compensation package is comprised of three elements: (i) base salary which
reflects individual performance and is designed primarily to be competitive with
salary levels in the industry, (ii) annual variable performance awards, if
awarded, are payable in cash and tied to the achievement by the Company of its
corporate objectives, and (iii) long-term stock-based incentive awards that
strengthen mutual interests between the executive officers and the Company's
stockholders. As an officer's level of
20
<PAGE>
responsibility increases, it is our intent to have a greater portion of his or
her total compensation be dependent upon Company performance and stock price
appreciation rather than base salary.
The total cash compensation paid to the Company's executive officers in
fiscal year 1995 placed approximately in the 40th percentile of executive
compensation paid to executive officers in companies included in the analysis
described above. Long-term incentive compensation (stock options and restricted
stock) awarded to the Company's executive officers in fiscal year 1995 placed
approximately in the 60th percentile. Base salary for the Company's executive
officers for fiscal year 1995 was generally in the 45th to 55th percentile
range.
FACTORS. Executive compensation is based primarily on the Company's
achievement of corporate objectives established at the start of the fiscal year.
For fiscal year 1995, the corporate objectives were to achieve profitability in
1995, to position the Company for continued future profitability and to continue
the Company's growth in terms of technological and product developments, market
acceptance of the Company's products, sales and earnings per share growth and
broadened participation in the crop protection and seed industries through
strategic transactions. These same corporate objectives remain in place for
fiscal year 1996. In the future, we may in our discretion apply entirely
different factors, particularly different measures of corporate growth and
financial performance, in setting executive compensation, but all compensation
decisions will be designed to further the general compensation policy indicated
above.
. BASE SALARY. The base salary for each executive officer is set on the
basis of the level of responsibility of the executive officers and the
salary levels in effect for comparable positions with the Company's
principal competitors. Under the incentive program described below,
officers' salaries were frozen at the 1993 levels through the end of fiscal
year 1995. Base salary for the Company's officers for fiscal year 1995
generally placed in the 45th - 55th percentile range of executive
compensation of competitor companies.
. ANNUAL INCENTIVE COMPENSATION PROGRAM. In July 1993, the Company
implemented an incentive program tied to profitability of the Company as
measured by net income applicable to common shares. The incentive program
applied to the executive officers and certain other key employees and was
comprised of a stock option component and a cash component. Under the
incentive program in place for fiscal year 1995, cash bonuses could have
been awarded only if the Company achieved greater than $6 million of
profits in fiscal year 1995. No cash bonuses were awarded under the
incentive program with respect to fiscal year 1995 because the Company was
not profitable in fiscal year 1995. Under the incentive program in place
for fiscal year 1996, cash bonuses may be awarded to executive officers
only if the Company achieves profitability in fiscal year 1996.
. LONG-TERM INCENTIVE COMPENSATION. On December 21, 1994, the Compensation
Committee approved the grant of new options ("New Options") to all current
full-time employees of the Company who held options granted after December
1, 1989 ("Old Options") as an exchange of New Options for an equal number
of Old Options. The New Options have an exercise price per share equal to
$8.50, the closing price per share as reported by the Nasdaq National
Market System as of the close of business on the date of grant. Each New
Option vests in successive equal monthly installments over a 36-month
period measured from December 21, 1994 and has a maximum term of ten (10)
years from the grant date. On July 21, 1995, in accordance with the belief
that long-term incentive awards are designed to align the interest of each
executive officer with those of the stockholders and provide each
individual with a significant incentive to manage the Company from the
perspective of an owner with an equity stake in the business, the
Compensation Committee approved additional stock option grants for each
executive. The Committee also determined that future long-term incentives
for the executive officers would consist of stock option grants and would
no longer include shares of restricted stock. Awards of shares of
restricted stock in the foreseeable future will be made only to employees
who are not executive officers.
Each stock option grant allows the officer to acquire shares of the
Company's common stock at a fixed price per share (the market price on the grant
date) over a specified period of time (up to 10 years). Accordingly, the option
will provide a return to the executive officer only if the market price of the
shares appreciates over the option term. The awards provide the officers with a
significant incentive to manage the Company from the perspective of an owner
with an interest in the appreciation of the market prices of the shares.
