<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
CLINTRIALS RESEARCH INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
CLINTRIALS RESEARCH INC.
11000 WESTON PARKWAY
CARY, NORTH CAROLINA 27513
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of ClinTrials Research Inc.:
The Annual Meeting of Stockholders of ClinTrials Research Inc., a
Delaware corporation (the "Company"), will be held at Bank of America, Bank of
America Plaza, 3rd Floor Board Room, Nashville, Tennessee, at 9:00 a.m.
Central Daylight Time, on Thursday, May 25, 2000 for the following purposes:
(1) To elect five (5) directors, to hold office for the
ensuing year or until their successors have been duly elected and qualified;
(2) To transact such other business as may properly come
before the meeting, or any adjournment or postponement thereof.
The proxy statement and form of proxy accompanying this Notice are
being mailed to stockholders on or about April 21, 2000. Only stockholders of
record at the close of business on April 7, 2000 are entitled to notice of and
to vote at the meeting or any adjournment or postponement thereof.
Your attention is directed to the Proxy Statement accompanying this
notice for a more complete statement regarding the matters to be acted upon at
the meeting.
We hope very much that you will be able to be with us. If you do not
plan to attend the meeting in person, you are requested to complete, sign and
date the enclosed proxy and return it promptly in the enclosed addressed
envelope, which requires no postage if mailed in the United States.
By Order of the Board of Directors
Jerry R. Mitchell, M.D., Ph.D.
Chairman of the Board,
Chief Executive Officer and President
April 17, 2000
<PAGE> 3
CLINTRIALS RESEARCH INC.
11000 WESTON PARKWAY
CARY, NORTH CAROLINA 27513
PROXY STATEMENT
This Proxy Statement and enclosed Proxy are being furnished to
stockholders of ClinTrials Research Inc., a Delaware corporation ("ClinTrials"
or the "Company"), in connection with the solicitation of proxies by the Board
of Directors of the Company for use at the Annual Meeting of Stockholders (the
"Annual Meeting") of the Company to be held at 9:00 a.m. Central Daylight Time
on May 25, 2000, at Bank of America, Bank of America Plaza, 3rd Floor Board
Room, Nashville, Tennessee and at any adjournments or postponements thereof. The
cost of soliciting proxies in the accompanying form will be borne by the
Company. The persons named as proxies were selected by the Board of Directors of
the Company and are executive officers of the Company.
This Proxy Statement and enclosed Proxy were initially mailed or
delivered to stockholders on or about April 21, 2000. The Company's Annual
Report, including financial statements for the fiscal year ended December 31,
1999, is being concurrently mailed or delivered with this Proxy Statement to
stockholders entitled to vote at the Annual Meeting. The Annual Report is not to
be regarded as proxy soliciting material.
The Company has fixed the close of business on April 7, 2000 as the
record date for determining the holders of its Common Stock, $.01 par value (the
"Common Stock") who will be entitled to notice of and to vote at the meeting. On
that date, the Company had issued and outstanding 18,402,172 shares of Common
Stock which are the only outstanding shares of capital stock of the Company.
Holders of the Company's Common Stock are entitled to one vote for each share
owned of record. A majority of shares entitled to vote constitutes a quorum. A
share, once represented for any purpose at the meeting, is deemed present for
purposes of determining a quorum for the meeting (unless the meeting is
adjourned and a new record date is set for the adjourned meeting), even if the
holder of the share abstains from voting with respect to any matter brought
before the meeting.
If properly executed and returned in time for the Annual Meeting, the
enclosed Proxy will be voted in accordance with the choices specified thereon.
Where a signed Proxy is returned, but no choice is specified, the shares will be
voted "for" the election of each director nominee and in the discretion of the
proxies on such other matters as may properly come before the meeting. Any
stockholder who executes and returns a Proxy may revoke it in writing at any
time before it is voted at the Annual Meeting by executing and delivering a
later-dated proxy, or by appearing at the meeting and voting in person.
Abstentions and broker non-votes will not be counted as affirmative votes on
matters to be voted upon, but will be counted for purposes of determining the
presence or absence of a quorum. They have no legal effect on the election of
directors, which are elected by a plurality of votes. On any other matters
requiring a majority vote for approval, abstentions and broker non-votes have
the effect of negative votes.
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ClinTrials is authorized to issue 50,000,000 shares of Common Stock. As
of March 1, 2000, there were 18,402,172 shares issued and outstanding.
