<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF
1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_]Preliminary Proxy Statement
[X]Definitive Proxy Statement
[_]Definitive Additional Materials
[_]Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Roberts Pharmaceutical Corporation
-----------------------------------------------------
(Name of Registrant as Specified in its Charter)
-----------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X]No fee required.
[_]Fee computed on table below per Exchange Act Rules 14a 6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
- -------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
- -------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed pursuant to
Exchange ActRule 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:
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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: ________________________________________
2) Form, Schedule or Registration Statement No.: __________________
3) Filing party: __________________________________________________
4) Date filed: ____________________________________________________
<PAGE>
PROXY STATEMENT
ROBERTS PHARMACEUTICAL CORPORATION
Meridian Center II
4 Industrial Way West
Eatontown, New Jersey 07724
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 21, 1997
----------------
To the Shareholders of
ROBERTS PHARMACEUTICAL CORPORATION:
The Annual Meeting of the Shareholders of ROBERTS PHARMACEUTICAL CORPORATION
(the "Company") will be held on Wednesday, May 21, 1997 at the Company's
headquarters, Meridian Center II, 4 Industrial Way West, Eatontown, New Jersey
07724, at 10:00 a.m., Eastern Daylight Savings Time, for the following
purposes:
1. To elect eight Directors to serve for the following year or until their
successors have been elected and qualify;
2. To transact such other business as may properly come before the meeting or
any adjournment thereof.
Holders of Common Stock of record at the close of business on April 8, 1997,
are entitled to notice of and to vote at the meeting.
ANTHONY A. RASCIO, ESQ.
VICE PRESIDENT AND SECRETARY
Eatontown, New Jersey
April 30, 1997
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. TO ENSURE YOUR REPRESENTATION
AT THE MEETING, HOWEVER, YOU ARE URGED TO SIGN AND DATE THE ACCOMPANYING PROXY
AND MAIL IT AT ONCE IN THE ENCLOSED ENVELOPE. PROMPT RESPONSE IS HELPFUL AND
YOUR COOPERATION WILL BE APPRECIATED.
<PAGE>
ROBERTS PHARMACEUTICAL CORPORATION
----------------
PROXY STATEMENT
----------------
GENERAL INFORMATION
This Proxy Statement is furnished to the holders of Common Stock, $.01 par
value ("Common Stock"), of Roberts Pharmaceutical Corporation (the "Company")
in connection with the solicitation of proxies for use at the annual meeting
of shareholders to be held on May 21, 1997, and at any adjournment thereof
(the "Annual Meeting"), pursuant to the accompanying Notice of Annual Meeting
of Shareholders. A form of proxy for use at the meeting is also enclosed. The
Company anticipates mailing this Proxy Statement to its shareholders on or
about April 30, 1997. The executive offices of the Company are located at
Meridian Center II, 4 Industrial Way West, Eatontown, New Jersey 07724.
Shareholders may revoke the authority granted by their execution of proxies
at any time before the effective exercise of proxies by filing written notice
of such revocation with the Secretary of the Annual Meeting. Presence at the
Annual Meeting does not of itself revoke the proxy. All shares represented by
executed and unrevoked proxies will be voted in accordance with the
instructions therein. Proxies submitted without indication will be voted FOR
the nominees for Director named herein. Management is not aware, at the date
hereof, of any matters to be presented at the Annual Meeting other than the
matters described hereinabove, but, if any other matter is properly presented,
the persons named in the proxy will vote thereon according to their best
judgment.
The cost of preparing, assembling and mailing the proxy material is to be
borne by the Company. Proxies for use at the Annual Meeting are being
solicited by the Board of Directors of the Company (the "Board of Directors").
It is not anticipated that any compensation will be paid for soliciting
proxies, and the Company does not intend to employ specially engaged personnel
in the solicitation of proxies. It is contemplated that proxies will be
solicited principally through the mail. Further, Directors, officers and
employees of the Company may also, without additional compensation, solicit
proxies, personally or by mail, telephone, telegraph, facsimile transmission
or special letter.
VOTING SECURITIES
The voting securities entitled to vote at the Annual Meeting consist of
shares of Common Stock of the Company with each share of Common Stock
entitling its owner to one vote on an equal basis. The number of outstanding
shares of Common Stock on April 8, 1997 was 27,281,481. Only shareholders of
record on the books of the Company at the close of business on that date will
be entitled to vote at the Annual Meeting. The holders of a majority of the
outstanding shares of Common Stock, present in person or by proxy and entitled
to vote, will constitute a quorum at the Annual Meeting for purposes of
electing Directors. Abstentions and broker non-votes will be counted for
purposes of determining whether a quorum is present at the Annual Meeting.
Directors shall be elected by a plurality of the votes cast at the Annual
Meeting by the holders of shares of Common Stock present in person or
represented by proxy and entitled to vote. The proxy card provides space for a
shareholder to withhold votes for any or all nominees for the Board of
Directors.
All votes will be tabulated by the inspector of election appointed for the
Annual Meeting who will separately tabulate affirmative votes, negative votes,
authority withheld for any nominee for Director, abstentions and broker non-
votes. Authority withheld will be counted toward the tabulation of total votes
cast in the election for Directors and will have the same effect as a negative
vote. Under the New Jersey Business Corporation Act and under the Company's
By-Laws, any proxy submitted and containing an abstention or a broker non-vote
will not be counted as a vote cast on any matter to which it relates.
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth information as of April 8, 1997, with respect
to each person who is known by the Company to be the beneficial owner, as
defined in Rule 13d-3 ("Rule 13d-3") of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), of more than five percent (5%) of the
Company's Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT
NAME AND ADDRESS OF BENEFICIAL OF
OF BENEFICIAL OWNER OWNERSHIP(1) CLASS
------------------- ----------------- -------
<S> <C> <C>
Yamanouchi Group Holding Inc.(2)............... 5,048,500 18.5%
Robert A. Vukovich, Ph.D.(3)................... 2,119,161(4)(5)(6) 7.6%
</TABLE>
- --------
(1) Except as otherwise indicated, all of the shares of the Company's Common
Stock are held beneficially and of record.
(2) The address of the principal office of such shareholder is c/o The
Corporation Trust Company, Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801. Yamanouchi Group Holding Inc. ("Yamanouchi
Group Holding") is a wholly owned subsidiary of Yamanouchi Pharmaceutical
Co., Ltd. ("Yamanouchi").
(3) Dr. Vukovich is Chairman of the Board of Directors, President and Chief
Executive Officer of the Company and maintains a business address at the
Company's offices at Meridian Center II, 4 Industrial Way West, Eatontown,
New Jersey 07724.
(4) Includes 430,000 shares of Common Stock subject to currently exercisable
options granted to Dr. Vukovich pursuant to the Company's stock option
plans.
(5) Includes 6,590 shares of Common Stock held by Dr. Vukovich's wife, with
respect to which Dr. Vukovich disclaims beneficial ownership.
(6) Includes 45,000 shares of Common Stock subject to currently exercisable
stock options granted to Dr. Vukovich's wife, with respect to which Dr.
Vukovich disclaims beneficial ownership.
2
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information as of April 8, 1997, with respect
to the beneficial ownership (as defined in Rule 13d-3 of the Exchange Act) of
the Company's Common Stock by each Director or nominee for Director, each of
the Named Officers (as defined in the section captioned "Executive
Compensation") and by all Directors, nominees for Director and Executive
Officers of the Company as a group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME OF BENEFICIAL HOLDER OWNERSHIP(1) CLASS
- ------------------------- ----------------- ----------
<S> <C> <C>
Robert A. Vukovich, Ph.D.................. 2,119,161 (2)(3)(4) 7.6%
Robert W. Loy............................. 84,500 (5) (6)
John T. Spitznagel........................ 19,000 (7) (6)
Peter M. Rogalin.......................... 18,000 (8) (6)
Anthony A. Rascio, Esq. .................. 60,465 (9) (6)
Takao Miyamoto............................ (10)
Akihiko Matsubara......................... (10)
Digby W. Barrios.......................... 24,000 (11) (6)
Zola P. Horovitz, Ph.D.................... 5,000 (12) (6)
Joseph N. Noonburg........................ --
All Directors, Nominees for Director and
Executive Officers as a Group (10 per-
sons).................................... 2,330,126 (2)(3)(4)(5) 8.3%
(7)(8)(9)(11)
</TABLE>
- --------
(1) Except as otherwise indicated, all of the shares of the Company's Common
Stock are held beneficially and of record.