21
<PAGE>
CEO COMPENSATION. In setting the compensation payable to the Company's
Chief Executive Officer, Dr. Caulder, we have sought to be competitive with
other companies in the industry, while at the same time tying a significant
percentage of such compensation to Company performance and stock price
appreciation. The Company's Chief Executive Officer total cash compensation was
analyzed as part of the extensive study presented to the Compensation Committee
cited above and places approximately in the 40th percentile of chief executive
compensation of competitor companies. Base salary for the Company's Chief
Executive Officer for fiscal year 1995 was in the 50th - 60th percentile range.
With respect to Dr. Caulder's base salary, it is our intent to provide him
with a level of stability and certainty each year and not have this particular
component of compensation affected to any significant degree by Company
performance factors. Pursuant to the incentive program implemented in July
1993, Dr. Caulder's base salary was frozen through fiscal year 1995 at the 1993
level. Dr. Caulder's base salary has not been increased for fiscal year 1996.
Also as part of the incentive program, Dr. Caulder was entitled to a bonus in
fiscal year 1995 only if Company profits in fiscal year 1995 exceeded $6
million. No bonus was awarded in 1995 to Dr. Caulder.
The option grant made to him during the 1995 fiscal year was intended to
place a significant portion of his total compensation for the year at risk,
since the options will have no value unless there is appreciation in the value
of the Company's common stock over the option term. As indicated, it is our
objective to have an increasing percentage of Dr. Caulder's total compensation
each year tied to the attainment of the Company's corporate objectives and stock
price appreciation on his option shares.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M). As a result of
Section 162(m) of the Internal Revenue Code, which was enacted into law in 1993,
the Company may not take a federal income tax deduction for compensation paid to
certain executive officers, to the extent that compensation exceeds $1 million
per officer in any one year. This limitation became effective for each fiscal
year of the Company beginning after December 31, 1993 and applies to all
compensation paid to the covered executive officers which is not considered to
be performance-based. Compensation which does qualify as performance-based
compensation will not have to be taken into account for purposes of this
limitation. Prior to the end of the transition period for the applicability of
the Section 162(m) limitation to outstanding options under the Company's Stock
Option Plan, the Company expects to obtain stockholder approval of certain plan
amendments which will assure that any compensation deemed paid in connection
with the exercise of such options will qualify as performance-based
compensation.
Compensation to be paid to the Company's executive officers for the 1996
fiscal year is not expected to exceed the $1 million limit per officer.
Accordingly, until final Treasury regulations are issued with respect to the new
$1 million limitation, any decision on whether or not to restructure one or more
components of the compensation paid to the executive officers so as to qualify
those components as performance-based compensation that will not be subject to
the $1 million limitation will be deferred.
Compensation Committee
Thomas J. Cable
George R. Hill
Kenneth H. Hopping
David H. Rammler
A. John Speziale
22
<PAGE>
COMPENSATION COMMITTEE REPORT ON 1994 CANCELLATION AND REGRANT OF OPTIONS
During the 1995 fiscal year, the Compensation Committee felt that
circumstances had made it necessary for the Company to implement an option
cancellation/regrant program pursuant to which outstanding options held by the
Company's executive officers and other employees under the Option Plan were
cancelled, and new options for the same number of shares were granted with a
lower exercise price per share equal to the market price of the Company's Common
Stock on the regrant date.
The Compensation Committee determined that this program was necessary
because equity incentives are a significant component of the total compensation
package of each Company employee and play a substantial role in the Company's
ability to retain the services of individuals essential to the Company's long-
term financial success. Prior to the implementation of the program, the market
price of the Company's Common Stock had fallen as a result of market factors
which affected stock prices throughout the industry and which did not
necessarily reflect the market's particular assessment of the Company's progress
in product development and marketing. The Compensation Committee felt that the
Company's ability to retain key employees would be significantly impaired,
unless value was restored to their options in the form of regranted options at
the current market price of the Company's Common Stock. Automatic option grants
to the non-employee directors were not eligible for participation in the
cancellation regrant program.
Accordingly, on December 21, 1994, the Compensation Committee approved the
cancellation and regrant of all outstanding options with an exercise price in
excess of $8.50 per share granted after December 1, 1989 and held by current
full-time employees. Each optionee holding such an option had the opportunity to
elect to retain his or her old options or accept a new option with an exercise
price of $8.50 per share, the market price of the Common Stock on that date, and
to cancel his or her higher-priced option. Each regranted option covered the
same number of shares subject to the higher-priced option at the time of
cancellation and will become exercisable in a series of thirty-six (36)
successive equal monthly installments as the optionee continues in the Company's
service after the December 21, 1994 grant date.