The following table sets forth as of March 1, 2000, information with
respect to the beneficial ownership of ClinTrials' outstanding Common Stock by
(i) each director of ClinTrials, (ii) each named executive officer, (iii) all
directors and executive officers as a group, and (iv) each stockholder known by
ClinTrials to be the beneficial owner of more than 5% of its outstanding Common
Stock. Except as otherwise indicated, the persons or entities listed below have
sole voting and investment power with respect to all shares of Common Stock
owned by them, except to the extent such power may be shared with a spouse.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY OWNED(1)
---------------------
NAME AND ADDRESS NUMBER PERCENT
- ---------------- ------ -------
<S> <C> <C>
Richard J. Eskind** .......................................... 1,709,632 9.3%
104 Lynwood Blvd
Nashville, TN
Dimensional Fund Advisors Inc. (2) ........................... 1,345,150 7.3
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Herbert J. Schulman, M.D ..................................... 1,330,745 7.2
109 Westhampton Place
Nashville, TN
Irwin B. Eskind, M.D.** ...................................... 1,328,064 7.2
541 Jackson Blvd
Nashville, TN
Longwood Investment Advisors Inc. (3) ........................ 1,077,350 5.9
3, Radnor Corporate Center, Suite 300
Radnor, PA 19087
Jerry R. Mitchell, M.D., Ph.D.**(4) .......................... 387,501 2.1
Paul J. Ottaviano (5) ........................................ 101,251 *
Edward G. Nelson ** (6) ...................................... 98,211 *
Roscoe R. Robinson, M.D. ** (7) .............................. 27,668 *
S. Colin Neill (8) ........................................... 25,000 *
Michael F. Ankcorn (9) ....................................... 20,251 *
William L. Shaw, MB, ChB (10) ................................ 12,500 *
All directors and executive officers as group (9 persons) (11) 3,710,078 19.5
</TABLE>
2
<PAGE> 5
* Less than 1%
** Director
(1) Based on 18,402,172 shares of Common Stock outstanding at March 1,
2000. For purposes of this table, a person or group of persons is
deemed to have "beneficial ownership" of any shares as of March 1, 2000
that such person or group has the right to acquire within 60 days after
such date, or with respect to which such person otherwise has or shares
voting or investment power. For purposes of computing beneficial
ownership and the percentages of outstanding shares held by each person
or group of persons on a given date, shares which such person or group
has the right to acquire within sixty days after such date are shares
for which such person has beneficial ownership and are deemed to be
outstanding for purposes of computing the percentage for such person,
but are not deemed to be outstanding for the purpose of computing the
percentage of any other person.
(2) Share ownership data obtained solely from Schedule 13G filed in
February 2000.
(3) Share ownership data based upon confirmation with investor.
(4) Includes 387,501 shares issuable upon the exercise of warrants and
vested options.
(5) Includes 101,251 shares issuable upon the exercise of vested options.
(6) Includes 3,000 shares owned by Mr. Nelson's wife. Mr. Nelson disclaims
beneficial ownership of such shares. Also includes 65,964 shares held
by Nelson Capital Corp. and certain of its affiliates, beneficial
ownership of which Mr. Nelson disclaims. Mr. Nelson is the principal
stockholder and president of Nelson Capital Corp. Also includes 19,500
shares issuable upon the exercise of vested options.
(7) Includes 2,168 shares owned by Dr. Robinson's wife. Dr. Robinson
disclaims beneficial ownership of these shares. Also includes 25,500
shares issuable upon the exercise of vested options.
(8) Includes 25,000 shares issuable upon the exercise of vested options.
(9) Includes 20,251 shares issuable upon the exercise of vested options.
(10) Includes 12,500 shares issuable upon the exercise of vested options.
(11) Includes 591,503 shares issuable upon the exercise of warrants and
vested options.
3
<PAGE> 6
PROPOSAL 1. ELECTION OF DIRECTORS
All directors hold office until the next Annual Meeting of the
Company's stockholders and until their successors are duly elected and
qualified. The Company's executive officers are appointed annually by the Board
of Directors and serve at the discretion of the Board.
It is intended that proxies received in response to this solicitation
will be voted in favor of the election of the nominees named herein to be
directors of the Company until the next Annual Meeting and until their
successors are elected and qualified, unless authority to vote is withheld.
If any of the nominees should become unable to accept election or
declines to serve, neither of which the Board anticipates, it is intended, in
the absence of contrary direction, that the proxies will be voted for the
balance of those named below and for substitute nominee(s) as the Board may
designate, unless the Board has taken prior action to reduce its membership. The
proxies will in no event be voted for a greater number of nominees than five.
