SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement |_| Confidential, For Use of the Com-
mission Only (as permitted by
Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CELGENE CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
|_| Fee paid previously with preliminary materials:
- --------------------------------------------------------------------------------
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE>
CELGENE CORPORATION
7 Powder Horn Drive
Warren, New Jersey 07059
May 24, 1999
Dear Stockholder:
On behalf of the Board of Directors, I cordially invite you to attend the
1999 Annual Meeting of Stockholders of Celgene Corporation. The Annual Meeting
will be held on Tuesday, June 22, 1999, beginning at 1:00 p.m., local time, at
the offices of Proskauer Rose LLP, 1585 Broadway, 26th floor, New York, New
York 10036. The formal Notice of Annual Meeting is set forth in the enclosed
material.
The matters expected to be acted upon at the meeting are described in the
attached Proxy Statement. During the meeting, stockholders will have the
opportunity to ask questions and comment on the Company's operation.
It is important that your views be represented whether or not you are able
to be present at the Annual Meeting. Please sign and return the enclosed proxy
card promptly.
We appreciate your investment in Celgene Corporation and urge you to
return your proxy card as soon as possible.
Sincerely,
John W. Jackson
Chairman of the Board and
Chief Executive Officer
<PAGE>
CELGENE CORPORATION
7 Powder Horn Drive
Warren, New Jersey 07059
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------------
The Annual Meeting of Stockholders of CELGENE CORPORATION (the "Company")
will be held at the offices of Proskauer Rose LLP, 1585 Broadway, 26th floor,
New York, New York 10036 on June 22, 1999, at 1:00 p.m., local time, for the
following purposes:
1. to elect nine directors;
2. to amend the 1995 Non-Employee Directors' Incentive Plan ("Directors'
Option Plan") to (a) increase the number of shares that may be issued upon
exercise of options granted thereunder from 350,000 shares to 600,000
shares and (b) provide for a discretionary grant upon the date of each
annual meeting of an additional option to purchase up to 5,000 shares to a
non-employee director who serves as a member (but not a chairman) of a
committee of the Board of Directors and up to 10,000 shares to a
non-employee director who serves as the chairman of a committee of the
Board of Directors;
3. to ratify the appointment of KPMG LLP as the independent certified
public accountants of the Company for the fiscal year ending December 31,
1999; and
4. to transact any such other business as may properly come before the
Meeting and at any adjournment thereof.
The Board of Directors has fixed the close of business on May 3, 1999 as
the record date for determining stockholders entitled to notice of and to vote
at the meeting.
A proxy and return envelope are enclosed for your convenience.
By order of the Board of Directors
JOHN W. JACKSON
Chairman of the Board and
Chief Executive Officer
May 24, 1999
YOUR VOTE IS IMPORTANT
Please mark, sign, and date the enclosed
proxy card and return it promptly
in the enclosed self-addressed, stamped envelope.
<PAGE>
CELGENE CORPORATION
7 Powder Horn Drive
Warren, New Jersey 07059
----------------
PROXY STATEMENT
----------------
This Proxy Statement is furnished to the stockholders of Celgene
Corporation, a Delaware corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors for use at the Annual Meeting
of Stockholders (the "Meeting" or "Annual Meeting") of the Company to be held
on June 22, 1999, and at any adjournment thereof. A copy of the notice of
meeting accompanies this Proxy Statement. It is anticipated that the mailing of
this Proxy Statement will commence on or about May 24, 1999.
Only stockholders of record at the close of business on May 3, 1999, the
record date for the Annual Meeting, will be entitled to notice of and to vote
at the Meeting. On the record date the Company had outstanding 16,901,546
shares of common stock, par value $.01 per share (the "Common Stock"), which
are the only securities of the Company entitled to vote at the Annual Meeting,
each share being entitled to one vote.
Stockholders who execute proxies may revoke them by giving written notice
to the Chief Executive Officer of the Company at any time before such proxies
are voted. Attendance at the Meeting shall not have the effect of revoking a
proxy unless the stockholder so attending shall, in writing, so notify the
Secretary of the Meeting at any time prior to the voting of the proxy.
The Board of Directors does not know of any matter that is expected to be
presented for consideration at the Meeting, other than the election of
directors, the amendment to the Directors' Option Plan and the confirmation of
the appointment of the independent certified public accountants of the Company
for the current fiscal year. However, if other matters properly come before the
Meeting, the persons named in the accompanying proxy intend to vote thereon in
accordance with their judgment.
The Company will bear the cost of the Meeting and the cost of soliciting
proxies, including the cost of mailing the proxy material. In addition to
solicitation by mail, directors, officers, and regular employees of the Company
(who will not be specifically compensated for such services) may solicit
proxies by telephone or otherwise. Arrangements will be made with brokerage
houses and other custodians, nominees, and fiduciaries to forward proxies and
proxy material to their principals, and the Company will reimburse them for
their expenses. In addition, the Company has retained D.F. King & Co., Inc. of
New York, New York, a proxy solicitation organization, to assist in the
solicitation of proxies. D.F. King's fee is estimated to be $5,000, plus
reasonable out-of-pocket expenses.
All proxies received pursuant to this solicitation will be voted except as
to matters where authority to vote is specifically withheld and, where a choice
is specified as to the proposal, they will be voted in accordance with such
specification. If no instructions are given, the persons named in the proxy
solicited by the Board of Directors of the Company intend to vote FOR the
nominees for election as directors of the Company listed herein, FOR the
amendment of the Directors' Option Plan described herein and FOR the
ratification of the appointment of KPMG LLP as the Company's independent
certified public accountants for the fiscal year ending December 31, 1999.
Abstentions are counted in tabulations of the votes cast on proposals
presented to stockholders, whereas broker non-votes are not counted for
purposes of determining whether a proposal has been approved. Abstentions and
broker non-votes will have no effect on the election of directors, which is by
plurality vote, but abstentions will, in effect, be votes against the
ratification of the selection of independent public accountants, as this item
requires the affirmative vote of the shares present and eligible to vote on
such matters. Since approval of the proposed amendment to the Directors' Option
Plan requires the affirmative vote of at least a majority of the outstanding
shares of Common Stock present and entitled to vote at the annual meeting, both
abstentions and broker non-votes will, in effect, be votes against such matter.
<PAGE>
MATTERS TO COME BEFORE THE ANNUAL MEETING
PROPOSAL ONE: ELECTION OF DIRECTORS
At the Annual Meeting, nine directors are to be elected, each to hold
office (subject to the Company's By-Laws) until the next annual meeting and
until his successor has been elected and qualified. Pursuant to the Company's
By-Laws, the Board of Directors has fixed the number of directors at nine. Each
nominee has consented to being named as a nominee in this Proxy Statement and
to serve if elected. If any nominee listed in the table below should become
unavailable for any reason, which the Board of Directors does not anticipate,
the proxy will be voted for any substitute nominee or nominees who may be
selected by the Board of Directors prior to or at the Meeting, or, if no
substitute is selected by the Board of Directors prior to or at the Meeting,
for a motion to reduce the membership of the Board of Directors to the number
of nominees available. Directors will be elected by an affirmative vote of a
plurality of the votes cast at the Annual Meeting. There are no family
relationships between any of the directors and executive officers of the
Company. The information concerning the nominees and their security holdings
has been furnished by them to the Company.
<TABLE>
<CAPTION>
Name Age Position
- --------------------------------------- ----- ---------------------------------------------------
<S> <C> <C>
John W. Jackson ....................... 54 Chairman of the Board and Chief Executive Officer
Sol J. Barer, Ph.D. ................... 51 President, Chief Operating Officer, and a Director
Frank T. Cary ......................... 78 Director
Arthur Hull Hayes, Jr., M.D. .......... 66 Director
Richard C.E. Morgan ................... 54 Director
Walter L. Robb, Ph.D. ................. 71 Director
Lee J. Schroeder ...................... 70 Director
Gilla Kaplan, Ph.D. ................... 51 Director
Jack L. Bowman ........................ 66 Director
</TABLE>
- ----------
John W. Jackson has been Chairman of the Board and Chief Executive Officer
of the Company since January 1996. Mr. Jackson was founder and President of
Gemini Medical, a consulting firm which specialized in services and investment
advice to start-up medical device and biotechnology companies, from February
1991 to January 1996. Previously, Mr. Jackson had been President of the
worldwide Medical Device Division of American Cyanamid, a major pharmaceutical
company, from February 1986 to January 1991 and served in various international
positions, including Vice President-International for American Cyanamid from
1978 to 1986. Mr. Jackson served in several human health marketing positions at
Merck & Company, a major pharmaceutical company, from 1971 to 1978.