With the new vesting schedule, the Compensation Committee believes that the
program strikes an appropriate balance between the interests of the option
holders and those of the stockholders. The lower exercise prices in effect
under the regranted options make those options valuable once again to the
executive officers and key employees critical to the Company's financial
performance. However, those individuals will enjoy the benefits of the
regranted options only if they in fact remain in the Company's employ and
contribute to the Company's financial success.
Compensation Committee
Thomas J. Cable
George R. Hill
Kenneth H. Hopping
David H. Rammler
A. John Speziale
TEN-YEAR INFORMATION REGARDING REPRICING, REPLACEMENT OF CANCELLATION AND
REGRANT OF OPTIONS
As discussed in the Compensation Committee Report on Executive
Compensation, the Company implemented an option cancellation/regrant program for
executive officers and all other employees holding stock options with an
exercise price per share in excess of the market price of the Company's Common
Stock at the time the cancellation/regrant occurred. For all employees,
including the Company's executive officers, the cancellation/regrant was
effected on December 21, 1994 and each option held by those employees with an
exercise price in excess of $8.50, at such employees' option, was cancelled in
exchange for a new option for the same number of shares with an exercise price
of $8.50 per share.
The table on the following page sets forth (i) information with respect to
each of the Company's executive officers concerning his participation in the
option cancellation/regrant program which was effected on December 21, 1994 and
(ii) information with respect to all former or current executive officers of the
Company concerning their participation in other option repricing programs
implemented by the Company during the last ten (10) fiscal years.
23
<PAGE>
<TABLE>
<CAPTION>
Market Price Length of
Number of of Stock at Exercise Original
Securities Time of Price at Option Term
Underlying Repricing Time of New Remaining at
Options/SARs or Repricing or Exercise Date of
Name and Repriced or Amendment Amendment Price Repricing or
Principal Position Date Amended ($) ($) ($) Amendment/1/
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jerry D. Caulder/2/ 12-21-94 40,000 $8.50 $9.99 $8.50 5.0
Chief Executive Officer 12-21-94 25,000 $8.50 $10.20 $8.50 5.9
12-21-94 40,000 $8.50 $15.75 $8.50 6.8
12-21-94 15,000 $8.50 $15.25 $8.50 7.1
12-21-94 40,000 $8.50 $13.00 $8.50 7.8
12-21-94 100,000 $8.50 $11.25 $8.50 8.6
Carlton J. Eibl/2/ 12-21-94 30,000 $8.50 $12.25 $8.50 8.0
President, Chief Operating 12-21-94 50,000 $8.50 $11.25 $8.50 8.6
Officer and Secretary
Andrew C. Barnes 12-21-94 25,000 $8.50 $9.99 $8.50 5.0
Executive Vice President 12-21-94 20,000 $8.50 $10.20 $8.50 5.9
12-21-94 30,000 $8.50 $15.75 $8.50 6.8
12-21-94 10,000 $8.50 $15.25 $8.50 7.1
12-21-94 25,000 $8.50 $13.00 $8.50 7.8
12-21-94 50,000 $8.50 $11.25 $8.50 8.6
James R. Glynn 12-21-94 25,000/3/ $8.50 $9.99 $8.50 5.0
(resigned as of March 1995 12-21-94 20,000/3/ $8.50 $10.20 $8.50 5.9
from the positions of 12-21-94 30,000/3/ $8.50 $15.75 $8.50 6.8
Executive Vice President and 12-21-94 10,000/3/ $8.50 $15.25 $8.50 7.1
Chief Financial Officer) 12-21-94 25,000/3/ $8.50 $13.00 $8.50 7.8
12-21-94 50,000/3/ $8.50 $11.25 $8.50 8.6
James W. Hopkins 12-21-94 10,000 $8.50 $12.25 $8.50 8.0
12-21-94 20,000 $8.50 $11.25 $8.50 8.6
Albert D. Kern 12-21-94 25,000 $8.50 $9.99 $8.50 5.0
(resigned as of August 1995 12-21-94 20,000 $8.50 $10.20 $8.50 5.9
from the position of 12-21-94 30,000 $8.50 $15.75 $8.50 6.8
Executive Vice President) 12-21-94 10,000 $8.50 $15.25 $8.50 7.1
12-21-94 25,000 $8.50 $13.00 $8.50 7.8
12-21-94 50,000 $8.50 $11.25 $8.50 8.6
Leo Kim 12-21-94 20,000 $8.50 $10.20 $8.50 5.9
Executive Vice President, 12-21-94 30,000 $8.50 $15.75 $8.50 6.8
Chief Technical Officer 12-21-94 10,000 $8.50 $15.25 $8.50 7.1
12-21-94 25,000 $8.50 $13.00 $8.50 7.8
12-21-94 50,000 $8.50 $11.25 $8.50 8.6
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Length of time remaining is set forth in years.