(2) Includes 430,000 shares of Common Stock subject to currently exercisable
options granted to Dr. Vukovich pursuant to the Company's Incentive Stock
Option Plan, Restricted Stock Option Plan and Equity Incentive Plan.
(3) Includes 6,590 shares of Common Stock held by Dr. Vukovich's wife, with
respect to which Dr. Vukovich disclaims beneficial ownership.
(4) Includes 45,000 shares of Common Stock subject to currently exercisable
stock options granted to Dr. Vukovich's wife, with respect to which Dr.
Vukovich disclaims beneficial ownership.
(5) Includes 83,500 shares of Common Stock subject to currently exercisable
options granted pursuant to the Incentive Stock Option Plan and Equity
Incentive Plan.
(6) Shares beneficially owned do not exceed 1% of the Company's outstanding
shares of Common Stock.
(7) Includes 18,500 shares of Common Stock subject to currently exercisable
options granted pursuant to the Incentive Stock Option Plan and Equity
Incentive Plan.
(8) Includes 16,500 shares of Common Stock subject to currently exercisable
options granted pursuant to the Incentive Stock Option Plan and Equity
Incentive Plan.
(9) Includes 6,200 shares of Common Stock subject to currently exercisable
options granted pursuant to the Incentive Stock Option Plan.
(10) Yamanouchi Group Holding, a principal shareholder of the Company, is a
wholly owned subsidiary of Yamanouchi. Yamanouchi Group Holding holds
5,048,500 shares of the Company's Common Stock. Each of Mr. Miyamoto and
Mr. Matsubara is a Director of the Company designated by Yamanouchi to
serve in that capacity and currently serves as an executive of
Yamanouchi. Yamanouchi has decided not to designate any member of the
Company's Board of Directors for election at the Annual Meeting.
(11) Includes 21,000 shares of Common Stock subject to currently exercisable
options granted pursuant to the Restricted Stock Option Plan.
(12) Includes 5,000 shares of Common Stock subject to currently exercisable
options granted pursuant to the Restricted Stock Option Plan.
3
<PAGE>
AGREEMENTS WITH YAMANOUCHI
Yamanouchi, through a subsidiary, owns 5,048,500 shares of the Company's
Common Stock. Of such shares, 4,000,000 were acquired in March 1992 for an
aggregate purchase price of $95,352,000 pursuant to the terms of a stock
purchase agreement (the "Stock Purchase Agreement") entered into by the
Company and Yamanouchi. Under the terms of the Stock Purchase Agreement,
Yamanouchi has certain preemptive rights to acquire securities issued by the
Company for so long as Yamanouchi owns at least 15% of the Company's
outstanding Common Stock on a fully diluted basis, and the Company is
prohibited from taking any action to prevent Yamanouchi from directly or
indirectly acquiring all of the remaining shares of the Company's outstanding
Common Stock, provided that any such acquisition is made in accordance with
the terms of the Stock Purchase Agreement. Yamanouchi is under no obligation
to acquire additional shares of Common Stock. For so long as Yamanouchi owns
10% of the outstanding Common Stock on a fully diluted basis, Yamanouchi has
granted the Company a right of first refusal with respect to any shares of
Common Stock which it proposes to sell, subject to certain specified
exceptions.
The Company has granted Yamanouchi certain demand and piggyback registration
rights with respect to shares of Common Stock owned by it. Under the Stock
Purchase Agreement, the Company is required to discuss with and obtain the
views of Yamanouchi with respect to certain specified transactions, including
equity offerings; incurring a material amount of debt; a material change in
the Company's capital structure; and the granting of any material license to a
third party. If any such proposed transaction involves a financing, the
Company has agreed to review with Yamanouchi its financing needs prior to
engaging in such transaction and to give Yamanouchi a reasonable opportunity
to propose and negotiate a financing alternative for the Company, though
Yamanouchi is under no obligation to do so. Yamanouchi is entitled to
designate two members of the Company's Board of Directors for so long as it
owns at least 18% of the outstanding shares of the Company's Common Stock on a
fully diluted basis (or one Director for so long as it owns at least 10% of
such Common Stock). Pursuant to a shareholder agreement between Yamanouchi and
Dr. Vukovich (the "Shareholder Agreement") entered into at the same time as
the Stock Purchase Agreement, Dr. Vukovich has agreed to vote all shares of
Common Stock held by him in favor of the election of any such designees.
Yamanouchi has decided not to designate any member of the Company's Board of
Directors for election at the Annual Meeting. Although Yamanouchi will not
have a representative serve on the Company's Board of Directors for the
following year, the Stock Purchase Agreement permits Yamanouchi to designate a
representative to attend any or all meetings of the Board of Directors during
such period.
Under the Shareholder Agreement, Dr. Vukovich has granted Yamanouchi certain
rights of first refusal with respect to shares of the Company's outstanding
Common Stock that he proposes to sell. Moreover, Dr. Vukovich has agreed in
the Shareholder Agreement to support as a shareholder and officer of the
Company any fair offer by Yamanouchi to acquire the Company or its outstanding
Common Stock made after December 10, 1994 and before December 31, 1998.
Yamanouchi is under no obligation to acquire the Company or any shares of
Common Stock of the Company.
ELECTION OF DIRECTORS
In accordance with the Company's By-Laws which provide that the Board of
Directors shall consist of not less than three nor more than fifteen members,
the Board of Directors has fixed the number of Directors at eight. Each of the
individuals named below has been nominated for election as a Director by the
Board of Directors. Except for Mr. Noonburg, each such individual named below
is currently a member of the Board of Directors of the Company.
Officers serve at the discretion of the Board of Directors. The Company has
entered into employment agreements with certain officers. See "Employment
Agreements."
It is the intention of the persons named in the accompanying proxy to vote,
unless otherwise instructed, in favor of the election of the eight nominees
named hereinafter as Directors of the Company.
4
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES FOR DIRECTOR.
If any of the nominees should be unavailable for election, the proxies will
be voted for the election of such other person or persons as shall be
determined by the persons named in the proxy in accordance with their
judgment. The Company is not aware of any reason why any of the nominees
should become unavailable for election, or if elected, should be unable to
serve as a Director.
There are no family relationships among the current Directors, Executive
Officers or persons nominated by the Company to become Directors.
Nominees
The nominees, their ages and current principal occupations or employment,
are as follows:
<TABLE>
<CAPTION>
Principal Occupation
Nominee Age Or Employment
------- --- --------------------
<C> <C> <S>
Robert A. Vukovich, Ph.D. ....... 53 Chairman of the Board of Directors,
President and Chief Executive Officer of
Roberts Pharmaceutical Corporation
Robert W. Loy.................... 59 Executive Vice President--Operations and
New Business Development and a Director
of Roberts Pharmaceutical Corporation
John T. Spitznagel............... 55 Executive Vice President--Worldwide
Sales and Marketing and a Director of
Roberts Pharmaceutical Corporation
Peter M. Rogalin................. 54 Vice President, Treasurer, Chief
Financial Officer and a Director of
Roberts Pharmaceutical Corporation
Anthony A. Rascio, Esq. ......... 54 Vice President, Secretary, General
Counsel and a Director of Roberts
Pharmaceutical Corporation
Digby W. Barrios................. 59 Self-employed Consultant and a Director
of Roberts Pharmaceutical Corporation
Zola P. Horovitz, Ph.D. ......... 62 Self-employed Consultant and a Director
of Roberts Pharmaceutical Corporation
Joseph N. Noonburg............... 61 Self-employed Consultant
</TABLE>
Each Director will hold office until the next Annual Meeting of Shareholders
or until his successor is elected and qualifies. Dr. Vukovich serves as a
Director of Cypros Pharmaceutical Corporation and Biotransplant, Inc. Mr.
Barrios serves as a Director of Sepracor, Inc. and Cypros Pharmaceutical
Corporation. Dr. Horovitz serves as a Director of BioCryst Pharmaceutical,
Magainin Pharmaceutical, Synaptic Pharmaceutical, Avigen, Inc., Procept, Inc.,
Diacrin, Inc. and Clinicor. None of the other nominees holds any directorships
in companies with a class of securities registered pursuant to Section 12 of
the Exchange Act or subject to the requirements of Section 15(d) of the
Exchange Act or any company registered as an investment company under the
Investment Company Act of 1940, as amended.
Robert A. Vukovich, Ph.D., has served as Chairman of the Board and President
of the Company since its inception in 1983. From 1979 to 1983, he served as
Director of the Division of Developmental Therapeutics for Revlon Health Care
Group. From 1970 to 1974, Dr. Vukovich was employed in various capacities by
the Squibb Institute and served as Director of Clinical Pharmacology for that
organization from 1974 to 1979. Prior to 1970, Dr. Vukovich was a clinical
research scientist for The Warner Lambert Research Institute. Dr. Vukovich is
a graduate of Jefferson Medical College, Philadelphia, Pennsylvania, with
training in pharmacology and pathology.