During 1999, the Board of Directors held 9 meetings. Each incumbent
director attended at least 75% of the aggregate of (i) the total number of
meetings of the Board of Directors and (ii) the total number of meetings held by
all committees on which the individual director served. There are two committees
of the Board of Directors which assist the Board in discharging its
responsibilities. These committees, their members and functions are discussed
below.
INFORMATION ABOUT NOMINEES FOR DIRECTORS
Jerry R. Mitchell, M.D., Ph.D., 58 years of age, joined the Company in
February 1998 as its Chief Executive Officer and President and was named
Chairman of the Board in May 1998. Prior to joining the Company, Dr. Mitchell
served on the Board of Directors of ILEX Oncology, Inc. of San Antonio, Texas,
and in 1996, co-founded MPILEX Partners, L.P., a joint venture with ILEX to
develop oncology drugs. He also co-founded MPI Research, a drug safety and
pharmaceutical development company. From 1993 to 1995, Dr. Mitchell served as
Vice Chairman of the Board of the Upjohn Company and from 1990 to 1996 as
President of Upjohn R&D Laboratories. Dr. Mitchell has also served as Section
Chief at the National Heart, Lung and Blood Institute of the National Institutes
of Health, and as Director of the Center for Experimental Therapeutics and as
Professor of Medicine and Pharmacology at Baylor College of Medicine. Dr.
Mitchell has served on a number of national science committees and is a member
of several professional organizations, including being President of the American
Society of Pharmacology and Experimental Therapeutics (ASPET) and a member of
the Board of Directors of the Federation of American Societies for Experimental
Biology (FASEB). He is the author of numerous research publications and was
designated in 1990 as a "Citation Superstar" in "The Scientist" newspaper. Dr.
Mitchell received his M.D. and Ph.D. degrees from Vanderbilt University.
4
<PAGE> 7
Irwin B. Eskind, M.D., 75 years of age, has been a director of the
Company since February 1992. Dr. Eskind engaged in the private practice of
internal medicine from 1954 until his retirement in January 1996.
Dr. Eskind is the brother of Richard J. Eskind, also a director of the Company.
Richard J. Eskind, 69 years of age, has served as a director of the
Company since February 1992. Mr. Eskind has served since October 1986 as Vice
President--Investments of A.G. Edwards & Sons, Inc., a broker-dealer firm. Mr.
Eskind is the brother of Irwin B. Eskind, M.D., also a director of the Company.
Edward G. Nelson, 68 years of age, has been a director of the Company
since November 1990. Mr. Nelson formed Nelson Capital Corp., a merchant banking
firm, in 1984, and has served as the President and Chairman of the Board since
its organization. Mr. Nelson serves as a director of Berlitz International,
Inc., a language services company; Central Parking Corporation, a parking
services company; and Advocat Inc., a long-term care company.
Roscoe R. Robinson, M.D., 69 years of age, has served as a director of
the Company since December 1997. Dr. Robinson served as Vice Chancellor for
Health Affairs for Vanderbilt University from 1981 until 1997 and has served as
a professor of medicine at Vanderbilt University since 1981. Dr. Robinson is a
former member of the Board of Directors of First American Corporation and a
Trustee of Duke University since 1994. He is the 2000 Recipient of Research
America's National Advocacy Award for Sustained Leadership at the National
Level.
COMMITTEES OF THE BOARD OF DIRECTORS
There are two committees of the Company's Board of Directors: the
Compensation and Stock Option Committee and the Audit Committee. The
Compensation and Stock Option Committee, which met once during 1999, is composed
of Dr. Irwin Eskind, Mr. Nelson and Dr. Robinson and is responsible for the
approval of remuneration arrangements for executive officers of the Company, the
review of the Company's compensation plans and the general review of the
Company's employee compensation policies. The Audit Committee, which met twice
during 1999, was composed of Mr. Edward Nelson and Mr. Richard Eskind, and is
responsible for the engagement of independent auditors, the review of audit
fees, the supervision of matters relating to audit functions, the review of
audit results and the Company's annual consolidated financial statements, the
review and setting of internal policies and procedures regarding audit,
accounting and other financial controls and the review of related party
transactions.
5
<PAGE> 8
COMPENSATION OF DIRECTORS
Non-employee directors owning less than 5% of the Company's outstanding
Common Stock (Mr. Nelson and Dr. Robinson) are compensated $15,000 annually.