2 Dr. Caulder was President of the Company in fiscal years 1993-1995. Mr.
Eibl became President and Chief Operating Officer in September 1995.
3 These awards were extinguished upon Mr. Glynn's resignation from the Company
in March 1995.
24
<PAGE>
PERFORMANCE GRAPH
The following graph compares total stockholder returns of the Company over
the last five fiscal years to the weighted average return of stocks of companies
included in the Nasdaq NMS Index and in a peer group index of companies
identified by the Company. The total return for each of the Company's Common
Stock, the Nasdaq NMS Index and the selected peer group index assumes the
reinvestment of dividends, although dividends have not been declared on the
Company's Common Stock and is based on the returns of the component companies
weighted according to their market capitalizations as of the end of each monthly
period for which returns are indicated. The Nasdaq NMS Index tracks the
aggregate price performance of equity securities of companies traded on the
Nasdaq National Market System ("NMS"). The Company's Common Stock is traded on
the NMS. The selected peer group index consists of the following agricultural
biotechnology companies, which are the only agricultural, crop-protection
biotechnology companies known to the Company to have their shares traded on NMS:
Agridyne Technologies, Inc.; Calgene, Inc.; DeKalb Genetics Corporation-CL B;
Ecogen Inc.; Ringer Corporation; Biosys; Crop Genetics International
Corporation; DNA Plant Technology Corporation; and Ecoscience Corporation. The
stockholder return shown on the graph below is not necessarily indicative of
future performance and the Company will not make or endorse any predictions as
to future stockholder returns.
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN AMONG MYCOGEN
NASDAQ NMS INDEX AND SELECTED PEER GROUP
<TABLE>
<CAPTION>
Mycogen Nasdaq Peer Mycogen Nasdaq Peer
Date Corporation NMS Index Date Corporation NMS Index
- --------------------------------------------- ---------------------------------------------
<S> <C> <C> <C> <S> <C> <C> <C>
8/31/90 100 100 100 3/31/93 96 189 120
9/28/90 80 91 89 4/30/93 98 181 120
10/31/90 94 87 80 5/28/93 98 192 129
11/30/90 112 95 84 6/30/93 104 193 135
12/31/90 114 99 88 7/30/93 100 193 117
1/31/91 135 110 103 8/31/93 104 203 118
2/28/91 112 121 110 9/30/93 100 209 129
3/28/91 102 129 129 10/29/93 88 214 145
4/30/91 104 130 127 11/30/93 80 207 129
5/31/91 96 136 143 12/31/93 80 213 121
6/28/91 116 128 131 1/31/94 91 220 130
7/31/91 106 135 128 2/28/94 86 218 129
8/30/91 104 142 136 3/31/94 73 204 117
9/30/91 118 142 153 4/29/94 88 202 106
10/31/91 124 147 150 5/31/94 82 202 123
11/29/91 105 142 135 6/30/94 84 195 111
12/31/91 119 160 146 7/29/94 78 199 101
1/31/92 122 169 177 8/31/94 82 211 105
2/28/92 110 173 174 9/30/94 78 211 91
3/31/92 121 165 155 10/31/94 78 215 83
4/30/92 116 157 141 11/30/94 78 208 73
5/29/92 114 160 154 12/30/94 66 208 70
6/30/92 114 153 130 1/31/95 89 210 69
7/31/92 106 159 136 2/28/95 73 221 72
8/31/92 104 154 123 3/31/95 76 227 69
9/30/92 102 160 125 4/28/95 73 234 69
10/30/92 100 166 128 5/31/95 66 240 64
11/30/92 100 179 147 6/30/95 65 260 70
12/31/92 110 186 157 7/31/95 68 278 67
1/29/93 118 191 144 8/31/95 80 284 66
2/26/93 104 184 129
</TABLE>
25
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 1, 1992, the Company and Lubrizol consummated a series of
transactions that resulted in: (i) the formation and capitalization of
Agrigenetics, L.P., a Delaware Limited Partnership doing business as Mycogen
Plant Sciences ("Mycogen Plant Sciences"), owned directly and indirectly fifty-
one percent (51%) by the Company and forty-nine percent (49%) by Lubrizol, with
the assets, rights and related items required to permit Agrigenetics, L.P. to
succeed to, own and operate the business of Agrigenetics Company, the former
agricultural seed and plant science division of Lubrizol; and (ii) the issuance
and sale to Lubrizol of 2,294,590 shares of Mycogen Common Stock and 3,940
shares of Mycogen Series A Preferred Stock. Dr. Hill, a member of the Board of
Directors, is a Senior Vice President of Lubrizol, and Mr. Hopping, also a
member of the Board of Directors, is Vice President and Secretary of Lubrizol.