5
<PAGE>
ROBERT W. LOY assumed the newly created position of Executive Vice
President--Operations and New Business Development in March 1996. Mr. Loy
served as Chief Operating Officer of the Company from August 1992 to March
1996 and as a Vice President of the Company from December 1992 to March 1996.
Mr. Loy also has served as a Director of the Company since October 1993. From
1963 to 1990, he held various positions at Squibb Corporation, including that
of Vice President, Worldwide Operations for the Squibb Derm Division. From
1990 to 1992, Mr. Loy served as Vice President, International Sales and
Marketing, with Hollister, Inc. Mr. Loy received his undergraduate degree from
Old Dominion University and attended Villanova University Graduate School.
JOHN T. SPITZNAGEL has served as Executive Vice President--Worldwide Sales
and Marketing since March 1996. In July 1996, the Company's Board of Directors
appointed him as an officer of the Company and also as a Director to fill a
vacancy which existed on the Board. Mr. Spitznagel served as President of Reed
and Carnrick Pharmaceuticals from September 1990 through July 1995. In 1989
and 1990, Mr. Spitznagel served as Chief Executive Officer of BioCryst
Pharmaceuticals, Inc. From 1979 through 1989, Mr. Spitznagel held various
positions with Wyeth-Ayerst Laboratories, advancing from Marketing Director to
Senior Vice President of Marketing and Sales. Mr. Spitznagel was employed by
Roche Laboratories from 1971 through 1979 and by Warner-Chilcott Laboratories
from 1966 through 1971 in various sales, marketing and management positions.
Mr. Spitznagel received his undergraduate degree from Rider University and an
M.B.A. from Fairleigh Dickinson University.
PETER M. ROGALIN has served as Vice President, Treasurer and Chief Financial
Officer and a Director of the Company since February 5, 1996. From 1978 to
1992, Mr. Rogalin was employed in various executive capacities by Sterling
Winthrop, Inc. (formerly Sterling Drug, Inc.), including Assistant Treasurer
from 1987 through 1992. From 1993 through July 1994, Mr. Rogalin was a
Principal in RK Associates, a consulting firm with specific expertise in
financial and business operations and systems for small and medium sized
companies. From July 1994 through January 1996, Mr. Rogalin served as Vice
President--Finance and Chief Financial Officer of ImClone Systems, Inc., a
biopharmaceutical company engaged in research and development of therapeutic
products for the treatment of cancer and cancer related disorders. Mr.
Rogalin, a Certified Public Accountant, received his undergraduate degree from
St. Lawrence University and an M.B.A. from the Graduate School of Business,
New York University.
ANTHONY A. RASCIO, ESQ., has served as Vice President and General Counsel
and a Director of the Company since June 1987. In addition, he served as
Assistant Secretary of the Company from June 1987 to June 1992, at which time
he assumed the position of Secretary of the Company. From January 1987 to June
1987, Mr. Rascio was Director, Legal Affairs for the Company. During 1986, Mr.
Rascio was engaged in the private practice of law. From 1984 through 1985, Mr.
Rascio was employed as Director, International Operations by Jeffrey Martin,
Inc., a marketer of cosmetics and proprietary medicines. Mr. Rascio served as
Legal Director, International Pharmaceutical Products Division for Schering-
Plough Corporation from 1980 through 1984 and held various legal positions
with that company from 1971 to 1980. Mr. Rascio received undergraduate and law
degrees from Fordham University.
DIGBY W. BARRIOS served as the President and Chief Executive Officer of
Boehringer Ingelheim Corporation from 1988 to 1992 and as an executive of that
company in various positions from 1983 to 1988. Since 1992, Mr. Barrios has
been self-employed as a consultant. Mr. Barrios also serves as a Director or
trustee of several academic institutions and pharmaceutical organizations. He
received his undergraduate degree from Loyola University. Mr. Barrios has
served as a Director of the Company since March 1994.
ZOLA P. HOROVITZ, PH.D. has been self-employed as a consultant in the
biotechnology and pharmaceutical industries from 1994 through the present.
From 1959 to 1994, Dr. Horovitz held various positions at Bristol-Myers Squibb
Corporation, including that of Vice President, Business Development and
Planning. Dr. Horovitz was appointed as a Director of the Company in October,
1996, to fill the vacancy created by the death of W. Robert Fowler. Dr.
Horovitz received his undergraduate degree, masters degree and Ph.D. from the
University of Pittsburgh.
6
<PAGE>
JOSEPH N. NOONBURG has been self-employed as a consultant in the
pharmaceutical industry since 1995. From 1961 to 1995, Mr. Noonburg was
employed in various executive capacities with Reed and Carnrick
Pharmaceuticals, a division of Block Drug Company, including as Senior Vice
President, Sales. Mr. Noonburg received his undergraduate degree from Rutgers
University.
MEETINGS OF THE BOARD OF DIRECTORS; COMMITTEES
During the fiscal year ended December 31, 1996, the Board of Directors held
five (5) regular meetings. During fiscal 1996, each incumbent member of the
Company's Board of Directors attended at least 75% of the meetings of the
Board of Directors and each of the committees on which he served which were
held during the period such person served as a Director and, if applicable, a
committee member.
The Board of Directors has two standing committees: the Audit Committee and
the Compensation Committee.
AUDIT COMMITTEE
The current members of the Audit Committee of the Board of Directors (the
"Audit Committee") are Mr. Barrios and Dr. Horovitz. The functions of the
Audit Committee are, among other things, to recommend to the Board of
Directors, the auditors to be engaged as the Company's independent public
accountants; to review the proposed plan and scope for the annual audit and
the results of such audit when completed; to review the services rendered by
the auditors and the fees charged for such services; to determine the effect,
if any, on the independent public accountants' independence in the performance
of any non-audit services; and to review the plan, scope and results of the
Company's internal audit operations. During the fiscal year ended December 31,
1996, the Audit Committee held four (4) meetings.
COMPENSATION COMMITTEE
The current members of the Compensation Committee of the Board of Directors
(the "Compensation Committee") are Mr. Barrios and Dr. Horovitz. The
Compensation Committee determines the compensation of officers and administers
the Management Incentive Compensation Plan, the Restricted Stock Option Plan
(the "Restricted Option Plan"), the 1996 Equity Incentive Plan (the "Equity
Incentive Plan") and the Employee Stock Purchase Plan (the "Stock Purchase
Plan"). With respect to the Restricted Option Plan and the Equity Incentive
Plan (collectively, the "Option Plans"), the administration of these Option
Plans involves the determination of persons to whom options are granted, or
awards are made, and the terms of such grants or awards, including the number
of shares subject to options or awards, the type of grants or awards, and the
exercise price thereof, subject to the express provisions set forth in each of
the Option Plans. In addition, the Compensation Committee administers the
Company's Money Purchase Pension Plan (the "Money Purchase Plan"), the
Company's Employees Savings and Protection Plan (the "401(k) Plan") and the
Company's Incentive Stock Option Plan (the "Incentive Option Plan") which has
terminated. Options granted under the Incentive Option Plan prior to its
termination remain outstanding and exercisable pursuant to their terms. During
the fiscal year ended December 31, 1996, the Compensation Committee held five
(5) meetings and acted by unanimous written consent on four (4) occasions.
7
<PAGE>
CORPORATE PERFORMANCE
The graph below compares the cumulative total shareholder return on the
Common Stock of the Company for the five years ended December 31, 1996, with
the cumulative total return on two broad market indices over the same period
(assuming an investment of $100 in the Company's Common Stock and in each of
the indices on December 31, 1991, and reinvestment of all dividends in the two
broad market indices).