Sol J. Barer has been President of the Company since October 1993 and
Chief Operating Officer and a director of the Company since March 1994. Dr.
Barer was Senior Vice President--Science and Technology and Vice
President/General Manager--Chiral Products of the Company from October 1990 to
October 1993 and Vice President--Technology of the Company from September 1987
to October 1990. Dr. Barer received a Ph.D. in organic and physical chemistry
from Rutgers University.
Frank T. Cary has been Chairman of the Executive Committee of the Board of
Directors of the Company since July 1990 and has been a director of the Company
since 1987. From 1973 to 1981, Mr. Cary was Chairman of the Board and Chief
Executive Officer of International Business Machines Corporation. Mr. Cary also
is a director of Cygnus Therapeutic Systems Inc., ICOS Corporation, Lincare
Inc., Lexmark International Inc., Vion Pharmaceuticals Inc. and Teltrend, Inc.
Arthur Hull Hayes, Jr., a director of the Company since 1995, has been
President and Chief Operating Officer of MediScience Associates, Inc., a
consulting organization that works with pharmaceutical firms, biomedical
2
<PAGE>
companies and foreign governments, since July 1991. Dr. Hayes has also been a
partner in Issue Sphere, a public affairs firm that focuses on health science
issues, since November 1995, as well as a professor in medicine, pharmacology
and family and community medicine at New York Medical College and clinical
professor of medicine and pharmacology at the Pennsylvania State University
College of Medicine. From 1986 to 1990, Dr. Hayes was President and Chief
Executive Officer of E.M. Pharmaceuticals, a unit of E. Merck AG and from 1981
to 1983 was Commissioner of the U.S. Food and Drug Administration. Dr. Hayes
also is a director of Myriad Genetics, Inc., NaPro BioTherapeutics, Inc. and
Premier Research Worldwide.
Richard C.E. Morgan, a director of the Company since 1987, has been the
Managing Member of Amphion Partners LLC (formerly Wolfensohn Partners, L.P.),
since 1986. Between January 1996 and January 1998, Mr. Morgan was a partner of
Jackson Hole Management Company, Inc. Mr. Morgan also is Chairman of the Board
of Directors of AXCESS, Inc., Chairman of the Board of Directors of Quidel
Corp., a director of Indigo, N.V. and a director of Orbis International, Inc.
Walter L. Robb, a director of the Company since 1992, has been a private
consultant and President of Vantage Management Inc., a consulting and investor
services company, since January 1993. Mr. Robb was Senior Vice President for
Corporate Research and Development of General Electric Company, and a member of
its Corporate Executive Council from 1986 to December 1992. Mr. Robb also is
Chairman of the Board of Directors of Capital District Sports and a director of
Marquette Electronics, Inc., Cree Research Inc., Neopath, Inc., and Mechanical
Technology, Inc.
Lee J. Schroeder, a director of the Company since 1995, has been President
of Lee Schroeder & Associates, Inc., pharmaceutical business consultants, since
1985. Mr. Schroeder was President of Fox Meyer Lincoln from 1983 to 1985, and
was an Executive Vice President of Sandoz, Inc. from 1981 to 1983. Mr.
Schroeder also is a director of Bryan LGH Hospital, MGI Pharmaceutical, Inc.,
Ascent Pediatrics, Inc. and Interneuron Pharmaceuticals, Inc.
Gilla Kaplan, Ph.D., a director of the Company since April 1998, is an
immunologist in the Laboratory of Cellular Physiology and Immunology at The
Rockefeller University in New York where she was appointed Assistant Professor
in 1985 and Associate Professor in 1990. Dr. Kaplan is a member of numerous
professional societies and has been the organizer of several major symposia on
tuberculosis. Dr. Kaplan has served as an advisor to the Global Program for
Vaccines and Immunization of the World Health Organization, has participated in
several NIH peer review panels, and is on the Editorial Board of Microbial Drug
Resistances, and Tubercle and Lung Disease. Dr. Kaplan is the author of more
than 100 scientific publications and has received international recognition for
her work. In 1995, she gave the Special Honorary Lecture at the American
Society for Microbiology and in 1997 was appointed a Fellow of the American
Academy of Microbiology.
Jack L. Bowman, a director of the Company since April 1998, served as
Company Group Chairman of Johnson & Johnson from 1987 to 1994. From 1983 to
1987, Mr. Bowman served as Executive Vice President of American Cyanamid. Mr.
Bowman is also a director of NeoRx Corporation, Cell Therapeutics, Inc., CytRx
Corporation, Cellegy Pharmaceuticals and Targeted Genetics.
-------------------------
The Company's By-Laws provide that nominations for the election of
directors may be made at any annual meeting of the stockholders: (a) by or at
the direction of the Board of Directors (or any duly authorized committee
thereof) or (b) by any stockholder of the Company (i) who is a stockholder of
record on the date of the giving of the notice and on the record date for the
determination of stockholders entitled to vote at such annual meeting and (ii)
who complies with the notice procedures set forth below.
3
<PAGE>
In addition to any other applicable requirements, for a nomination to be
made by a stockholder, such stockholder must have given timely notice thereof
in proper written form to the Secretary of the Company.
To be timely, a stockholder's notice to the Secretary must be delivered to
or mailed and received at the principal executive offices of the Company not
less than sixty (60) days nor more than ninety (90) days prior to the date of
the annual meeting; provided, however, that in the event that less than seventy
(70) days' notice or prior public disclosure of the date of the annual meeting
is given or made to stockholders, notice by the stockholder (in order to be
timely) must be so received not later than the close of business on the tenth
(10th) day following the day on which such notice of the date of the annual
meeting was mailed or such public disclosure of the date of the annual meeting
was made, whichever first occurs.
To be in proper written form, a stockholder's notice to the Secretary must
set forth (a) as to each person whom the stockholder proposes to nominate for
election as a director (i) the name, age, business address and residence
address of the person, (ii) the principal occupation or employment of the
person, (iii) the class or series and number of shares of capital stock of the
Company which are owned beneficially or of record by the person and (iv) any
other information relating to the person that would be required to be disclosed
in a proxy statement or other filing required to be made in connection with
solicitations of proxies for election of directors pursuant to Section 14 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
rules and regulations promulgated thereunder; and (b) as to the stockholder
giving the notice (i) the name and record address of such stockholder, (ii) the
class or series and number of shares of capital stock of the Company which are
owned beneficially or of record by such stockholder, (iii) a description of all
arrangements or understandings between such stockholder and each proposed
nominee and any other person or persons (including their names) pursuant to
which the nomination(s) are to be made by such stockholder, (iv) a
representation that such stockholder intends to appear in person or by proxy at
the annual meeting to nominate the persons named in his notice and (v) any
other information relating to such stockholder that would be required to be
disclosed in a proxy statement or other filing required to be made in
connection with solicitations of proxies for election of directors pursuant to
Section 14 of the Exchange Act and the rules and regulations promulgated
thereunder. Such notice must be accompanied by a written consent of each
proposed nominee to being named as a nominee and to serve as a director if
elected.
Security Ownership of Certain Beneficial Owners and Management
The table below sets forth the beneficial ownership of the Common Stock as
of March 31, 1999 (i) by each director, (ii) by each of the named executive
officers (iii) by all directors and executive officers of the Company as a
group, and (iv) by all persons known by the Board of Directors to be beneficial
owners of more than five percent of the outstanding shares of Common Stock.
<TABLE>
<CAPTION>
Amount and
Nature of
Beneficial Percent
Name Ownership of Class
- -------------------------------------- ---------------------- ---------
<S> <C> <C>
John W. Jackson ...................... 305,733(1)(2) 1.8%
Sol J. Barer, Ph.D. .................. 250,761(2) 1.5%
Frank T. Cary ........................ 118,000(1) *
Arthur Hull Hayes, Jr., M.D. ......... 35,000(1) *
Richard C.E. Morgan .................. 320,055(1)(3) 1.9%
Walter L. Robb, Ph.D. ................ 97,000(1) *
Lee J. Schroeder ..................... 46,000(1) *
Gilla Kaplan ......................... 20,000(1) *
Jack L. Bowman ....................... 6,000(1) *
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Amount and
Nature of
Beneficial Percent
Name Ownership of Class
- ------------------------------------------------------ ------------------ ---------
<S> <C> <C>
All directors and current executive officers of
the Company as a group (nine persons) ............... 1,251,949(4) 7.1%
Donald P. Moriarty and
William P. Scully(5) ................................. 1,355,505(5) 8.0%
c/o McGrath, Doyle & Phair
150 Broadway
New York, NY 10038
Frontier Capital Management Company, Inc.(6) ......... 938,050(6) 5.6%
99 Summer Street
Boston, MA 02110
</TABLE>
----------
* Less than one percent (1%).