Non-employee directors owning 5% or more of the company's outstanding Common
Stock (Dr. Eskind and Mr. Eskind) receive no compensation.
On February 6, 1998, the Company's board of directors approved the
adoption of the Company's 1998 Non Qualified Stock Option Plan for Directors
(the "1998 Director Option Plan"). The 1998 Director Option Plan was approved by
the Company's shareholders on May 11, 1998. The 1998 Director Option Plan is a
formula plan under which options to acquire 10,000 shares of the Company's
Common Stock are initially granted to each director of the Company who is not an
employee and does not beneficially own more than 2.5% of the Company's
outstanding stock upon the date of initial election to the board of directors.
These directors are automatically eligible to receive annual grants of options
to acquire 1,000 shares of the Company's Common Stock. At December 31, 1999,
there were 181,000 shares available for grant.
Information with respect to the 1998 Director Option Plan is as follows:
<TABLE>
<CAPTION>
WEIGHTED-
AVERAGE
EXERCISE PRICE
--------------
1999 1998 1999 1998
------- ------ -------- --------
<S> <C> <C> <C> <C>
Options outstanding at January 1 18,000 0 $ 2.95 $ 0.00
Granted 7,000 18,000 $ 5.38 $ 2.95
Exercised 0 0 $ 0.00 $ 0.00
Cancelled (6,000) 0 $ 2.95 $ 0.00
-------- --------
Outstanding at December 31 19,000 18,000 $ 3.84 $ 2.95
======== ========
Option price range at
December 31 $2.81 to $5.88 $2.81 to $3.63
Options exercisable at December 31 19,000 18,000 $ 3.84 $ 2.95
</TABLE>
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
FOR THE PROPOSED NOMINEES TO THE BOARD OF DIRECTORS. THE AFFIRMATIVE VOTE OF A
MAJORITY OF THE VOTES CAST ON PROPOSAL 1, IN PERSON OR BY PROXY, IS NECESSARY
FOR THE ELECTION OF THE NOMINEES NAMED HEREIN TO BE DIRECTORS OF THE COMPANY.
6
<PAGE> 9
EXECUTIVE OFFICERS
The following table sets forth certain information concerning the
executive officers of the Company, other than Dr. Mitchell, whose information is
set forth above.
<TABLE>
<CAPTION>
NAME AGE POSITIONS
- ---- --- ---------
<S> <C> <C>
Paul J. Ottaviano............ 53 Executive Vice President--Worldwide Operations
S. Colin Neill............... 53 Senior Vice President, Chief Financial Officer,
Secretary and Treasurer
William L. Shaw, MB, ChB..... 53 President--Europe/Asia Pacific
Michael F. Ankcorn........... 57 Chairman, President and Chief Executive Officer,
ClinTrials BioResearch Ltd.
</TABLE>
Paul J. Ottaviano has served the Company as Executive Vice
President--Worldwide Operations since December 1995 after serving as Executive
Vice President--U.S. Operations since July 1992. From May 1989 until joining the
Company in July 1992, he was President and Chief Executive Officer of National
Psychopharmacology Laboratories, Inc., a specialty laboratory company. Mr.
Ottaviano was Chief Operating Officer of Med Inc. (later ImageAmerica, Inc.), a
medical imaging company, from April 1988 through May 1989. From July 1987 until
April 1988, Mr. Ottaviano was the Vice President--Operations and President--ICL
East of International Clinical Laboratories, Inc. From March 1980 until July
1987, Mr. Ottaviano served as a Division President of International Clinical
Laboratories, Inc.
S. Colin Neill has served as Senior Vice President, Chief Financial
Officer, Secretary and Treasurer of the Company since October 1998. Prior to
joining the Company, Mr. Neill served as a financial consultant to a variety of
companies from October 1997 to October 1998. Mr. Neill served from July 1996 to
October 1997 as Vice President, Chief Financial Officer of Continental Health
Affiliates, Inc. and its majority owned subsidiary Infu-Tech, Inc., a network of
health care companies focused on home care, long term care, assisted living and
managed care. Mr. Neill's career experience has included that of Acting Vice
President--Finance, Chief Financial Officer of Pharmos Corporation, a
biopharmaceutical company in the business of developing novel drug technologies
from January 1995 to July 1996; Vice President--Finance, Chief Financial Officer
of BTR Inc., the US subsidiary of BTR plc, a British diversified manufacturing
company with US revenues of approximately $3.5 billion from 1992 to December
1994; and Vice President--Financial Services of The BOC Group, Inc., a British
industrial gases company with substantial operations in the health care
industry. He began his career in public accounting with Arthur Andersen LLP in
Ireland as a Senior Auditor and later with Price Waterhouse LLP in New York City
as a Senior Manager.