[CHART APPEARS HERE]
12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
Roberts
Pharmaceutical
Corporation 100 70 124 99 55 35
NASDAQ Stock
Market (US
Companies) 100 116 134 131 185 227
NASDAQ
Pharmaceutical
Stocks 100 83 74 58 102 102
Average Annual Compound Growth Rates
- ------------------------------------
Roberts Pharmaceutical Corporation -18.9%
NASDAQ Stock Market (US Companies) 17.8%
NASDAQ Pharmaceutical Stocks 0.5%
8
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and long-
term compensation for services in all capacities to the Company and its
subsidiaries for the fiscal years ended December 31, 1996, 1995 and 1994, of
the Company's Chief Executive Officer and the other Executive Officers of the
Company who earned salary and bonuses in fiscal 1996 in excess of $100,000
(collectively, the "Named Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION LONG TERM COMPENSATION
----------------- --------------------------
SECURITIES
UNDERLYING ALL OTHER
SALARY BONUS OPTIONS COMPENSATION
NAME & PRINCIPAL POSITION YEAR ($)(1) ($)(2) /SARS (#) ($)(3)(4)
- ------------------------- ---- -------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Robert A. Vukovich,
Ph.D. .................. 1996 $540,000 $ -- 790,000(7) $7,500
President and Chief 1995 452,770 -- -- 7,500
Executive Officer 1994 469,038 600,000 200,000 7,500
Robert W. Loy............ 1996 202,071 -- 136,000(8) 7,500
Executive Vice President 1995 182,196 -- 81,000(9) 7,500
1994 177,458 75,000 65,000(10) 7,500
John T. Spitznagel (5)... 1996 149,715 -- 115,000(11) 6,750
Executive Vice President
Peter M. Rogalin (6)..... 1996 155,677 -- 115,000(12) 7,500
Vice President, Trea-
surer and
Chief Financial Officer
Anthony A. Rascio, Esq. . 1996 148,069 -- 17,000(13) 7,442
Vice President, Secre-
tary and 1995 131,030 -- 7,000(9) 6,698
General Counsel 1994 131,100 5,000 7,000(10) 6,705
</TABLE>
- --------
(1) Includes amounts earned but deferred at the election of the Named
Officers under the Company's 401(k) Plan. See "Employees Savings and
Protection Plan."
(2) Represents amounts paid to the Named Officers pursuant to the Company's
Management Incentive Compensation Plan. See "Compensation Committee
Report on Executive Compensation."
(3) Includes amounts to be contributed by the Company under the 401(k) Plan.
Amounts to be contributed by the Company to the accounts of the Named
Officers for fiscal 1996 are as follows: Dr. Vukovich--$4,500; Mr. Loy--
$4,500; Mr. Spitznagel--$3,750; Mr. Rogalin--$4,500; and Mr. Rascio--
$4,442.
(4) Includes amounts to be contributed by the Company under the Money
Purchase Plan. Amounts to be contributed by the Company to the accounts
of the Named Officers for fiscal 1996 are as follows: Dr. Vukovich--
$3,000; Mr. Loy--$3,000; Mr. Spitznagel--$3,000; Mr. Rogalin--$3,000; and
Mr. Rascio --$3,000.
(5) Mr. Spitznagel joined the Company in March, 1996.
(6) Mr. Rogalin joined the Company in February, 1996.
(7) Includes 350,000 shares of Common Stock underlying options and 150,000
Stock Appreciation Rights ("SARs") granted during the fiscal year ended
December 31, 1996. Includes also 290,000 shares of Common Stock
underlying options granted during the fiscal years ended December 31,
1993 and December 31, 1994 which were repriced by the Company in
December, 1996. See "Report on Option Repricing" and "Compensation
Committee Report on Executive Compensation."
(8) Includes 25,000 shares of Common Stock underlying options and 30,000 SARs
granted during the fiscal year ended December 31, 1996. Includes also
81,000 shares of Common Stock underlying options granted during the
fiscal years ended December 31, 1992 through December 31, 1994 which were
repriced by the Company in December, 1996. See "Report on Option
Repricing" and "Compensation Committee Report on Executive Compensation."
9
<PAGE>
(9) Includes 81,000 and 7,000 shares of Common Stock underlying options
granted during the fiscal years ended December 31, 1992 through December
31, 1994 to Mr. Loy and Mr. Rascio, respectively; such options were
repriced by the Company during the fiscal year ended December 31, 1995.
(10) Includes 15,000 and 2,000 shares of Common Stock underlying options
granted during the fiscal year ended December 31, 1993 to Mr. Loy and Mr.
Rascio, respectively; such options were repriced by the Company during
the fiscal year ended December 31, 1994.
(11) Includes 55,000 shares of Common Stock underlying options and 30,000 SARs
granted during the fiscal year ended December 31, 1996. Includes also
30,000 shares of Common Stock underlying options granted in 1996 which
were repriced by the Company in December, 1996. See "Report on Option
Repricing" and "Compensation Committee Report on Executive Compensation."
(12) Includes 55,000 shares of Common Stock underlying options and 30,000 SARs
granted during the fiscal year ended December 31, 1996. Includes also
30,000 shares of Common Stock underlying options granted in 1996 which
were repriced by the Company in December, 1996. See "Report on Option
Repricing" and "Compensation Committee Report on Executive Compensation."
(13) Includes 5,000 shares of Common Stock underlying options granted in 1996
and repriced in December, 1996. Includes also 7,000 shares of Common
Stock underlying options granted during the years December 31, 1992
through December 31, 1994 which were repriced by the Company in December,
1996. See "Report on Option Repricing."
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with each of Dr.
Vukovich, Mr. Loy, Mr. Spitznagel, Mr. Rogalin and Mr. Rascio. The employment
agreements with Dr. Vukovich, Mr. Loy, Mr. Spitznagel, Mr. Rogalin and Mr.
Rascio, provide for base minimum salaries of $540,000, $186,500, $185,000,
$175,000 and $135,200, respectively. In addition, the agreements entitle each
of such officers to participate in any incentive compensation plan offered to
the Company's senior level management and to receive all vacation and other
benefits, including insurance, provided to employees of the Company.
Under the terms of the employment agreements with Dr. Vukovich, Mr. Loy and
Mr. Rascio, in the event that the employment of any such officer is terminated
by the Company other than for the officer's willful misconduct, the officer is
entitled to receive all base compensation at the annual rate of his base
compensation at the time of termination for three years after the termination
(five years after termination in the case of Dr. Vukovich) and to additional
payments equal to three times the officer's average annual bonus and incentive
compensation for the period commencing July 1, 1988 and ending upon
termination of the employment agreement and to three times any payment made by
the Company during the fiscal year prior to termination to the 401(k) Plan
and/or Money Purchase Plan on behalf of the officer (five times the average
annual bonus and incentive compensation received during such period by Dr.
Vukovich and five times any payment made by the Company during the fiscal year
prior to termination to the 401(k) Plan and/or Money Purchase Plan on behalf
of Dr. Vukovich) (all such payments made to an officer in connection with the
termination of employment are referred to herein collectively as "Severance
Compensation"). The Severance Compensation shall be paid to the officer in the
same manner and on the same dates as the officer would have received such
compensation had the termination of the employment agreement not occurred.
Under the terms of the employment agreements with Dr. Vukovich, Mr. Loy and
Mr. Rascio, in the event that the employment of any such officer is terminated
by the Company in connection with a "change in control" (as such term is
defined in such employment agreements) of the Company, the officer is entitled
to receive the full amount of the Severance Compensation. However, if, after
giving the Company six months notice, such officer terminates his employment
with the Company in connection with a change in control of the Company, the
officer shall be entitled to receive 75% of the Severance Compensation (100%
of the Severance Compensation in the case of Dr. Vukovich).
10
<PAGE>
Under the terms of the employment agreements with Mr. Spitznagel and Mr.
Rogalin, in the event that the employment of either such officer is terminated
by the Company in connection with a "change in control" (as such term is
defined in such employment agreements) of the Company, the officer is entitled
to receive 100% of the base compensation which such officer is receiving on
the date of termination of the employment agreement for a period of two (2)
years following the termination date.
The Internal Revenue Code of 1986, as amended (the "Code"), imposes an
excise tax on and limits the Company's deduction of payments to terminated
employees following a change in control if the payments meet certain
requirements and exceed the limit set forth in the Code. Generally, this limit
is equal to three times the employee's average annual compensation for the
five taxable years preceding the year in which the change of control occurs.
The employment agreements with Dr. Vukovich, Mr. Loy and Mr. Rascio provide
that the Company shall pay any such excise taxes assessed against the officers
in connection with any Severance Compensation payments made or benefits
conferred under the employment agreements, including, in connection with a
change in control of the Company.
In the event of termination of an officer's employment with the Company for
any reason, each of the employment agreements provides that such officer shall
have the right to elect, during a period of seven months from the date of
termination, to exercise all options previously granted to the officer under
all stock option plans then adopted and maintained by the Company, whether or
not such options would then be exercisable. In the event of termination for
any reason by an officer, each of the employment agreements prohibit such
officer from engaging in any activities in direct competition with the Company
for a two year period. Under the terms of the employment agreements with Dr.