(1) Includes shares of Common Stock which the directors and executive officers
have the right to acquire through the exercise of options within 60 days
of March 31, 1999, as follows: John W. Jackson--283,333; Sol J. Barer
--250,746; Frank T. Cary--81,000; Arthur Hull Hayes, Jr.--35,000; Richard
C.E. Morgan--61,000 shares; Walter L. Robb--54,000; Lee J.
Schroeder--46,000; Gilla Kaplan--20,000; Jack Bowman--5,000. Does not
include shares of Common Stock which the directors and executive officers
had the right to acquire through the exercise of options not exercisable
within 60 days of March 31, 1999, as follows: John W. Jackson-- 136,667;
Sol J. Barer--68,334; Frank T. Cary--10,000; Arthur Hull Hayes,
Jr.--15,000; Richard C.E. Morgan--10,000; Walter L. Robb--10,000; Lee J.
Schroeder--10,000; Gilla Kaplan--16,700; and Jack L. Bowman--16,700.
(2) Includes with respect to Mr. Jackson, 400 shares owned by the son of Mr.
Jackson, as to which shares Mr. Jackson disclaims beneficial ownership;
includes with respect to Dr. Barer, 15 shares owned by the daughter of Dr.
Barer, as to which shares Dr. Barer disclaims beneficial ownership.
(3) Includes 252,055 shares of Common Stock owned by Amphion Ventures, L.P. of
which Amphion Partners, LLC is the general partner. Mr. Morgan is a
managing member of Amphion Ventures, LLC. Mr. Morgan's indirect pecuniary
interest in these shares of Common Stock, within the meaning of Rule
16a-1(a)(2)(ii)(B) under the Securities Exchange Act of 1934, is
significantly less than the amount disclosed. Mr. Morgan otherwise
disclaims beneficial ownership of such shares of Common Stock owned by
Amphion Ventures, L.P.
(4) Includes or excludes, as the case may be, shares of Common Stock as
indicated in the preceding footnotes.
(5) Information regarding Donald P. Moriarty and William P. Scully was obtained
from a Schedule 13D, as amended, filed by them with the Securities and
Exchange Commission. Such Schedule 13D states that Messrs. Moriarty and
Scully are deemed to be the beneficial owners of and to have shared
dispositive power over all such shares of Common Stock, and that such
shares are held by Mr. Moriarty, Mr. Scully, their family members, and
Twin Oaks Partners, a partnership in which Messrs. Moriarty and Scully are
general partners.
(6) Information regarding Frontier Capital Management Company, Inc. was
obtained from a Schedule 13G, filed by it with the Securities and Exchange
Commission. Such Schedule 13G states that Frontier Capital Management
Company, Inc. is the beneficial owner of and has the sole dispositive
power over all such shares of Common Stock.
5
<PAGE>
Director Compensation
Directors do not receive salaries or cash fees for serving as directors
nor do they receive any cash compensation for serving on committees; however,
all members of the Board of Directors who are not employees of the Company
("Non-Employee Directors") are reimbursed for their expenses for each meeting
attended and are eligible to receive stock options pursuant to the 1995
Non-Employee Directors' Option Plan (the "Directors' Option Plan").
The Directors' Option Plan was adopted by the Board of Directors on April
5, 1995, and approved by the Company's stockholders at the 1995 Annual Meeting
of Stockholders. At the annual meeting of the Company held in 1997, the
Directors' Option Plan was amended to increase the number of shares of the
Company's Common Stock that may be issued upon exercise of options granted
thereunder from 250,000 shares to 350,000 shares. The Directors' Option Plan
currently provides for the granting to Non-Employee Directors of non-qualified
options to purchase an aggregate of not more than 350,000 shares (subject to
adjustment in certain circumstances) of Common Stock.
Under the Directors' Option Plan, each Non-Employee Director as of April
5, 1995 was granted a non-qualified option to purchase 20,000 shares of Common
Stock, and each new Non-Employee Director upon the date of his election or
appointment will be granted a non-qualified option to purchase 20,000 shares of
Common Stock. These initial options vest in four equal annual installments
commencing on the first anniversary of the date of grant, assuming the
Non-Employee Director remains a director.
Upon the date of each Annual Meeting of Stockholders, each Non-Employee
Director is granted a non-qualified option to purchase 10,000 shares of Common
Stock (or a pro rata portion thereof if the director did not serve the entire
year since the date of the last annual meeting). These options vest in full on
the date of the first Annual Meeting of Stockholders held following the date of
the grant, assuming the Non-Employer Director is a director on that date.
All options granted pursuant to the Directors' Option Plan will expire no
later than 10 years from the date of grant and no options may be granted after
June 16, 2005. If a Non-Employee Director terminates his service on the Board
of Directors for any reason, options which were exercisable on the date of
termination and which have not expired may be exercised at any time until the
date of expiration of such options. In addition, if there is a change of
control and within two years thereafter a director is removed without cause (as
defined) or is not nominated for election by the Company's stockholders, all
unvested portions of a stock option will automatically vest.
In 1998, pursuant to the Directors' Option Plan, each of Messrs. Cary,
Hayes, Morgan, Robb and Schroeder received an option to purchase 10,000 shares
of Common Stock at an exercise price of $10.688 per share, the fair market
value of the stock on the date of the grant. Dr. Kaplan and Mr. Bowman each
received an option to purchase 20,000 shares of common stock at an exercise
price of $10.625 as new Non-Employee Directors and 1,700 shares at an exercise
price of $10.688 as the pro-rata share for time served since the date of the
last annual meeting.
Board Committees and Membership
The Company has an Executive Committee of the Board of Directors, whose
current members are Frank T. Cary, Chairman, Sol J. Barer, John W. Jackson and
Richard C. E. Morgan. The Executive Committee held one meeting in 1998. The
Executive Committee has and may exercise all of the powers and authority of the
full Board of Directors of the Company, subject to certain exceptions.
The Company has an Audit Committee of the Board of Directors, consisting
entirely of outside directors, the current members of which are Walter L. Robb,
Chairman, Arthur Hull Hayes, Jr. and Gilla Kaplan. The Audit Committee held one
meeting in 1998. The Board of Directors has delegated to the Audit Committee
the following
6
<PAGE>
duties: reviewing with the independent auditors the plans and results of the
audit engagement; reviewing the adequacy, scope, and results of the internal
accounting controls and procedures; reviewing the degree of independence of the
auditors; reviewing the auditors' fees; and recommending the engagement of
auditors to the full Board of Directors.
The Company has a Management Compensation and Development Committee (the
"Compensation Committee") of the Board of Directors, whose current members are
Richard C.E. Morgan, Chairman, Frank T. Cary, Jack L. Bowman and Lee J.
Schroeder. The Compensation Committee held two meetings in 1998. The
Compensation Committee has (i) the full power and authority to interpret the
provisions and supervise the administration of the Company's 1986 Stock Option
Plan, 1992 Long-Term Incentive Plan and the 1998 Long-Term Incentive Plan and
to grant options outside of these plans and (ii) the authority to review all
matters relating to the personnel of the Company.
The Company does not have a nominating committee. The Board of Directors
held six meetings during 1998. During 1998, all of the directors attended more
than 75% of the aggregate of (i) the total number of meetings of the Board of
Directors and (ii) the total number of meetings of all committees of the Board
on which such director served.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Under the securities laws of the United States, the Company's directors,
executive officers and any persons holding more than 10 percent of the Common
Stock are required to report their ownership of Common Stock and any changes in
that ownership, on a timely basis, to the Securities and Exchange Commission.