7
<PAGE> 10
William L. Shaw, MB, ChB, joined the Company in January 1998 as
President--Europe/Asia Pacific. Prior to joining the Company, Dr. Shaw served as
Chief Executive Officer--Europe, Asia and Pacific Rim for Pharmaco International
Ltd. and as a Director for APBI Holdings Ltd., a life and environmental sciences
research and consulting company, from 1996 through 1997; as Chief Operating
Officer for HLS Ltd., a pre-clinical contract research organization, from 1995
through 1996; as a Director for LCRC Ltd., a Phase I contract research
organization, from 1993 through 1996; and as Managing Director for HRC Ltd., a
pre-clinical contract research organization, from 1993 through 1995.
Michael F. Ankcorn has served as President of ClinTrials BioResearch
Ltd. since its acquisition by the Company in August 1996. From 1979 to July 1996
Mr. Ankcorn served as President and Chief Executive Officer of Bio-Research
Laboratories Ltd. From 1977 to 1979 he served as Assistant Vice President for
the Canada Development Corporation.
8
<PAGE> 11
EXECUTIVE COMPENSATION
The following table provides information as to annual, long-term or
other compensation during fiscal years ended December 31, 1999, 1998 and 1997
for the Company's Chief Executive Officer and the persons who, at December 31,
1999, were the other four most highly compensated executive officers of the
Company (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------
------------------- SECURITIES
OTHER UNDERLYING
ANNUAL OPTIONS/SARS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (#)(1) COMPENSATION(2)
- --------------------------- ---- ------ ----- ------------ ------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Jerry R. Mitchell, M.D., Ph.D ........ 1999 $275,000 $ 0 $0 325,000 $ 31,059
Chairman of the Board, 1998 252,083 0 0 600,000 114,257
President and Chief 1997 N/A N/A N/A N/A N/A
Executive Officer
Paul J. Ottaviano .................... 1999 240,000 0 0 125,000 13,802
Executive Vice President-- 1998 240,000 0 0 15,000 12,375
Worldwide Operation 1997 240,000 0 0 15,000 12,102
William S. Shaw, MB, ChB ............. 1999 242,135 60,000 0 40,000 87,273
President--Europe/Asia 1998 240,336 0 0 20,000 25,202
Pacific 1997 N/A N/A N/A N/A N/A
Michael F. Ankcorn ................... 1999 193,641 100,000 0 0 199,895
Chairman, President and 1998 166,140 85,020 0 20,250 57,952
Chief Executive Officer 1997 173,232 72,829 0 20,250 79,340
ClinTrials BioResearch Ltd
S. Colin Neill ....................... 1999 225,000 0 0 100,000 40,147
Senior Vice President, Chief 1998 43,557 0 0 50,000 0
Financial Officer, Secretary, and 1997 N/A N/A N/A N/A N/A
Treasurer
</TABLE>
9
<PAGE> 12
(1) Although the Company's existing stock option plan permits the grant of
stock appreciation rights, no such rights have been granted to date.
(2) Amounts represent life insurance premium payments, profit sharing
contributions at 5% of the U.S. participant's base salary (subject to
limitations) and discontinued in 1999, supplemental retirement plan
contributions for overseas employees, 401(k) plan Company matching
contributions at 33% through March 1999 and 50% thereafter, of U.S.