Vukovich, Mr. Loy and Mr. Rascio, in the event of the "disability" (as such
term is defined in each of the employment agreements) of any such officer,
such officer shall be entitled to receive the full Severance Compensation from
the Company. The current terms of each of the employment agreements, which are
automatically renewed for successive one year periods upon their expiration,
expire as follows: Dr. Vukovich--July 2001; Mr. Loy--December 1997; Mr.
Rascio--December 1997; Mr. Spitznagel--November 1998; and Mr. Rogalin--
November 1998.
EMPLOYEES SAVINGS AND PROTECTION PLAN
All employees who have completed six months of service with the Company and
have attained age 20-1/2 are eligible to participate in the Company's 401(k)
Plan. The 401(k) Plan is intended to qualify under Section 401 of the Code.
The 401(k) Plan enables electing employees to save up to 20% of their pre-tax
compensation, subject to a dollar limit which is set by law, through
contributions to the 401(k) Plan. The Company may, but is not obligated to,
make matching contributions to the 401(k) Plan up to a limit of 3% of a
participant's compensation. The total of employee and Company contributions
under the 401(k) Plan for fiscal 1996 will be $906,732 of which the Company
will contribute $257,377. See the Summary Compensation Table for amounts to be
contributed by the Company under the 401(k) Plan to the accounts of the Named
Officers.
MONEY PURCHASE PENSION PLAN
The Company has adopted the Money Purchase Plan. All full-time employees who
have completed one year of service with the Company and have attained age 20-
1/2 are eligible to participate in the Money Purchase Plan (the "Eligible
Participants"). For the 1996 fiscal year, the Company will contribute an
aggregate amount of $256,067 under the Money Purchase Plan, which will be
distributed to the accounts of the Company's employees who were Eligible
Participants as of December 31, 1996 pursuant to an allocation percentage
equal to 2% of each Eligible Participant's 1996 compensation up to $150,000.
Contributions to the Money Purchase Plan by the Company, including the
aggregate amount, if any, and the percentage of the annual compensation of
Eligible Participants to be contributed to their accounts, are determined by
the Compensation Committee subject to review by the Company's Board of
Directors. An Eligible Participant's rights in the funds in his or her Money
Purchase Plan account will vest 20% per year commencing after three years of
service with the Company. Full vesting occurs after seven years of service
with the Company. See the Summary Compensation Table for amounts to be
contributed by the Company under the Money Purchase Plan to the accounts of
the Named Officers for fiscal 1996.
11
<PAGE>
RESTRICTED STOCK OPTION PLAN
The Restricted Option Plan is administered by the Compensation Committee
which may grant options to purchase Common Stock to selected employees,
consultants and Directors. Options granted under the Restricted Option Plan
are nontransferable. The Compensation Committee has the discretion to
establish the option exercise price, and the option exercise price may be less
than the fair market value of the Common Stock at the time of the grant of the
option. Options granted under the Restricted Option Plan may be exercised by
payment of the exercise price in cash or such other form of consideration as
may be deemed acceptable by the Compensation Committee. Shares issued pursuant
to the exercise of options under the Restricted Option Plan may be subject to
restrictions against disposition and an obligation of resale to the Company at
the original acquisition price. Such restrictions and obligations lapse as
determined by the Compensation Committee or as specified in the Restricted
Option Plan. The Restricted Option Plan provides for the lapse of restrictions
against disposition and the obligations of resale in the event of, among other
things, the shareholder's death, disability or retirement.
EMPLOYEE STOCK PURCHASE PLAN
The Stock Purchase Plan approved by the Board and the shareholders of the
Company in 1996, was implemented by the Company effective as of April 1, 1997.
Under the Stock Purchase Plan, eligible employees may use salary deductions to
invest in the Company's Common Stock pursuant to a plan which is intended to
qualify as an "employee stock purchase plan" within the meaning of section 423
of the Code. Each eligible employee who elects to participate in the Stock
Purchase Plan shall be able to designate from 1% to 10% of the eligible
employee's compensation, which shall automatically be deducted from the
employee's paycheck, to purchase shares of the Company's Common Stock;
provided, that no employee participant may purchase in a particular plan year
under the Stock Purchase Plan, shares of Common Stock with a fair market value
more than $25,000.
The Stock Purchase Plan is administered by the Compensation Committee.
500,000 shares of the Company's Common Stock have been reserved for issuance
under the Stock Purchase Plan. The Stock Purchase Plan shall terminate when
all shares of Common Stock reserved for issuance are issued, or at any other
time at the discretion of the Board of Directors. As of April 8, 1997, no
shares of the Company's Common Stock have been issued under the Stock Purchase
Plan.
EQUITY INCENTIVE PLAN
The Equity Incentive Plan is administered by the Compensation Committee. The
Equity Incentive Plan authorizes the Compensation Committee to grant (i)
"incentive stock options" within the meaning of section 422 of the Code, (ii)
non-qualified stock options, (iii) SARs, (iv) restricted stock grants, (v)
deferred stock awards, and (vi) other stock based awards to employees of the
Company and its subsidiaries and other persons and entities who, in the
opinion of the Compensation Committee, are in a position to make a significant
contribution to the success of the Company and its subsidiaries. Awards may be
made singly, in combination or in tandem.
The Compensation Committee shall determine (i) the recipient of awards under
the Equity Incentive Plan, (ii) the times at which awards will be made, (iii)
the size and type of awards, and (iv) the terms, conditions, limitations and
restrictions of awards. The Equity Incentive Plan will terminate on May 21,
2006, unless earlier terminated by the Board.
INCENTIVE STOCK OPTION PLAN
The Incentive Option Plan was terminated before its scheduled expiration
date in connection with the approval and adoption of the Equity Incentive
Plan. However, options granted under the Incentive Option Plan which were
outstanding on the date of such termination of the Incentive Option Plan, will
remain outstanding and be exercisable pursuant to their respective terms. As
of April 8, 1997 there are 820,975 such options still outstanding.
12
<PAGE>
OPTION GRANTS
The Company has (i) options outstanding under the Restricted Option Plan and
the Incentive Option Plan; and (ii) has options and SARs outstanding under the
Equity Incentive Plan. The following table shows, for the fiscal year ended
December 31, 1996, certain information regarding options and SARs granted to
each of the Named Officers, including information with respect to the
repricing of certain options.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL
% OF TOTAL RATES OF STOCK
NUMBER OF SECURITIES OPTIONS/SARS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION/SAR TERM (1)
OPTIONS/SARS GRANTED EMPLOYEES IN BASE PRICE EXPIRATION ------------------------------
(#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
-------------------- ------------ ----------- ---------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Robert A. Vukovich,
Ph.D. ................. 350,000(2) 10% $11.500 12/16/02 $ 1,368,885 $ 3,105,533
90,000(4) 3% 11.375 05/12/98 104,934 214,988
200,000(4) 6% 11.375 07/28/99 358,597 753,025
150,000(5) 4% 11.250 01/01/00 363,667 783,169
Robert W. Loy........... 25,000(2) (6) 11.500 12/16/02 97,777 221,824
16,000(4) (6) 11.375 09/19/98 18,655 38,220
15,000(4) (6) 11.375 10/13/99 26,895 56,477
50,000(4) 1% 11.375 07/28/99 89,649 188,256
30,000(5) (6) 11.250 01/01/00 72,733 156,634
John T. Spitznagel...... 30,000(3) (6) 21.250 03/04/02 216,811 491,870
25,000(2) (6) 11.500 12/16/02 97,777 221,824
30,000(4) (6) 11.375 03/04/02 116,058 263,295
30,000(5) (6) 11.250 01/01/00 72,733 156,634
Peter M. Rogalin........ 20,000(3) (6) 21.750 02/13/02 147,942 335,629
10,000(2) (6) 16.635 10/23/02 56,575 128,349
25,000(2) (6) 11.500 12/16/02 97,777 221,824
20,000(4) (6) 11.375 02/13/02 77,372 175,530
10,000(4) (6) 11.375 10/23/02 38,686 87,765
30,000(5) (6) 11.250 01/01/00 72,733 156,634
Anthony A. Rascio,
Esq. .................. 5,000(2) (6) 16.635 10/23/02 28,287 64,175
2,000(4) (6) 11.375 10/13/99 3,586 7,530
5,000(4) (6) 11.375 07/28/99 8,965 18,826
5,000(4) (6) 11.375 10/23/02 19,343 43,883
</TABLE>
- --------
(1) The potential realizable value does not represent actual value. The value,
if any, a Named Officer may realize will depend upon the excess of the
fair market value of the Common Stock over the exercise price on the date
the option or SAR is exercised so that there is no assurance the value
realized by the Named Officer will be at or near the estimated value. The
estimated values are based upon assumptions of 5% and 10% appreciation,
respectively, in the fair market value of the Company's Common Stock from
the date of grant or repricing of these options and SARs through the
expiration dates of such options and SARs.