Due to an administrative oversight, Messrs. Cary, Hayes, Morgan, Robb,
Schroeder, Bowman and Ms. Kaplan were not able to timely file forms required
with respect to the automatic grant of options in 1998 under the Non-Employee
Directors' Incentive Plan and Messrs. Jackson and Barer were not able to timely
file forms with respect to options granted in 1998 to each of them under the
Company's 1992 Long-Term Incentive Plan.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE FOR THE ELECTION OF EACH OF THE NOMINEES
---
7
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary of Cash and Certain Other Compensation
The following table sets forth information about the compensation paid, or
payable, by the Company for services rendered in all capacities to the Chief
Executive Officer of the Company and each of the most highly paid executive
officers of the Company who earned more than $100,000, for each of the fiscal
years ended December 31, 1998, December 31, 1997 and December 31, 1996 in which
such officers were executive officers for all or part of the year.
<TABLE>
<CAPTION>
Annual
Compensation
----------------------------------------------------
Other
Name and Annual
Principal Position Year Salary ($) Bonus ($) Compensation ($)
- ----------------------------- ------ ---------------- ---------------- ------------------
<S> <C> <C> <C> <C>
John W. Jackson ............. 1998 285,000 79,800 19,200
Chairman and 1997 270,000 97,200 9,500(3)
Chief Executive 1996 243,429(1) 105,625(2) 4,750(3)
Officer
Sol J. Barer, Ph.D. ......... 1998 243,333 51,100 19,200
President and Chief 1997 232,500 63,647 9,500(3)
Operating Officer 1996 216,667 50,000 4,750(3)
<CAPTION>
Long Term
Compensation
-------------------------------------------
Restricted Securities All Other
Name and Stock Underlying Compen-
Principal Position Award(s) ($) Options # sation ($)
- ----------------------------- -------------- ------------ ---------------
<S> <C> <C> <C>
John W. Jackson ............. 0 100,000 13,390(4)
Chairman and 0 0 13,390(4)
Chief Executive 0 250,000 0
Officer
Sol J. Barer, Ph.D. ......... 0 50,000 0
President and Chief 0 0 0
Operating Officer 0 72,500 0
</TABLE>
- ----------
(1) Mr. Jackson commenced his employment with the Company on January 11, 1996.
(2) Mr. Jackson's bonus consisted of $50,000 in cash and 5,000 shares of
unrestricted stock, valued at $55,625 on the date of grant.
(3) Reflects matching contributions under the Company's 401K plan.
(4) Reflects life insurance premiums for a life insurance policy for Mr.
Jackson.
Employment Agreements and Termination of Employment Arrangements
John W. Jackson and Sol J. Barer (each an "Executive") are employed
pursuant to substantially similar employment agreements (collectively, the
"Employment Agreements") providing for their continued employment until
September 30, 2000 (the period during which Executive is employed is referred
to as the "Employment Period"). The Employment Period shall be automatically
renewed for successive one-year terms unless the Company or Executive gives
written notice to the other at least one year prior to the expiration of the
Employment Period. The Employment Agreements provide Messrs. Jackson and Barer
with a base salary (which may be increased by the Board of Directors, or a
committee thereof) of $270,000 and $235,000, respectively, per annum. In
addition, each of the Employment Agreements provides for an annual bonus in
such amount as may be determined by the Board of Directors, or a committee
thereof. The Employment Agreements also provide that Messrs. Jackson and Barer
are entitled to continue to participate in all group health and insurance
programs and all other fringe benefit or retirement plans which are generally
available to the Company's employees. Each of the Employment Agreements
provides that if the Executive is terminated by the Company without cause, he
shall be entitled to receive a lump-sum payment in an amount equal to the
greater of (A) twelve months salary at the rate being paid on the date of such
termination or (B) salary at such rate for the unexpired term of the Employment
Agreement. Each Employment Agreement also provides that if Executive is
terminated without cause or if Executive terminates his employment
8
<PAGE>
within 30 days of having actual knowledge of the occurrence of any of the
following events: (i) Executive not maintaining his position with the Company
as Chief Executive Officer (in the case of Mr. Jackson) and Chief Operating
Officer (in the case of Mr. Barer), (ii) a significant change in the duties
normally attached to such Executive's position, (iii) a good faith
determination by such Executive that, as a result of a change in control, such
Executive is unable to carry out the duties of such position and (iv) a breach
by the Company of any material term of such Executive's Employment Agreement,
the Executive shall be paid a lump-sum amount of cash equal to 2.99 times
Executive's "base amount," as defined in Section 280G(b)(3) of the Internal
Revenue Code of 1986, as amended (the "Code").
If during the two-year period following a change in control (as defined in
the Company's 1992 Long-Term Incentive Plan) of the Company, (i) there is a
change in an employee's title or a significant change in the nature or scope of
his employment or duties and such person terminates his employment within 90
days following such change or (ii) an employee's employment by the Company is
terminated without cause (as defined), then all of the options held by such
employee then outstanding will become immediately and fully exercisable, and
all restrictions applicable to restricted stock automatically will terminate.
Stock Options
The following table sets forth information for each of the named executive
officers with respect to the value of options exercised during the year ended
December 31, 1998, and the value of outstanding and unexercised options held as
of December 31, 1998. There were no stock appreciation rights exercised during
1998 and none were outstanding as of December 31, 1998.
Option Grants for Fiscal 1998
The following table provides information concerning grants of stock
options by the Company to the named executive officers in fiscal 1998.
OPTION GRANTS DURING FISCAL 1998
<TABLE>
<CAPTION>
Potential Realizable
Value at
Number of % of Total Assumed Annual Rates of
Securities Options Stock Price Appreciation
Underlying Granted Exercise for Option Term
Date of Options to Employees in Price Per Expiration -----------------------
Name Grant Granted(1) 1998(2) Share Date(3) 5% 10%
- ------------------------- --------- ------------ ----------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
John W. Jackson ......... 1/30/98 100,000 22% 8.563 1/30/08 $428,075 $856,200
Sol J. Barer ............ 1/30/98 50,000 11% 8.563 1/30/08 $214,038 $428,100
</TABLE>
- ----------
(1) All options granted in 1998 were granted pursuant to the Company's 1992
Long-Term Incentive Plan. The grant to Mr. Jackson is exercisable in
annual increments of 33-1/3% of the total grant, beginning on the first
anniversary of the date of grant. The grant to Dr. Barer is also
exercisable in annual increments of 33-1/3% of the total grant, beginning
on the first anniversary of the date of grant. All options were granted at
the fair market value of Common Stock on the effective date of grant.
(2) The total number of options granted to employees in 1998 was 456,870.
(3) Each option is subject to earlier termination if the officer's employment
with the Company is terminated.
9
<PAGE>
Option Exercises and Values for Fiscal 1998
The following table provides information concerning options exercised in
fiscal 1998 by the named executive officers and the value of such officers'
unexercised options at December 26, 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of
Securities Underlying Value of Unexercised
Unexercised Options In-the-Money Options
Shares at Fiscal Year-End at Fiscal Year-End(1)
Acquired ----------------------------- ----------------------------
Name on Exercise ($) Value Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------- ----------------- ------------------- ------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
John W. Jackson ............. -- -- 283,333 66,667 $ 805,064 $454,136
Sol J. Barer, Ph.D. ......... -- -- 250,746 33,334 $1,289,901 $227,071
</TABLE>
- ----------
(1) Represents the difference between the closing market price of the Common
Stock as reported by Nasdaq on December 31, 1998 of $15.375 per share and
the exercise price per share of in-the-money options multiplied by the
number of shares underlying the in-the-money options.
Compensation Committee Report on Executive Compensation
The Compensation Committee determines the Company's executive compensation
policies. The Compensation Committee determines the compensation of the
Company's executive officers and approves and oversees the administration of
incentive compensation programs for all employees including executive officers.
The Compensation Committee is composed solely of outside directors.
Executive Compensation Policies and Programs
The Company's executive compensation program is part of a company-wide
program covering all employees. The program's goals are to attract, retain, and
motivate employees, and it utilizes incentives such that employees and
stockholders share the same risks. The compensation program is designed to link
compensation to performance.
A portion of each employee's compensation relates to the grant of stock
options, and such grants are based on the successful attainment of strategic
corporate, business unit, and individual goals. As the Company has not as yet
attained significant commercial revenues, goals are set which relate to the
successful attainment of strategic events.
The Company does not have a pension plan or other capital accumulation
program. Grants of stock options are therefore of great importance to
executives as well as all employees. Any long-term value to be derived from
such grants will be consistent with stockholder gains.