On December 31, 1993, Mycogen Plant Sciences was reorganized from a limited
partnership to a corporation and the Company acquired an additional twenty-nine
point fifty-four percent (29.54%) interest in Mycogen Plant Sciences from
Lubrizol for $7 million in cash and 2 million shares of Mycogen Common Stock.
Mycogen Plant Sciences currently is owned eighty point fifty-four percent
(80.54%) by the Company and nineteen point forty-six percent (19.46%) by
Lubrizol.
Mycogen Plant Sciences is the seventh largest seed company in the United
States. It produces and markets planting seeds for corn, soybean, sunflower,
sorghum and alfalfa crops to farmers, principally in the northern and midwestern
regions of the United States and certain foreign countries. Mycogen Plant
Sciences also conducts advanced biotechnology research and development of plants
and carries out ongoing plant breeding programs for its principal crops.
The Company has granted to Mycogen Plant Sciences a perpetual, world-wide
and royalty-free license to all of the Company's technology for use by Mycogen
Plant Sciences solely for the purpose of developing and commercializing plants,
planting seeds and plant by-products (other than pesticides, herbicides,
fungicides and human and animal pharmaceuticals). In exchange, Mycogen Plant
Sciences granted to the Company an exclusive, perpetual, and world-wide and
royalty-free license to all of Mycogen Plant Sciences' technology, except
certain technology rights granted exclusively to Lubrizol with respect to
specialty oils, for use by the Company to develop and commercialize pesticides
and human and animal pharmaceuticals. The principal purpose of this arrangement
is to consolidate into Mycogen Plant Sciences the application of all technology
related to the development and commercialization of transgenic plants and to
consolidate into Mycogen the application of all technology related to the
development and commercialization of pesticides and potential animal and human
pharmaceuticals.
Under a related agreement as amended, Lubrizol has agreed to provide
Mycogen Plant Sciences with funding from the beginning of 1993 through 1998 for
research and development projects related to planting seeds that yield plants
capable of producing special oils with certain desired characteristics. Lubrizol
is obligated to provide a minimum of $4.6 million of funding through 1998. In
exchange, Mycogen Plant Sciences has granted to Lubrizol an exclusive,
perpetual, world-wide and royalty-free license to planting seeds developed or
acquired by Mycogen Plant Sciences that yield plants capable of producing
certain special oils. Under commercial contracts between a subsidiary of
Lubrizol and Mycogen Plant Sciences, Mycogen Plant Sciences is the exclusive
supplier of such planting seeds and will manage the production of crops from
such seeds.
With respect to their ownership interest in Mycogen Plant Sciences, the
Company and Lubrizol have agreed to the following: (i) the Company and Lubrizol
each has the first opportunity to acquire the selling party's interest in
Mycogen Plant Sciences; (ii) if the Company decides to sell any of its interest
in Mycogen Plant Sciences, Lubrizol has certain rights to sell all or any
portion of its interest in Mycogen Plant Sciences in the same transaction; (iii)
the Company will purchase Lubrizol's remaining interest in Mycogen Plant
Sciences over time for additional shares of Mycogen Common Stock or, after
November 2000, for cash; and (iv) Lubrizol will not acquire additional shares of
Mycogen Common Stock (other than shares of common stock that it currently holds
or shares that are issuable in connection with the Company's purchase of
Lubrizol's remaining interest in Mycogen Plant Sciences or upon conversion of
Mycogen Series A Preferred Stock) except under certain limited circumstances.
On December 1, 1993, the Company redeemed $10 million of Mycogen Series A
Preferred Stock from Lubrizol in accordance with the terms of such stock. The
remaining shares of Mycogen Series A Preferred Stock are not subject to
mandatory redemption.
26
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Effective December 31, 1993, Lubrizol surrendered to Mycogen 300 shares of
Mycogen Series A Preferred Stock in satisfaction of certain indemnification
obligations related to the Mycogen Plant Sciences transactions consummated
between the parties on December 1, 1992.