(2) Includes 350,000, 25,000, 25,000, 35,000 and 5,000 shares of Common Stock
underlying options granted under the Equity Incentive Plan during the
fiscal year ended December 31, 1996 to Dr. Vukovich and Messrs. Loy,
Spitznagel, Rogalin and Rascio, respectively.
(3) Includes 30,000 and 20,000 shares of Common Stock underlying options
granted under the Incentive Option Plan during the fiscal year ended
December 31, 1996 to Messrs. Spitznagel and Rogalin, respectively.
(4) Includes 290,000, 81,000, 30,000, 30,000 and 12,000 shares of Common Stock
underlying options which were repriced by the Company in December 1996
with respect to options held by Dr. Vukovich and Messrs. Loy, Spitznagel,
Rogalin and Rascio, respectively. See "Report on Repricing."
13
<PAGE>
(5) Includes 150,000, 30,000, 30,000 and 30,000 SARs granted under the Equity
Incentive Plan during the fiscal year ended December 31, 1996 to Dr.
Vukovich and Messrs. Loy, Spitznagel and Rogalin, respectively.
(6) Represents less than 1% of total options or SARs granted to Employees or
repriced in the fiscal year ended December 31, 1996.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
Shown below is certain information with respect to options exercised by each
of the Named Officers during the fiscal year ended December 31, 1996 and
certain information regarding options held by each of the Named Officers at
December 31, 1996.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF SECURITIES UNEXERCISED
UNDERLYING UNEXERCISED IN-THE MONEY
SHARES OPTIONS/SARS HELD AT OPTIONS/SARS
ACQUIRED FY-END(#) AT FY-END($)(2)
ON VALUE -------------------------- --------------------------
NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE/ UNEXERCISABLE EXERCISABLE/ UNEXERCISABLE
- ---- ----------- -------------- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Robert A. Vukovich,
Ph.D. ................. -- $ -- 505,000 285,000 $ 0 $ 0
Robert W. Loy........... -- -- 98,500 37,500 0 0
John T. Spitznagel...... -- -- 27,500 57,500 0 0
Peter M. Rogalin........ -- -- 27,500 57,500 0 0
Anthony A. Rascio, Esq.. 2,986 45,163 6,200 5,800 0 0
</TABLE>
- --------
(1) The amounts in this column represent the difference between the exercise
price and the average of the reported sales prices of the Company's Common
Stock on the NASDAQ National Market System on the date of exercise of the
stock options by the Named Officer. The amount actually realized by each
such Named Officer upon the sale of such shares of Common Stock may be
greater or less than, or the same as, the amounts shown above.
(2) The value of unexercised in-the-money options and SARs represents the
difference between an option's or SAR's exercise price and the reported
last sale price of the Company's Common Stock on the NASDAQ National
Market System on December 31, 1996 ($11.25 per share). The actual value,
if any, a Named Officer may realize upon the exercise of an option or an
SAR will depend upon the excess of the stock price over the exercise price
on the date the option or an SAR is exercised, so that there is no
assurance the value realized by a Named Officer will be at or near the
value which would have been realized if such options or SARs were
exercised on December 31, 1996.
14
<PAGE>
REPORT ON OPTION REPRICING
The Compensation Committee examined the market price of the Company's Common
Stock during 1996 and determined that the exercise price of certain stock
options issued under the Equity Incentive Plan, Incentive Option Plan and
Restricted Option Plan were consistently higher than the average market price
of the Company's Common Stock over the period of time studied. The
Compensation Committee concluded that such stock options were not providing
the desired incentive to those employees of the Company whom the Compensation
Committee believed were making and were expected to continue to make
substantial contributions to the successful growth of the Company's business.
In order to make the incentive feature of certain options more meaningful to
the employees whom the Company believes are important to the future growth and
success of the Company, the Compensation Committee, which administers the
Option Plans, approved an adjustment in the exercise price of certain options
to the last reported sale price ($11.375) of the Company's Common Stock on the
NASDAQ National Market System on December 3, 1996. Options with respect to
2,183,219 shares of the Company's Common Stock held by all of the Company's
current employees, including certain of the Named Officers, were repriced. The
repriced options retained their original vesting status and expiration dates.
The Compensation Committee believes that the repricing of such options has had
the desired effect and will, once again, provide employees of the Company with
an attractive opportunity for increased equity ownership and a meaningful
incentive to remain in the employ of the Company for the long term. In
addition, certain options held by Mr. Barrios and Dr. Horovitz, Directors of
the Company, were repriced at the same time and on the same terms as the
repricing for employees of the Company. See "Directors' Compensation."
COMPENSATION COMMITTEE
Digby W. Barrios
Dr. Zola P. Horovitz
15
<PAGE>
Shown below is information with respect to all repricings of options held by
any Executive Officer of the Company during the period commencing on the date
of the Company's initial public offering (January 23, 1990) through December
31, 1996.
<TABLE>
<CAPTION>
TEN-YEAR OPTION
REPRICINGS
-------------------
LENGTH OF
NUMBER OF ORIGINAL
SECURITIES MARKET PRICE EXERCISE OPTION TERM
UNDERLYING OF STOCK AT PRICE AT NEW REMAINING AT
OPTIONS TIME OF TIME OF EXERCISE DATE OF
REPRICED OR REPRICING OR REPRICING PRICE REPRICING
NAME AND POSITION DATE AMENDED (#) AMENDMENT ($) AMENDMENT ($) ($) AMENDMENT
- ----------------- ------- ----------- ------------- ------------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Robert A. Vukovich,
Ph.D.................. 12/3/96 90,000(1) $11.375 $20.00 $11.375 1 Yr 5 Mos
President and Chief 12/3/96 200,000(1) 11.375 25.00 11.375 2 Yrs 7 Mos
Executive Officer
Robert W. Loy.......... 12/3/96 16,000(2) 11.375 18.25 11.375 1 Yr 9 Mos
Executive Vice Presi- 12/3/96 15,000(2) 11.375 18.25 11.375 2 Yrs 10 Mos
dent 12/3/96 50,000(2) 11.375 18.25 11.375 2 Yrs 7 Mos
9/14/95 16,000 18.25 19.50 18.25 3 Yrs
9/14/95 50,000 18.25 25.00 18.25 3 Yrs 11 Mos
9/14/95 15,000 18.25 25.00 18.25 4 Yrs 1 Mo
7/28/94 15,000 25.00 36.50 25.00 5 Yrs 2 Mos
John T. Spitznagel..... 12/3/96 30,000(3) 11.375 21.25 11.375 5 Yrs 3 Mos
Executive Vice Presi-
dent
Peter M. Rogalin....... 12/3/96 20,000(4) 11.375 21.75 11.375 5 Yrs 2 Mos
Vice President, Trea- 12/3/96 10,000(4) 11.375 16.635 11.375 5 Yrs 10 Mos
surer, and Chief
Financial Officer
Anthony A. Rascio,
Esq. ................. 12/3/96 2,000(5) 11.375 18.25 11.375 2 Yrs 10 Mos
Vice President, Secre- 12/3/96 5,000(5) 11.375 18.25 11.375 2 Yrs 7 Mos
tary and General 12/3/96 5,000(5) 11.375 16.635 11.375 5 Yrs 10 Mos
Counsel 9/14/95 5,000 18.25 25.00 18.25 3 Yrs 11 Mos
9/14/95 2,000 18.25 25.00 18.25 4 Yrs 1 Mo
7/28/94 2,000 25.00 36.50 25.00 5 Yrs 2 Mos
9/18/90 10,000 3.875 6.00 3.875 5 Yrs 9 Mos
Anthony P. Maris....... 9/14/95 16,000 18.25 19.50 18.25 3 Yrs
Former Employee/ 9/14/95 50,000 18.25 25.00 18.25 3 Yrs 11 Mos
Executive Officer 9/14/95 15,000 18.25 25.00 18.25 4 Yrs 1 Mo
7/28/94 15,000 25.00 36.50 25.00 5 Yrs 2 Mos
9/18/90 10,000 3.875 6.00 3.875 5 Yrs 9 Mos
Frank S. Caruso........ 9/18/90 10,000 3.875 6.00 3.875 5 Yrs 9 Mos
Former Employee/
Executive Officer
</TABLE>
- --------
(1) Represents the repricing of 90,000 and 200,000 shares of Common Stock
underlying options granted by the Company to Dr. Vukovich in May, 1993 and
July, 1994, respectively, which were repriced by the Company in December,
1996. See "Compensation Committee Report on Option Repricing."
(2) Represents 16,000, 15,000 and 50,000 shares of Common Stock underlying
options granted by the Company to Mr. Loy in September, 1992, October,
1993, and July, 1994, respectively, which were repriced by the Company in
December, 1996. See "Compensation Committee Report on Option Repricing."