Executive and employee compensation includes salary, employment-related
benefits, and long-term incentive compensation:
Salary. Salaries are set competitively relative to the biotechnology and
pharmaceutical industries--industries with which the Company competes for its
highly skilled personnel. Individual experience and performance is considered
when setting salaries within the range for each position. Annual reviews are
held and adjustments are made based on attainment of individual goals.
Benefits. All employees are eligible for similar benefits, such as health,
disability, and life insurance.
10
<PAGE>
Long-Term Incentive Compensation. An incentive compensation program is
established annually. The purpose of this program is to provide financial
incentives to executives and employees to achieve annual corporate, business
unit, and individual goals. The incentive program also aligns executive and
employee interests with those of stockholders by using grants of stock options.
Such grants vest over time thereby encouraging continued employment with the
Company. The size of grants is tied to comparative biotechnology industry
practices. To determine such comparative data, the Company relies on outside
compensation consultants, the Company's auditors, and third party industry
surveys.
Under the Company's 1998 incentive program, it was agreed, subject to the
achievement of certain goals in 1998 by the Company, that the Company would
grant at a future date options to purchase shares of common stock. A similar
incentive program has been designed for 1999 based on attainment of corporate,
business unit, and individual goals. The program is open to all regular
full-time employees, other than the executive officers of the Company.
Chief Executive Officer Compensation. Pursuant to Mr. Jackson's contract
with the Company entered into on September 30, 1997, Mr. Jackson received a
base salary of $285,000 for 1998. Mr. Jackson also received a bonus of $79,800
for 1998. Factors considered in determining Mr. Jackson's bonus included the
successful attainment of several important milestones in the development of the
Company's products, as well comparisons to total compensation packages of chief
executive officers at corporations within the Company's industry that are of
comparable size.
Members of the Compensation Committee
Richard C.E. Morgan, Chairman
Frank T. Cary
Jack L. Bowman
Lee J. Schroeder
Compensation Committee Interlocks and Insider Participation
The current members of the Compensation Committee are Richard C.E. Morgan,
Chairman, Frank T. Cary, Jack L. Bowman and Lee J. Schroeder. Each is an
outside director of the Company.
11
<PAGE>
Performance Graph
The following graph shows changes over the past five years in the value of
$100 invested in: 1) the Company's Common Stock; 2) the Standard & Poor's 500
Index; and 3) the NASDAQ Pharmaceutical Index.
The graph shows the value of $100 invested on December 31, 1993 in the
Company's Common Stock or in one of the indexes, as applicable, including
reinvestment of dividends, at December 31 for each of 1993-1998.
[GRAPH OMITTED]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG CELGENE CORPORATION, THE S & P 500 INDEX
AND THE NASDAQ PHARMACEUTICAL INDEX
<TABLE>
<CAPTION>
CELGENE CORPORATION S&P 500 NASDAQ PHARMACEUTICAL
------------------- ------- ---------------------
<S> <C> <C> <C>
12/93 $100 $100 $100
12/94 43 112 67
12/95 102 153 123
12/96 85 189 123
12/97 64 252 142
12/98 220 294 183
</TABLE>
* $100 INVESTED ON 12/31/91 IN STOCK OR INDEX - INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDING DECEMBER 31
The foregoing graph is based on historical data and is not necessarily
indicative of future performance. This graph shall not be deemed to be
"soliciting material" or to be "filed" with the Securities and Exchange
Commission or subject to Regulations 14A and 14C under the Exchange Act or to
the liabilities of Section 18 under the Exchange Act.
12
<PAGE>
PROPOSAL TWO:
APPROVAL OF AN AMENDMENT TO
THE 1995 NON-EMPLOYEE DIRECTORS' INCENTIVE PLAN
The stockholders of the Company are asked to approve an amendment to the
Company's 1995 Non-Employee Directors' Incentive Plan (the "Directors' Option
Plan") to increase the number of shares of the Company's Common Stock that may
be issued upon exercise of options granted thereunder from 350,000 to 600,000.
The Directors' Option Plan was adopted by the Board of Directors on April 5,
1995 and approved by the Company's stockholders at the 1995 Annual Meeting of
Stockholders. At the annual meeting of the Company held in 1997, the Directors'
Option Plan was amended to increase the number of shares of the Company's
Common Stock that may be issued upon exercise of options granted thereunder
from 250,000 shares to 350,000 shares. The affirmative vote of the holders of
at least a majority of the outstanding shares of Common Stock present and
entitled to vote at the annual meeting is required to approve the amendment of
the Directors' Option Plan.
Background of the Proposal to Amend the Directors' Option Plan
As of March 31, 1999, options to purchase 317,400 shares of Common Stock
have been granted under the Directors' Option Plan at exercise prices based on
the fair market value of the shares of the Company's Common Stock ranging from
$5.75 to $15.00. Of the options granted, none has been canceled, leaving a
total of 32,600 available for future grants out of the aggregate of 350,000
shares of Common Stock authorized for grant under the Directors' Option Plan.
As of May 17, 1999, the closing price of a share of Common Stock was $19.00.
Options may be granted under the Directors' Option Plan through June 16, 2005.
Accordingly, the Board of Directors recommends that stockholders approve the
amendment of the Directors' Option Plan as described below. The Board of
Directors approved the amendment of the Directors' Option Plan on April 20,
1999, subject to the approval of stockholders.
Summary of the Directors' Option Plan
The following is a brief summary of the principal provisions of the
Directors' Option Plan. This summary does not purport to be complete and is
qualified in its entirety by reference to the text of the Directors' Option
Plan set forth in Exhibit A hereto.
The Directors' Option Plan currently provides for the granting of
non-qualified options to purchase an aggregate of not more than 350,000 shares
(subject to adjustment in certain circumstances) of Common Stock to
Non-Employee Directors. As amended, the maximum number of shares of Common
Stock as to which options may be granted under the Directors' Option Plan
increases to not more than 600,000 shares. The Directors' Option Plan is
designed to provide a means of giving existing and new Non-Employee Directors
an increased opportunity to acquire an investment in the Company, thereby
maintaining and strengthening their desire to remain with the Company's Board
of Directors and stimulating their efforts on the Company's behalf. It is also
expected that the Directors' Option Plan will encourage qualified persons to
become directors of the Company.
Under the Directors' Option Plan, each Non-Employee Director as of April
5, 1995 was granted a non-qualified option to purchase 20,000 shares of Common
Stock, and each new Non-Employee Director upon the date of his election or
appointment was or will be granted a non-qualified option to purchase 20,000
shares of Common Stock. These initial options vest in four equal annual
installments commencing on the first anniversary of the date of grant, assuming
the Non-Employee Director remains a director.
Upon the date of each Annual Meeting of Stockholders, each Non-Employee
Director is granted a non-qualified option to purchase 10,000 shares of Common
Stock (or a pro rata portion thereof if the director did not serve the entire
year since the date of the last annual meeting). As amended, the Directors'
Option Plan provides that upon the date of each Annual Meeting of Stockholders,
the Board of Directors at their sole discretion may also grant
13
<PAGE>
(i) a non-qualified option to purchase up to 10,000 shares of Common Stock to a
non-employee director who served as the chairman of a committee of the Board of
Directors and (ii) a non-qualified option to purchase up to 5,000 shares of
Common Stock to a non-employee director who served as a member of a committee
of the Board of Directors but not as the chairman of any committee of the Board
of Directors. These options vest in full on the date of the first Annual
Meeting of Stockholders held following the date of the grant, assuming the
Non-Employer Director is a director on that date.
All options granted pursuant to the Directors' Option Plan will expire no
later than 10 years from the date of grant and no options may be granted after
June 16, 2005. If a Non-Employee Director terminates his service on the Board
of Directors for any reason, options which were exercisable on the date of
termination and which have not expired may be exercised at any time until the
date of expiration of such options. In addition, if there is a change of
control and within two years thereafter, a director is removed without cause
(as defined) or is not nominated for election by the Company's stockholders,
all unvested portions of a stock option will automatically vest.
The Directors' Option Plan is administered by the Board of Directors which
has the full and final authority to interpret the Directors' Option Plan and to
adopt and amend such rules and regulations for the administration of the
Directors' Option Plan as the Board may deem desirable. In addition, the Board
of Directors has the right to amend, suspend, or terminate the Directors'
Option Plan at any time; provided, however, that unless first duly approved by
the holders of Common Stock entitled to vote thereon, no amendment or change
may be made in the Directors' Option Plan: (i) increasing the maximum number of
shares for which options may be granted under the Directors' Option Plan; (ii)
reducing the purchase price previously specified for the shares subject to
options; (iii) extending the period during which options may be granted or
options exercised under the Directors' Option Plan; or (iv) changing the class
of persons eligible to receive options under the Directors' Option Plan.