In August 1995, the Company entered into a three (3) year Consulting
Agreement with Dr. Kern, whereas Dr. Kern will provide the Company with his
expertise and knowledge of herbicide technologies, herbicide markets and
international pesticide markets. For such consulting services, Dr. Kern will be
compensated at a rate of $150,000 per year, payable in equal bimonthly
installments. During the 1995 fiscal year, Dr. Kern received $12,500 in
compensation for his consulting services.
STOCKHOLDER PROPOSALS FOR 1996 PROXY STATEMENT
Stockholder proposals that are intended to be presented at the Company's
annual meeting of stockholders to be held in 1996 must be received by the
Company no later than July 18, 1996 in order to be included in the proxy
statement and related proxy materials.
FORM 10-K
THE COMPANY WILL MAIL WITHOUT CHARGE, UPON WRITTEN REQUEST, A COPY OF THE
ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS, SCHEDULES AND
LIST OF EXHIBITS. REQUESTS SHOULD BE SENT TO INVESTOR RELATIONS.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent (10%) of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the SEC and Nasdaq. Officers, directors
and greater than ten percent stockholders are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms they file.
Based solely on review of the copies of such forms furnished to the
Company, the Company believes that, during the period from September 1, 1994 to
August 31, 1995, all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten percent (10%) beneficial owners were
satisfied.
OTHER BUSINESS
The Board of Directors knows of no other business that will be presented
for consideration at the Annual Meeting. If other matters are properly brought
before the Annual Meeting, however, it is the intention of the persons named in
the accompanying proxy to vote the shares represented thereby on such matters in
accordance with their best judgment.
Dated: November 15, 1995 By Order of the Board of Directors
/s/ Carlton J. Eibl
CARLTON J. EIBL as Secretary
27
<PAGE>
MYCOGEN CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY
The undersigned hereby appoints Carlton J. Eibl, the Secretary of the
Company, as proxy, with full power of substitution, to vote all shares of stock
which the undersigned is entitled to vote at the Annual Meeting of Stockholders
of Mycogen Corporation to be held on Thursday, December 14, 1995, or at any
adjournment(s) thereof, as specified on the reverse side, and to vote in his
discretion on such other business as may properly come before the Meeting and
any adjournment(s) thereof.
-------------
(Please sign and date on reverse side) SEE REVERSE
SIDE
-------------
PLEASE MARK
[X] VOTES AS IN
THIS EXAMPLE.
UNLESS OTHERWISE SPECIFIED BY THE UNDERSIGNED, THIS PROXY WILL BE VOTED IN THE
MANNER DIRECTED BELOW, BUT IF NO CONTRARY DIRECTION IS MADE, IT WILL BE VOTED
FOR THE DIRECTOR NOMINEES LISTED BELOW, AND BY THE PROXYHOLDER AT HIS DISCRETION
AS TO ANY OTHER MATTERS PROPERLY TRANSACTED AT THE MEETING OR ANY ADJOURNMENT(S)
THEREOF.
<TABLE>
<S> <C>
FOR AGAINST ABSTAIN
1. Election of Directors: 2. To approve the implementation of the 1995 [_] [_] [_]
Employee Stock Purchase Plan, pursuant to
NOMINEES: Thomas J. Cable, Jerry D. Caulder, George R. Hill, which 250,000 shares of Common Stock will
Kenneth H. Hopping, David H. Rammler and A. John Speziale. be reserved for issuance.
FOR WITHHELD
[_] [_] MARK HERE [_] 3. To ratify the non-statutory stock option
IF YOU PLAN grants for 20,000 shares of Common Stock [_] [_] [_]
TO ATTEND made under the Company's Automatic Grant
THE MEETING Program to each of three non-employee
Board members
MARK HERE [_] 4. To ratify the appointment of Ernst & Young
FOR ADDRESS LLP as the Company's independent auditors [_] [_] [_]
CHANGE AND for the fiscal year ending August 31, 1996.
[_] _________________________________ NOTE BELOW
For all nominees except as noted above
5. The undersigned confers upon the proxy hereby appointed discretion
to transact any other business which may properly come before the
Meeting or any adjournment(s) thereof.
Please sign exactly as name appears on your stock certificate. If signing
as attorney, executor, administrator, trustee, or guardian, please give
full title as such, and if signing for an organization, give your title.
When shares are in the names of more than one person, each should sign.
Signature: _____________________________________________Date _____________
Signature: _____________________________________________Date _____________
</TABLE>