16
<PAGE>
(3) Represents 30,000 shares of Common Stock underlying options granted by the
Company to Mr. Spitznagel in March, 1996, which were repriced by the
Company in December, 1996. See "Compensation Committee Report on Option
Repricing."
(4) Represents 20,000 and 10,000 shares of Common Stock underlying options
granted by the Company to Mr. Rogalin in February, 1996 and November,
1996, respectively, which were repriced by the Company in December, 1996.
See "Compensation Committee Report on Option Repricing."
(5) Represents 2,000, 5,000 and 5,000 shares of Common Stock underlying
options granted by the Company to Mr. Rascio in November, 1993, July, 1997
and November, 1996, respectively, which were repriced by the Company in
December, 1996. See "Compensation Committee Report on Option Repricing."
DIRECTORS' COMPENSATION
Each Director who is not an employee of the Company is entitled to receive a
participation fee of $500 for each meeting of the Board of Directors attended
and a fee of $250 for each meeting attended of any committee of the Board of
Directors on which such Director serves. In addition, each Director who is not
an employee of the Company is entitled to receive a $7,500 fee annually for
services as a Director. The Company makes no payment to Directors who are
employees of the Company for their services on the Board of Directors or
committees thereof. The Company paid a total of $47,433 during the fiscal year
ended December 31, 1996 to Directors who are not employees of the Company.
Each of Mr. Miyamoto and Mr. Matsubara chose not to receive any compensation
for serving as a Director of the Company in 1996. Nonemployee directors are
eligible to participate in the Company's Restricted Option Plan and the Equity
Incentive Plan. During the fiscal year ended December 31, 1996, options and
SARs were granted to Mr. Barrios and Dr. Horovitz and previously granted
options held by Mr. Barrios and Dr. Horovitz were repriced in connection with
the repricing of options held by certain employees of the Company. In 1996,
options with respect to 15,000 and 20,000 shares were granted to Mr. Barrios
and Dr. Horovitz, respectively, and 7,500 SARs were granted to each of Mr.
Barrios and Dr. Horovitz. In addition, options with respect to 20,000 shares
and 10,000 shares held by Mr. Barrios and Dr. Horovitz, respectively, were
repriced in 1996. See "Report on Option Repricing." Neither Mr. Miyamoto, Mr.
Matsubara nor any other representative of Yamanouchi, who has served on the
Board of Directors, has received any options or SARs from the Company.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
GENERAL COMPENSATION POLICIES
The base salaries and wages for all the Company's employees are managed
through the Company's wage and salary administration program. Increases in
base salary and wages are managed according to three guidelines: individual
merit, promotions and competitive factors. Guidelines are established each
year and vary in order to reflect the Company's performance and the
competitive environment and to manage appropriately the overall cost of wage
and salary growth.
The Company's compensation program is based on a pay for performance
criterion and consists of three key components: base salary, an annual
incentive bonus program and longer term incentives through the granting of
equity based awards, such as stock options and stock appreciation rights. The
compensation program is designed to attract, retain and motivate the best
personnel possible for all levels of the Company. The Company's various
programs are designed to treat all employees in a fair and equitable manner
and have the following common attributes upon which compensation is based:
. level of job responsibility;
. individual performance;
. company performance;
. competitive marketplace factors.
EXECUTIVE OFFICER COMPENSATION
The method of compensation of the Company's Executive Officers is consistent
with the Company's general compensation policies and is related to the
Company's growth and performance. The Compensation Committee is responsible
for administering the compensation program for Executive Officers of the
Company, the
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Management Incentive Compensation Plan, the Company's Option Plans, the Money
Purchase Plan and the 401(k) Plan. The Compensation Committee believes that
the Company's compensation practices should reward strategic management of the
business in the best long term interests of the shareholders.
A portion of an Executive Officer's compensation may consist of bonus
payments under the Management Incentive Compensation Plan. Under this plan,
awards are based on the Company's performance and the employee's contribution
to that performance. The aggregate amount allocated to any individual award
under the Management Incentive Compensation Plan is determined by the
Compensation Committee.
The Company's long term incentives are generally in the form of stock option
grants. The objectives of the Company's stock option programs are to advance
the long term interests of the Company and its shareholders. Equity
compensation, in the form of stock options, is an important element of the
performance-based compensation of the Executive Officers. The grant of stock
options continues the Company's practice of providing for management's equity
ownership in order to ensure that their interests remain closely aligned with
those of the Company's shareholders. Equity ownership in the Company provides
a direct relationship between executive compensation and shareholder value.
Stock options provide the Company's key employees an opportunity for increased
equity ownership, and create an incentive to remain with the Company for the
long term. The Equity Incentive Plan authorizes the Compensation Committee to
grant SARs to employees of the Company. The Company granted SARs to certain of
its Executive Officers and Directors in 1996. These rights are expected to
provide the holders thereof with an additional long term incentive, the value
of which is a function of the appreciation in the value of a share of the
Company's Common Stock. Neither the grant nor the exercise of stock options
having an exercise price equal to or greater than the fair market value of the
Company's Common Stock on the date of grant will affect the Company's income
statement. The grant of SARs affects the Company's income statement by way of
a charge to compensation expense measured by the amount by which the price of
the Company's Common Stock at the end of a measurement period exceeds the
grant price of the SAR. Accordingly, the compensation expense attributable to
a SAR reported for any measurement period will be adjusted in future periods
depending upon the market price of the Company's Common Stock at the end of
the measurement period.
The compensation of the Company's Chief Executive Officer is determined by
the Compensation Committee based on its assessment of the Company's financial
and non-financial performance against a background of various factors. The
Committee has identified several factors which are critical to the success of
the business, including sales growth, business growth and achievement,
financial strength, progress toward achievement of goals and growth in
shareholder value. The Compensation Committee believes it is important that
these factors are well managed in order to maximize returns to the Company's
shareholders over the long term. Performance is reviewed on an annual basis.
Under his employment agreement, Dr. Vukovich was entitled to receive a minimum
base salary of $540,000 in 1996. Based on the Compensation Committee's review
and evaluation of various performance factors outlined above, Dr. Vukovich's
annual salary was not increased in 1996; however, the salary paid to him in
1996 was 19.3% greater than the salary paid to him in 1995 when Dr. Vukovich
voluntarily elected to forego his salary for approximately two months, which
represented a voluntary reduction of 16% from the $540,000 salary authorized
for 1995.
The Company granted options in 1996 to Dr. Vukovich and certain other
Executive Officers of the Company as follows: Dr. Vukovich--350,000; Mr. Loy--
25,000; Mr. Spitznagel--25,000; and Mr. Rogalin--25,000. Fifty percent of
these options are exercisable immediately and the balance are exercisable one
year after the date of grant. In addition, the Company granted options in 1996
with respect to 30,000, 30,000 and 5,000 shares to each of Messrs. Spitznagel,
Rogalin and Rascio, respectively, which are exercisable in substantially equal
installments over a period of five years from the date of grant. Options
granted to other employees of the Company in 1996 vest in equal installments
over a five year period. All of the options granted in 1996 have a six year
term.
Incentive bonus awards to the Chief Executive Officer are determined by the
Compensation Committee based on the Company's performance and the Compensation
Committee's assessment of the individual
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contribution of the Chief Executive Officer to that performance. The
Compensation Committee did not award any bonuses to Dr. Vukovich or any other
Executive Officer of the Company for 1996. Nevertheless, the Compensation
Committee determined that SARs should be awarded to Dr. Vukovich and certain
of the Company's Executive Officers and Directors to reward certain
achievements that the Company made in 1996 even though the financial
performance of the Company for 1996 was less favorable than planned. In
recognition of a variety of corporate achievements, including the approval of
ProAmatine by the U.S. Food and Drug Administration (the "FDA"), the
acquisition of a manufacturing facility in Canada and the successful
completion of two offerings of the Company's equity securities for $115
million, the Company awarded SARs to certain of its Executive Officers and
Directors. SARs awarded in 1996 to Dr. Vukovich and certain Executive Officers
of the Company are as follows: Dr. Vukovich--150,000; Mr. Loy--30,000; Mr.