participant's voluntary deduction, severance, and car allowances. The
amounts represented by each of those forms of compensation for 1999 are
as follows:
<TABLE>
<CAPTION>
PROFIT SHARING
401(K)/
INSURANCE PENSION PLAN CAR
PREMIUM CONTRIBUTIONS RELOCATION SEVERANCE ALLOWANCE
------- ------------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
Jerry R. Mitchell, M.D. Ph.D.,.. $ 1,441 $ 7,503 $ 22,115 $ 0 $ 0
Paul J. Ottaviano............... 1,414 12,388 0 0 0
William L. Shaw, MB, ChB........ 6,721 64,858 0 0 15,694
Michael F. Ankcorn.............. 8,072 180,916 0 0 10,907
S. Colin Neill.................. 1,371 4,500 34,276 0 0
</TABLE>
10
<PAGE> 13
The tables below provide certain information with respect to grants of
stock options to the Named Executive Officers pursuant to the Company's 1989
Stock Option Plan during the year ended December 31, 1999.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
NUMBER OF ----------------- VALUE AT ASSUMED
SECURITIES PERCENT OF ANNUAL RATE OF STOCK
UNDERLYING TOTAL OPTIONS/ MARKET PRICE APPRECIATION FOR
OPTIONS/ SARS GRANTED EXERCISE OF PRICE ON OPTIONSTERM(2)(3)
SARS TO EMPLOYEES IN BASE PRICE DATE OF EXPIRATION -----------------------
NAME GRANTED(1) FISCAL YEAR ($/SHARE) GRANT DATE 5% 10%
- ---- ---------- ----------- --------- ----- ---- -- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Jerry R, Mitchell, M.D.,Ph.D. 100,000 -- $ 5.88 $ 5.88 3/25/09 $ 369,475 $ 936,324
225,000 -- 4.56 4.56 4/30/09 645,600 1,636,076
------- ---- --------- ---------
Total .............. 325,000 34.5% 1,015,075 2,572,400
======= ==== ========= =========
Paul J. Ottaviano ........... 75,000 -- 5.88 5.88 3/25/09 277,107 702,243
50,000 -- 3.75 3.75 12/9/09 117,918 298,827
------- ---- --------- ---------
Total ..... 125,000 13.3% 395,025 1,001,070
======= ==== ========= =========
William L. Shaw, MB, ChB .... 10,000 -- 5.50 5.50 2/17/09 34,084 86,852
30,000 -- 3.75 3.75 12/9/09 70,751 179,296
------- ---- --------- ---------
Total ...... 40,000 4.2% 104,835 266,148
======= ==== ========= =========
S. Colin Neill .............. 50,000 -- 5.88 5.88 3/25/09 184,738 468,162
50,000 -- 3.75 3.75 12/9/09 117,918 298,827
------- ---- --------- ---------
Total ... 100,000 10.6% 302,656 766,989
======= ==== ========= =========
</TABLE>
(1) All options granted to the Named Executive Officers are exercisable in
four equal annual installments beginning one year after the date of
grant. This per share exercise price represents the fair market value
of the Common Stock on the date of grant.
(2) Potential realizable value is calculated from a stock price equal to
the exercise or base price of the options granted.
11
<PAGE> 14
(3) The potential realizable values illustrate values that might be
realized upon exercise immediately prior to the expiration of the term
of these options using 5% and 10% appreciation rates, as required by
the Securities and Exchange Commission, compounded annually. These
values do not, and are not intended to, forecast possible future
appreciation, if any, of the Company's stock price. Additionally, these
values do not take into consideration the provisions of the options
providing for vesting over a period of years or termination of options
following termination of employment.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF VALUE OF UNEXERCISED
SECURITIES UNDERLYING UNEXERCISED IN-THE-MONEY
UNDERLYING VALUE OPTIONS/SARS OPTIONS/SARS
OPTIONS/SARS REALIZED AT FISCAL YEAR-END AT FISCAL YEAR-END($)(1)
NAME EXERCISED (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------- --- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jerry R. Mitchell, M.D., Ph.D........... 0 $ 0 150,000 775,000 $ 131,250 $ 393,750
Paul J. Ottaviano....................... 0 0 78,750 143,750 10,138 18,750
William L. Shaw, MB, ChB................ 0 0 5,000 55,000 0 11,250
Michael F. Ankcorn...................... 0 0 20,251 20,249 0 0
S. Colin Neill.......................... 0 0 12,500 137,500 2,338 25,763
</TABLE>
(1) This amount represents the aggregate of the number of options
multiplied by the difference between $4.13, the fair market value of
the Common Stock at December 31, 1999, and the exercise price for that
option.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Dr. Mitchell,
Mr. Ottaviano, Mr. Neill, Dr. Shaw and Mr. Ankcorn.
The employment agreement for Mr. Ottaviano commenced on January 1, 2000
and ends on December 31, 2000. The employment agreement for Dr. Mitchell
commenced on February 1, 2000 and ends on January 31, 2001. The employment
agreement for Dr. Shaw commenced on December 29, 1999 and ends on December 28,
2000. The employment agreement for Mr. Neill commenced on October 22, 1999 and
ends on October 21, 2000. Each of the agreements are automatically renewed for
additional and successive one year periods unless the Company provides 90 days
notice prior to any anniversary date to the individual employee of its intent
not to renew the employment agreement. The annual minimum base salary under the
agreement for
12
<PAGE> 15
Dr. Mitchell is $275,000; for Mr. Ottaviano, $240,000; for Dr. Shaw,
approximately $235,000; for Mr. Neill, $225,000.