The Directors' Option Plan is not subject to any of the requirements of
the Employee Retirement Income Security Act of 1974, as amended. The Directors'
Option Plan is not, nor is it intended to be, qualified under Section 401(a) of
the Internal Revenue Code. Options granted under the Directors' Option Plan are
"non-qualified" stock options and are not intended to qualify as incentive
stock options under Section 422 of the Internal Revenue Code.
Certain Federal Income Tax Consequences
The principal federal income tax consequences with respect to stock
options granted or to be granted pursuant to the Directors' Option Plan are
summarized below. The following discussion does not set forth any state or
local tax consequences that may be applicable. Individuals are urged to obtain
professional advice regarding the applicability of federal, state, and local
tax laws to them.
The options granted or to be granted under the Directors' Option Plan do
not and will not qualify as incentive stock options and are herein referred to
as non-qualified stock options. An optionee will realize no income at the time
he is granted a non-qualified stock option. Such conclusion is predicated on
the assumption that, under existing Treasury Department regulations, a
non-qualified stock option, at the time of its grant, has no readily
ascertainable fair market value. Except with respect to the exercise of a
non-qualified stock option for stock which is 'not transferable' and subject to
a 'substantial risk of forfeiture,' as described below, ordinary income will be
realized when a non- qualified stock option is exercised. The amount of such
income will be equal to the excess of the fair market value on the exercise
date of the shares of Common Stock issued to an optionee over the option price.
The optionee's holding period with respect to the shares acquired will begin on
the date of exercise.
Special rules are applicable to stock which is "not transferable" and
subject to a "substantial risk of forfeiture." In general, such stock (i) is
subject to a substantial risk of forfeiture if the optionee's right to full
enjoyment of the stock is conditioned upon the future performance of
substantial services and (ii) is not transferable if a transferee would take
the stock subject to the same restrictions. Stock acquired pursuant to the
exercise of an option as to which a service requirement is imposed could be so
treated.
14
<PAGE>
Unless the optionee elects to be taxed at the time of exercise (an "83(b)
election"), the optionee will recognize ordinary income on the first day that
the stock is either transferable or not subject to a substantial risk of
forfeiture. In the case of any other stock subject to a service requirement,
this will depend on the individual facts and circumstances. The ordinary income
in such case will be the excess of the fair market value of the stock on such
date over the option price and the optionee's holding period will begin on that
day.
An optionee who makes an 83(b) election will recognize ordinary income on
the date of exercise equal to the excess of the fair market value of such stock
at the time of exercise over the option price. The optionee's holding period
with respect to such stock will begin on the date of exercise.
The tax basis of the stock acquired upon the exercise of any option will
be equal to the sum of (i) the exercise price of such option and (ii) the
amount included in income with respect to such option. Any gain or loss on a
subsequent sale of the stock will be either long term or short term capital
gain or loss, depending on the optionee's holding period for the stock disposed
of.
In addition, any officers and directors of the Company subject to Section
16(b) of the Securities Exchange Act of 1934 may be subject to special tax
rules regarding the income tax consequences concerning their non-qualified
options. A participant subject to Section 16(b) should consult his or her tax
advisor as to whether, as a result of Section 16(b) of the Securities Exchange
Act of 1934 and Section 83 of the Internal Revenue Code and the regulations
thereunder, the timing of income recognition is deferred to any period
following exercise of an option (e.g., the six month period following such
exercise).
The Company will be entitled, subject to rules regarding reasonableness of
compensation, to a deduction for Federal income tax purposes at the same time
and in the same amount as the optionee is considered to have realized ordinary
income in connection with the exercise of the option. The deduction will be
allowed for the taxable year of the Company in which or with which ends the
taxable year of the optionee in which such ordinary income is recognized.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE FOR THE ADOPTION OF THIS PROPOSAL
---
15
<PAGE>
PROPOSAL THREE:
INDEPENDENT AUDITORS
The Board of Directors has appointed KPMG LLP, independent certified
public accountants, to audit the books and records of the Company for the
current year. The affirmative vote of a majority of the shares voted at the
Annual Meeting is required for the ratification of the Board of Directors'
selection of KPMG LLP as the Company's independent auditors for the fiscal year
ending December 31, 1999.
Representatives of KPMG LLP are expected to be present at the meeting of
stockholders and will be given an opportunity to make a statement if they so
desire. They are expected to be available to respond to appropriate questions.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE FOR THE ADOPTION OF THIS PROPOSAL
---
16
<PAGE>
STOCKHOLDER PROPOSALS
Stockholders of the Company wishing to include proposals in the proxy
material in relation to the annual meeting of the Company to be held in 2000
must submit the same in writing so as to be received at the executive office of
the Company on or before January 15, 2000. If notice of a stockholder proposal
is not received by the Company on or before April 1, 2000, the persons named in
the enclosed form of proxy will have discretionary authority to vote all
proxies with respect thereto in accordance with their best judgment. Such
proposals must also meet the other requirements of the rules of the Securities
and Exchange Commission relating to stockholders' proposals.
OTHER MATTERS
Upon written request addressed to the Company's Secretary at 7 Powder Horn
Drive, Warren, New Jersey 07059 from any person solicited herein, the Company
will provide, at no cost, a copy of the Form 10-K Annual Report filed with the
Commission for the fiscal year ended December 31, 1998.
The Board of Directors of the Company does not know of any matters to be
brought before the Annual Meeting other than the matters set forth in the
Notice of Annual Meeting of Stockholders and matters incident to the conduct of
the Meeting. However, if any other matters should properly come before the
Annual Meeting, the persons named in the enclosed proxy card will have
discretionary authority to vote all proxies with respect thereto in accordance
with their best judgment.
By Order of the Board of Directors,
JOHN W. JACKSON
Chairman of the Board and
Chief Executive Officer
May 24, 1999
STOCKHOLDERS ARE REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN
THE ENCLOSED, SELF-ADDRESSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES. YOUR PROMPT RESPONSE WILL BE HELPFUL, AND YOUR COOPERATION WILL
BE APPRECIATED.
17
<PAGE>
EXHIBIT A
CELGENE CORPORATION
1995 NON EMPLOYEE DIRECTORS' INCENTIVE PLAN
Amended and restated as of June 22, 1999
(Provisions which are subject to approval
by stockholders are shown in italics.)
1. Purpose
The purpose of the Celgene Corporation 1995 Non Employee Directors'
Incentive Plan (the "Plan") is to secure for Celgene Corporation (the
"Corporation") and its stockholders the benefits of the incentive inherent in
increased ownership of common stock, par value $.01 per share (the "Common
Stock"), of the Corporation by the members of the Board of Directors (the
"Board") of the Corporation who are not employees of the Corporation or any of
its subsidiaries (as defined under Section 424(f) of the Internal Revenue Code
of 1986, as amended (the "Code") ("Non Employee Directors"). It is expected
that such ownership will provide such Non Employee Directors with a more direct
stake in the future welfare of the Corporation and encourage them to remain
directors of the Corporation. It is also expected that the Plan will encourage
qualified persons to become directors of the Corporation.
2. Administration
The Plan shall be administered by the Board, and in connection therewith,
the Board shall have all the powers vested in it by the terms of the Plan,
including authority (within the limitations described herein) to make grants
under the Plan and prescribe the form of the agreements embodying awards of
stock options made under the Plan (the "Options"). Subject to the provisions of
the Plan, the Board shall have the power to construe the Plan, to determine all
questions arising under the Plan, and to adopt and amend such rules and
regulations for the administration of the Plan as it may deem desirable. Any
decision of the Board in the administration of the Plan, as described herein,
shall be final and conclusive. The Board may act only by a majority of its
members in office, except that the members thereof may authorize any one or
more of their number or the Secretary or any other officer of the Corporation
to execute and deliver documents on behalf of the Board. No member of the Board
shall be liable for anything done or omitted to be done by such member or by
any other member of the Board in connection with the Plan, except for such
member's own willful misconduct, gross negligence, or as expressly provided by
statute.