Spitznagel--30,000; and Mr. Rogalin--30,000. In its assessment of the award to
Dr. Vukovich, the Compensation Committee focused on Dr. Vukovich's significant
contribution toward obtaining FDA approval of ProAmatine. The SARs awarded to
certain Executive Officers and Directors in 1996 have a four year term,
expiring on December 31, 2000, and are exercisable in whole or in part over
said term. Fifty percent of the rights granted were exercisable on the date of
grant and the remaining fifty percent become exercisable on January 1, 1998.
Vesting of the SARs is accelerated upon a change in control of the Company.
Upon exercise of a SAR, the holder is entitled to receive, in cash, an amount
equal to the excess of the fair market value of a share of the Company's
Common Stock on the date of exercise over $11.25, the fair market value of a
share of the Company's Common Stock on December 31, 1996, the date the SARs
were granted.
In 1993, the Company adopted the Money Purchase Plan which is available to
all full-time employees who have completed one year of service with the
Company and attained age 20- 1/2. The Compensation Committee believes this
additional Company benefit will help attract, retain and motivate the best
personnel possible for all levels of the Company, particularly in light of the
fact that comparable benefits are offered by competitors of the Company. See
"Money Purchase Pension Plan."
Section 162(m) of the Code ("Section 162(m)"), which was enacted in 1993
(final regulations adopted December 19, 1995) for taxable years beginning on
or after January 1, 1994, generally disallows a tax deduction to public
companies for compensation over $1 million (per capita) paid to a
corporation's Chief Executive Officer and four other highest paid officers.
Qualifying performance-based compensation is not subject to the deduction
limit if certain requirements are met.
The 162(m) limitation has not yet had any significant effect upon the
Company and its ability to deduct, for tax purposes, the compensation paid to
the Company's Named Officers. Compensation paid, or to be paid, pursuant to
certain of the Company's employee benefit plans will not qualify for the
performance-based compensation exception to Section 162(m) by reason of Dr.
Vukovich's previous participation as a member of the Compensation Committee.
Dr. Vukovich resigned from the Compensation Committee in 1995 with the
intention that the Company would thus be able to attempt to qualify
compensation to be paid pursuant to future employee benefit plans under the
performance-based exception to Section 162(m).
The Compensation Committee recognizes that certain future events, such as a
change in control of the Company, termination by the Company of certain
executive personnel, or the exercise of certain stock options, depending upon
the difference between the fair market value of the Company's Common Stock and
the exercise price of such an option on the date of exercise, may result in
the disallowance of a portion of the Company's compensation deductions under
Section 162(m) as it relates to the Named Officers of the Company. See
"Employment Agreements." Moreover, the Compensation Committee may from time to
time award compensation that may be non-deductible under Section 162(m) when,
in the exercise of the Compensation Committee's business judgment, such award
would be in the best interests of the Company.
COMPENSATION COMMITTEE
Digby W. Barrios
Dr. Zola P. Horovitz
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COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's Executive Officers
and Directors, and persons who own more than ten percent of a registered class
of the Company's equity securities, to file reports of ownership and changes
in ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission
("SEC"). Executive Officers, Directors and greater than ten percent
shareholders are required by SEC regulation to furnish the Company with copies
of all Forms 3, 4 and 5 they file.
Based solely on the Company's review of the copies of such forms it has
received, the Company believes that all its Executive Officers, Directors, and
greater than ten percent beneficial owners complied with all filing
requirements applicable to them with respect to reports required to be filed
by Section 16(a) of the Exchange Act during fiscal 1996 except for the
following report which was filed late: the Form 4 required to be filed by Mr.
Barrios for the month of February 1996, as a result of the grant in that month
of options to acquire shares of Common Stock. Mr. Barrios filed a Form 4 upon
realizing the inadvertent omission.
ANNUAL REPORT
The annual report to shareholders for the fiscal year ended December 31,
1996 accompanies this Proxy Statement. Coopers & Lybrand L.L.P. has audited
the financial statements for the fiscal year ended December 31, 1996, which
financial statements are contained in the annual report to shareholders. Such
annual report, including the audited financial statements contained therein,
is not incorporated in this Proxy Statement and is not deemed to be a part of
the proxy soliciting material.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
Selection of the independent public accountants for the Company is made by
the Board of Directors and is based upon the recommendation of the Company's
Audit Committee. Coopers & Lybrand L.L.P. was the Company's independent public
accountants for the fiscal year ended December 31, 1996. A representative of
Coopers & Lybrand L.L.P. will be present at the meeting and will have an
opportunity to make a statement if the representative desires to do so. Said
representative will also be available to respond to appropriate questions from
shareholders of the Company.
The appointment of the Company's independent public accountants for the
current fiscal year shall be made by the Board of Directors at its annual
reorganization meeting which shall be held immediately following the
conclusion of the Annual Meeting of Shareholders.
SHAREHOLDER PROPOSALS
Shareholder proposals for presentation at the Company's next Annual Meeting
of shareholders must be received by the Company at its principal executive
offices for inclusion in its proxy statement and form of proxy relating to
that meeting no later than December 31, 1997. The Company's By-Laws contain
certain procedures which must be followed in connection with shareholder
proposals.
MANAGEMENT OF THE COMPANY RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
NOMINEES TO THE BOARD OF DIRECTORS.
THE COMPANY SUBMITS TO THE SECURITIES AND EXCHANGE COMMISSION AN ANNUAL
REPORT ON FORM 10-K. COPIES OF THE REPORT WILL BE FURNISHED WITHOUT CHARGE
UPON WRITTEN REQUEST RECEIVED FROM ANY HOLDER OF RECORD OR BENEFICIAL OWNER OF
SHARES OF THE COMMON STOCK OF THE COMPANY. REQUESTS SHOULD BE DIRECTED TO
INVESTOR RELATIONS, ROBERTS PHARMACEUTICAL CORPORATION, MERIDIAN CENTER II, 4
INDUSTRIAL WAY WEST, EATONTOWN, NEW JERSEY 07724.
ALL SHAREHOLDERS ARE URGED TO FILL IN, SIGN AND SEND IN THEIR PROXIES
WITHOUT DELAY TO CONTINENTAL STOCK TRANSFER & TRUST COMPANY, 2 BROADWAY, 19TH
FLOOR, NEW YORK, NY 10004. PROMPT RESPONSE IS HELPFUL AND YOUR COOPERATION
WILL BE APPRECIATED.
Anthony A. Rascio, Esq.
Vice President and Secretary
April 30, 1997
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ROBERTS PHARMACEUTICAL CORPORATION
ANNUAL MEETING OF SHAREHOLDERS - MAY 21, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby nominates and appoints Robert A. Vukovich, Ph.D. and
Anthony A. Rascio, Esq. and each of them, the true and lawful attorneys, agents
and proxies of the undersigned, with full power of substitution, to vote with
respect to all of the shares of Common Stock of ROBERTS PHARMACEUTICAL
CORPORATION standing in the name of the undersigned at the close of business on
April 8, 1997, at the annual meeting of shareholders to be held at the Company's
headquarters, Meridian Center II, 4 Industrial Way West, Eatontown, New Jersey
07724, on May 21, 1997 at 10:00 a.m., and at any and all adjournment or
adjournments thereof, with all powers that the undersigned would possess if
personally present and especially (but without limiting the general
authorization and power hereby given) to vote as indicated on the reverse side
of this Proxy.
1. ELECTION OF DIRECTORS
FOR all nominees listed below WITHHOLD AUTHORITY
to vote for all
(except as marked to the nominees listed
contrary below) --- below ---
--- ---
Robert A. Vukovich, Ph.D., Robert W. Loy, John T. Spitznagel, Peter M.
Rogalin, Anthony A. Rascio, Esq., Digby W. Barrios, Zola P. Horovitz, Ph.D. and
Joseph N. Noonburg.
INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.
- --------------------------------------------------------------------------------
2. In their discretion upon such other matters as may properly come before the
meeting or any adjournment or adjournments thereof.
<PAGE>
The shares represented by this Proxy will be voted in the manner directed,
and if no instructions to the contrary are indicated, will be voted FOR the
election of the nominees indicated on the reverse side of this Proxy.
NOTE: Please mark, sign, date and return
promptly in the envelope provided.
No postage is required if mailed
in the United States.
DATE: ________________________________, 1997
________________________________
(Signature)
________________________________
(Signature)
Please sign exactly as your name appears. When
signing as attorney, executor, administrator,
trustee or guardian, please set forth your full
title. If signer is a corporation, please sign the
full corporate name by a duly authorized officer.
Joint owners should each sign.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