These agreements (other than Mr. Ankcorn's, which is described
separately below) provide for periodic increases in the base salaries at the
discretion of the Board of Directors. The named individuals are entitled to
benefits such as medical insurance, expense reimbursement, vacation and
participation in the Company's 401(k) savings plan or supplemental retirement
plan and, in some cases, incentive bonuses. The agreements contain a non-compete
clause providing that during the term of employment, and for a period of either
six months or one year following the date of termination of employment (for any
reason), the employee may not engage in certain activities competitive with the
Company. The agreements also provide for severance compensation upon termination
of employment, with the amount and type of compensation contingent upon the
context of the termination.
In January 2000, the Company entered into Amendments to the Employment
Agreements with Dr. Mitchell, Mr. Ottaviano, and Mr. Neill. The Amendments
provide for full vesting of all stock options held by Dr. Mitchell, Mr.
Ottaviano, and Mr. Neill upon a change in control of the Company and that the
options shall remain exercisable for the remainder of the stated terms,
regardless of whether employment continues beyond the point of change in
control. Additionally, the Amendments provide that if Dr. Mitchell, Mr.
Ottaviano, or Mr. Neill are terminated by the Company for any reason other than
for cause (including a termination as a result in a change in control), the
Company shall pay an amount in a lump sum equal to eighteen times the current
monthly base salary.
The employment agreement for Mr. Ankcorn commenced on July 31, 1996 and
ends on July 31, 2001. The agreement is automatically renewed for an additional
five year period unless the Company provides six months notice prior to the
fifth anniversary date to Mr. Ankcorn of its intent not to renew the employment
agreement. The annual base salary under the agreement for Mr. Ankcorn is
Canadian $220,000. The agreement provides for periodic increases in the base
salary at the discretion of the Board of Directors. Mr. Ankcorn is entitled to
the standard benefits offered at ClinTrials BioResearch. The employment
agreement contains a non-competition clause providing that during the term of
employment, and for thirty-six months following the date of the expiration or
termination of employment, he may not carry on or be engaged in any endeavor in
competition, in whole or in part, with the Company. In the event of termination
by the Company other than "for cause", Mr. Ankcorn is entitled to three years
severance compensation, including a lump sum salary payment and continued
benefits coverage. If the Company fails to renew the agreement, he is entitled
to a lump sum payment of his most recent annual base salary.
13
<PAGE> 16
CERTAIN TRANSACTIONS
On January 30, 1998, the Company entered into an option agreement (the
MPI Option) with MPI Research, LLC (MPI) and its shareholders, Jerry R.
Mitchell, M.D., Ph.D. and William U. Parfet, who each owned 50% of MPI. Dr.
Mitchell is the President, Chief Executive Officer and Chairman of the Board of
Directors of the Company and Mr. Parfet was the Company's Director of Business
Planning and Analysis until April 1999. Pursuant to the MPI Option, the Company
paid $1,500,000 in cash in exchange for an exclusive option to purchase all of
the outstanding stock of MPI at its fair market value at any time on or prior to
March 31, 2000.
The Company recorded an asset impairment charge of $2,178,000 in the
fourth quarter of 1999 to write-off the purchase option costs included in other
assets on the balance sheet relating to MPI Research. The option expired March
31, 2000 and it was determined that as of December 31, 1999, it was unlikely to
be exercised.
COMPENSATION COMMITTEE REPORT
Recommendations on compensation for the Company's executive officers
are made to the Company's Board of Directors by the Compensation and Stock
Option Committee (the "Committee"). Each member of the Committee is a
non-employee director. It is the responsibility of the Committee to determine
whether in its judgment the executive compensation policies are reasonable and
appropriate, meet their stated objectives and effectively serve the best
interests of the Company and its stockholders.
EXECUTIVE COMPENSATION POLICY
The Committee believes that the primary objectives of the Company's
executive compensation policy should be:
- to attract and retain talented executives critical to both the
short-term and long-term success of the Company by providing
compensation that is highly competitive with compensation
provided to executives of comparable position at companies in
the contract research organization ("CRO") industry,
pharmaceutical industry, and other related health services
industries, while maintaining compensation levels that are
consistent with the Company's financial objectives and
operating performance; and
- to reinforce strategic financial and operating performance
objectives through the use of appropriate annual incentive
programs; and
14
<PAGE> 17
- to create mutuality of interest between executive officers and
stockholders by providing long-term incentive compensation.