3. Amount of Stock
The maximum number of shares of Common Stock which may be issued pursuant
to the Plan shall not exceed 600,000 shares of Common Stock, subject to
adjustment as provided in Section 9. The Common Stock to be issued may be
either authorized and unissued shares or previously issued shares acquired or
to be acquired by the Corporation and held in treasury. Any shares subject to
an Option which for any reason expires or is terminated unexercised may again
be subject to a new Option.
4. Eligibility
Each Non Employee Director shall be eligible to receive non qualified
stock options in accordance with Section 5. Options granted under the Plan
shall each be evidenced by an agreement in such form as the Board shall
prescribe from time to time in accordance with the Plan.
A-1
<PAGE>
5. Grant of Options
Each Option automatically shall be granted in accordance with the
following terms and conditions:
(a) upon the date of the initial approval of this Plan by the Board, each
Non Employee Director shall receive an Option to purchase 20,000 shares of
Common Stock, subject to adjustment as provided in Section 9;
(b) upon the date of initial election or appointment as a member of the
Board, each new Non Employee Director shall receive an Option to purchase
20,000 shares of Common Stock, subject to adjustment as provided in Section 9;
(c) upon the date of the Annual Meeting of Stockholders of the Corporation
to be held on June 16, 1995 (the "1995 Annual Meeting") or any adjournment or
adjournments thereof, each Non Employee Director who has been reelected at the
1995 Annual Meeting and is continuing as a member of the Board as of the
completion of the 1995 Annual Meeting shall receive an Option to purchase 6,000
shares of Common Stock, subject to adjustment as provided in Section 9;
(d) each year after the 1995 Annual Meeting, upon the date of an Annual
Meeting of Stockholders of the Corporation (each, an "Annual Meeting") each Non
Employee Director who has been elected at such Annual Meeting and is continuing
as a member of the Board as of the completion of such Annual Meeting shall
receive an Option to purchase 10,000 shares of Common Stock subject to
adjustment as provided in Section 9; provided, however, that a Non Employee
Director who has been elected at such Annual Meeting and is continuing as a
member of the Board as of the completion of such Annual Meeting but has not
been a member of the Board during the entire period between such Annual Meeting
and the prior Annual Meeting shall receive an Option to purchase that number of
shares equal to the product of (i) 10,000 and (ii) a fraction, numerator of
which is the number of days in the 12 month period immediately preceding such
Annual Meeting during which such Non Employee Director was a Non Employee
Director and the denominator is 365; and
(e) each year on and after the Annual Meeting of Stockholders of the
Corporation to be held on June 22, 1999 (the "1999 Annual Meeting"), upon the
date of an Annual Meeting, the Board shall have the sole discretion to grant
any Non Employee Director who has been elected at such Annual Meeting and is
continuing as a member of the Board as of the completion of such Annual Meeting
and, during the time period between such Annual Meeting and the prior Annual
Meeting, who (i) has served on a committee of the Board (but who has not served
as the chairman of a Board Committee), including but not limited to, the
Executive Committee, the Audit Committee, and the Management Compensation and
Development Committee (each, a "Board Committee"), an Option to purchase up to
5,000 shares of Common Stock and (ii) has served as the chairman of a Board
Committee, an Option to purchase up to 10,000 shares of Common Stock, subject
to adjustment as provided in Section 9.
6. Exercise Price
The Option exercise price per share shall be 100% of the fair market value
of a share of Common Stock on the date of grant, subject to adjustment as
provided in Section 9. As used herein, fair market value shall be the closing
price of the Common Stock on the date of determination (if the Common Stock is
then traded on a national securities exchange or in the Nasdaq Stock Market,
Inc.) or, if the Common Stock is not traded on the date of determination, on
the last preceding date on which the Common Stock is traded.
7. Exercise of Options
(a) No Option shall be exercisable until and unless the Plan is approved
by the Corporation's stockholders at the 1995 Annual Meeting and, unless the
Plan is so approved, all Options will terminate and be of no further force or
effect on the earlier to occur of (i) the day after the 1995 Annual Meeting and
(ii) April 4, 1996. No Option to be granted on and after the 1999 Annual
Meeting (i) in excess of the 350,000 maximum number of shares of Common Stock
which may be issued pursuant to the Plan prior to amendment or (ii) pursuant to
Section 5(e) hereof shall be exercisable until and unless the amended and
restated Plan is approved by the Corporation's stockholders
A-2
<PAGE>
at the 1999 Annual Meeting and, unless the Plan is so approved, all Options
will terminate and be of no further force or effect on the earlier to occur of
(i) the day after the 1999 Annual Meeting and (ii) the date the amended and
restated Plan is approved by the Board.
(b) The Option granted pursuant to Section 5(a) or 5(b) shall vest in four
equal annual installments, with the first installment vesting on the first
anniversary of the date of grant if the holder thereof has been a Non Employee
Director of the Corporation at all times since such date of grant. The Option
granted pursuant to Section 5(c), 5(d) and 5(e) shall vest in full on the date
of the first Annual Meeting held following the date of grant if the holder
thereof has been a Non Employee Director of the Corporation at all times from
such date of grant to the date of such Annual Meeting.
(c) If a person shall cease to be a Non Employee Director for any reason
("Termination") while holding an Option that has not expired and has not been
fully exercised, such person, or in the case of his or her death or
adjudication of incompetency, his or her executors, administrators,
distributees, guardian, or legal representative, as the case may be, may, at
any time until the termination of such Option, exercise the Option with respect
to any shares of Common Stock as to which it was exercisable on the date the
person ceased to be such a Non Employee Director.
(d) No Option or any part of an Option shall be exercisable:
(i) after the expiration of 10 years from the date the Option was
granted; and
(ii) unless written notice of the exercise is delivered to the
Corporation specifying the number of shares to be purchased, and
payment in full is made for the shares of Common Stock being acquired
thereunder at the time of exercise.
(e) An Option shall not be transferable by the optionee otherwise than by
will or the laws of descent and distribution or pursuant to a qualified
domestic relations order, as defined in the Code, and shall be exercisable
during this lifetime only by the optionee, his or her guardian or legal
representative, or the recipient thereof pursuant to a qualified domestic
relations order.
8. Acceleration of Vesting
(a) If Termination occurs within two years following a Change in Control
(as defined in Section 8(b) hereof), an Option shall automatically be vested
and immediately exercisable in full. In such event, notwithstanding the vesting
provisions of Section 7, an Option recipient, or in the case of his or her
death or adjudication of incompetency, his or her executors, administrators,
distributees, guardian, or legal representative, as the case may be, may, at
any time until the termination of such Option, purchase some or all of the
shares covered by such recipient's Options.
(b) For the purposes hereof, a change in control (a "Change in Control")
shall be deemed to occur:
(i) if any person within the meaning of Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended, other than the Corporation
or any of its subsidiaries or any employee benefit plan sponsored or
maintained by the Company or any subsidiary of the Company (including
any trustee of any such plan acting in his capacity as trustee), has
become the beneficial owner, within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, of 30 percent or more of the combined
voting power of the Corporation's then outstanding voting securities;
or
(ii) when a majority of the directors elected at any special or annual
meeting of stockholders are not individuals nominated by the
Corporation's incumbent Board or when individuals who are members of
the Board at any one time shall immediately thereafter cease to
constitute a majority of the Board; or
A-3
<PAGE>
(iii) the merger, consolidation or other business combination of the
Company (a "Transaction"), other than (A) a Transaction involving the
Company and one or more of its subsidiaries, or (B) a Transaction
immediately following which the stockholders of the Company immediately
prior to the Transaction continue to have a majority of the voting
power in the resulting entity and no person is the beneficial owner of
securities of the resulting entity representing more than 25 percent of
the voting power of the resulting entity; or
(iv) the approval by the stockholders of the Company of any plan of
complete liquidation of the Company or an agreement for the sale of all
or substantially all of the Company's assets other than the sale of all
or substantially all of the assets of the Company to a subsidiary of
the Company or to a person or persons who beneficially own, directly or
indirectly, at least 50 percent or more of the combined voting power of
the outstanding voting securities of the Company at the time of such
sale.
9. Adjustment Upon Changes in Capitalization
(a) If dividends payable in Common Stock during any fiscal year of the
Corporation exceed in the aggregate 5% of the Common Stock issued and
outstanding at the beginning of such fiscal year, or if there is during any
fiscal year of the Corporation one or more splits, subdivisions, or
combinations of shares of Common Stock resulting in an increase or decrease by
more than 5% of the shares outstanding at the beginning of the year, the number
of shares subject to Options to be granted thereafter to Non Employee Directors
pursuant to Section 5 shall be increased or decreased proportionately, as the
case may be, and the number of shares deliverable upon the exercise thereafter
of any Options theretofor granted shall be increased or decreased
proportionately, as the case may be, without change in the aggregate purchase
price. Common Stock dividends, splits, subdivisions, or combinations during any
fiscal year which do not exceed in the aggregate 5% of the Common Stock issued
and outstanding at the beginning of such year shall be ignored for purposes of
the Plan. All adjustments shall be made as of the day such action necessitating
such adjustment becomes effective.
(b) In case the Corporation is merged or consolidated with another
corporation, or in case all or substantially all of the property or stock of
the Corporation is acquired by another corporation, or in case of a
reorganization or liquidation of the Corporation, the Board, or the board of
directors of any corporation assuming the obligations of the Corporation
hereunder, shall either (i) make appropriate provisions for the protection of
any outstanding Options by the substitution on an equitable basis of
appropriate stock of the Corporation, or appropriate stock of the merged,
consolidated, or otherwise reorganized corporation or (ii) give written notice
to optionees that their Options, which will become immediately exercisable
notwithstanding any waiting period otherwise prescribed by the Board, must be
exercised within 30 days of the date of such notice or they will be terminated.
10. Miscellaneous Provisions
(a) Except as expressly provided for in the Plan, no Non Employee Director
or other person shall have any claim or right to be granted an Option under the
Plan.
(b) Nothing in the Plan or in any Option agreement shall confer any right
to continue as a director of the Corporation or as a member of a Board
Committee or interfere in any way with the right of the Corporation to remove
such option holder or not to nominate such option holder for election as a
director of the Corporation at any time.
(c) The Corporation shall not be obligated to deliver any shares of Common
Stock hereunder until there has been qualification under or compliance with
such state or federal laws, rules or regulations as the Corporation may deem
applicable.
A-4
<PAGE>
(d) Stock purchased pursuant to the exercise of an Option shall at the time
of purchase be paid in full as follows:
(i) in cash, or by check, bank draft or money order payable to the
order of the Company;
(ii) if the shares are traded on a national securities exchange,
through the delivery of irrevocable instructions to a broker to deliver
promptly to the Company an amount equal to the aggregate purchase
price; or
(iii) on such other terms and conditions as may be acceptable to the
Board (which may include payment in full or in part by the transfer of
shares owned by the Non Employee Director) and in accordance with
applicable laws;
provided, however, that any shares of Common Stock so delivered shall have been
beneficially owned by the optionee for a period of not less than six months
prior to the date of exercise. Upon receipt of payment and such documentation
as the Corporation may deem necessary to establish compliance with the
Securities Act of 1933, as amended, the Corporation shall, without stock
transfer tax to the optionee or other person entitled to exercise the Option,
deliver to the person exercising the Option a certificate or certificates for
such shares. It shall be a condition to the obligations of the Corporation to
issue or transfer shares of Common Stock upon exercise of an Option, that the
optionee (or any person entitled to act under Sections 7(c) and 7(e)) pay to
the Corporation, upon its demand, such amount, if any, as may be requested by
the Corporation for the purpose of satisfying any liability to withhold
federal, state, local or foreign income or other taxes. If the amount requested
is not paid, the Corporation may refuse to issue shares of Common Stock. Such
taxes may be paid in cash or by tender of the option holder or the withholding
by the Corporation of the number of shares of Common Stock whose fair market
value equals the amount required to be withheld.
(e) A recipient of Options shall have no rights as a stockholder with
respect to any shares issuable or transferable upon exercise thereof until the
date a stock certificate is issued to him for such shares. Except as otherwise
expressly provided in the Plan, no adjustment shall be made for dividends or
other rights for which the record date is prior to the date such stock
certificate is issued.
(f) The expenses of the Plan shall be borne by the Corporation.
(g) If an Option is exercised by the executors, administrators, legatees,
or distributees of the estate of a deceased optionee or by the guardian or
legal representative of an optionee, the Corporation shall be under no
obligation to issue stock thereunder unless and until the Corporation is
satisfied that the person or persons exercising the Option are the duly
appointed legal representatives of the optionee or of the deceased optionee's
estate or the proper legatees or distributees of such estate.
11. Amendment or Discontinuance
The Plan may be amended at any time and from time to time by the Board as
the Board shall deem advisable including, but not limited to, amendments
necessary to qualify for any exemption or to comply with applicable law or
regulations; provided, however, that except as provided in Section 9, the Board
may not, without further approval by the stockholders of the Corporation,
increase the maximum number of shares of Common Stock as to which Options may
be granted under the Plan, reduce the minimum Option exercise price described
in Section 6, extend the period during which Options may be granted or
exercised under the Plan or change the class of persons eligible to receive
Options under the Plan. No amendment of the Plan shall materially and adversely
affect any right of any holder of an Option with respect to any Option
theretofore granted without the written consent of the holder of such Option.
12. Termination
The Plan shall terminate upon the earlier to occur of (a) the adoption of
a resolution of the Board terminating the Plan, (b) April 5, 2005, and (c)
April 4, 1996 if the Plan has not been approved by the Corporation's
stockholders at the 1995 Annual Meeting.
A-5
<PAGE>
13. Effective Date of Plan
The Plan shall become effective as of April 5, 1995, provided that the
Corporation's stockholders shall have approved the Plan at the 1995 Annual
Meeting. The amended and restated Plan shall become effective as of June 22,
1999, provided that the Corporation's stockholders shall have approved the Plan
at the 1999 Annual Meeting. If the amended and restated Plan is not approved at
the 1999 Annual Meeting, the Plan prior to being amended and restated shall
remain in effect.
A-6
<PAGE>
PROXY
CELGENE CORPORATION
The undersigned hereby appoints John W. Jackson and Sol J. Barer, and each of
them, with power of substitution, to represent and to vote on behalf of the
undersigned all of the shares of Celgene Corporation (the "Company") which the
undersigned is entitled to vote at the Annual Meeting of Stockholders to be
held at the offices of Proskauer Rose LLP, 26th floor, 1585 Broadway, New York,
New York 10036 on Tuesday, June 22, 1999, at 1:00 p.m., local time, and at any
postponements or adjournments thereof, hereby revoking all proxies heretofore
given with respect to such stock, upon the following proposals more fully
described in the notice of and proxy statement for the meeting (receipt of
which is hereby acknowledged).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR (1), (2) AND (3)
(Please See Reverse Side)
<PAGE>
[X] Please mark your
votes as in this
example using
dark ink only.
1. ELECTION OF DIRECTORS
<TABLE>
<S> <C> <C> <C> <C>
FOR all WITHHOLD
nominees AUTHORITY
[ ] listed below [ ] to vote
(except as for all
marked to the nominees
contrary) listed
</TABLE>
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THAT NOMINEE'S NAME.
John W. Jackson, Sol J. Barer, Frank T. Cary, Richard C.E. Morgan, Walter L.
Robb, Lee J. Schroeder, Arthur Hull Hayes, Jr., Gilla Kaplan and Jack Bowman
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
2. PROPOSAL TO APPROVE THE AMENDMENT OF [ ] [ ] [ ]
THE 1995 NON-EMPLOYEE DIRECTORS'
INCENTIVE PLAN
3. PROPOSAL TO RATIFY THE APPOINTMENT OF [ ] [ ] [ ]
KPMG LLP AS THE INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS OF THE COMPANY FOR
THE FISCAL YEAR ENDING DECEMBER 31,
1999
</TABLE>
4. In their discretion, upon such other matters as may properly come before the
meeting
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ELECTION OF ALL
NOMINEES FOR DIRECTOR LISTED IN PROPOSAL 1 AND FOR PROPOSALS
2 AND 3.
<TABLE>
<S> <C> <C> <C> <C>
[ ] I will attend [ ] I will not attend
the meeting the meeting
</TABLE>
DATED: __________________________ , 1999
SIGNATURE ______________________________
NOTE: Please sign exactly as names appear on this proxy. Where shares are held
by joint tenants, both should sign. If signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign full corporate name by president or other authorized
person. If a partnership, please sign in partnership name by an authorized
person. Please mark, sign, date and return the proxy promptly using the
enclosed envelope.