The Committee believes that the Company's executive compensation policy
should be reviewed annually in relation to the Company's financial performance,
annual budgeted financial goals and its position in the CRO industry. The
compensation of individuals should then be reviewed annually by the Committee in
light of its executive compensation policy for that year.
The Committee believes that in addition to corporate performance, it is
appropriate to consider in setting and reviewing executive compensation the
level of experience and responsibilities of each executive as well as the
personal contributions a particular individual may make to the success of the
Company. Such factors as leadership skills, analytical skills and organizational
development are deemed to be important qualitative factors to take into account
in considering levels of compensation. No relative weight is assigned to these
qualitative factors, which are applied subjectively by the Committee.
COMPENSATION OF EXECUTIVE OFFICERS
The Committee believes that the compensation of executive officers
should be comprised of base compensation, annual incentive compensation, and
long-term incentive compensation, and has applied this policy to fiscal 1999
compensation for executive officers as described below.
Base Compensation. The Committee's approach to base compensation for
executive officers of the Company is to offer competitive salaries in comparison
to its local markets, the CRO industry, the pharmaceutical industry, and other
related health service industries. In determining base compensation for the
executive officers for fiscal 1999, the Committee reviewed salary ranges
recommended by management, consulted with the CEO, and took into account each
executive's experience in business generally and with the Company specifically
and what it viewed to be appropriate levels of base compensation after taking
into consideration the contribution of each executive. For those executive
officers with employment agreements, the base salaries were determined according
to the terms of the respective employment agreements. In addition, Mr. Anckorn's
base salary is set in terms of Canadian dollars and is accordingly subject to
change annually as expressed in U.S. dollars based on fluctuation in currency
exchange rates.
Annual Incentive Programs. The Committee believes that incentive
compensation for the executive officers of the Company should be primarily
linked to operating performance. To achieve this goal, the Committee relies on
cash bonuses. Cash bonuses are awarded to executive officers of the Company
based primarily upon the actual earnings of the Company during the fiscal year
compared to the earnings targets approved by the Board of Directors through the
annual financial budget and subsequent financial projections.
15
<PAGE> 18
Long-Term Incentive Compensation. The 1999 Long-Term Incentive
Compensation Plan is the only plan currently in place as a long-term
compensation incentive for the Company's executive officers. There are six types
of stock options available for grant: incentive stock options, non-qualified
options, stock appreciation rights, restricted stock, performance shares and
performance units. These stock options are generally granted with an exercise
price at not less than the fair market value of the underlying stock at the date
of grant. Stock options are granted to executive officers by the Board of
Directors based primarily upon the financial performance of the Company as
compared to budgeted and projected earnings, as well as actual or potential
contributions to the growth of the Company.
The Company has a 401(k) profit sharing plan in which all U.S.
employees, including executive officers, have equal participation eligibility.
The Committee annually establishes the Company matching portion of the 401(k)
deposits made to employees' 401(k) accounts. The matching percentage is the same
for executive officers and all employees. For 1999, the matching amount was 33%
through March and 50% thereafter, of the amount withheld by each participant,
not to exceed the maximum contribution allowed under Section 415 of the Internal
Revenue Code (the "Code") for a qualified plan. Mr. Ankcorn and Dr. Shaw are the
sole participants in separate supplemental retirement plans, for which
contributions are actuarially determined.
Section 162(m) of the Code generally disallows a tax deduction to
public companies for executive compensation in excess of $1 million. It is not
anticipated that the Company will pay any of its executives compensation in
excess of $1 million in 2000.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The Committee believes that compensation of the Chief Executive Officer
is consistent with the policies concerning executive compensation and
appropriately reflects the Company's financial objectives and operating
performance. Awards of long-term incentive compensation of the Chief Executive
Officer are considered concurrently with awards to other executive officers.
In approving Dr. Mitchell's compensation package, the Board of
Directors considered factors such as the compensation package of its outgoing
CEO, compensation packages for CEOs of comparable companies, and, most
importantly, its judgment as to Dr. Mitchell's anticipated value to the Company
based on his business experience and expertise in the industry.
16
<PAGE> 19
The foregoing report on executive compensation is provided by the following
directors, who constituted the Compensation and Stock Option Committee during
1999:
Edward G. Nelson, Chairman of Committee
Irwin B. Eskind, M.D.
Roscoe R. Robinson, M.D.
The above Compensation Committee Report is not deemed to be part of a
document filed with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and is not to be deemed
incorporated by reference in any documents filed under the Securities Act or the
Exchange Act, without the express written consent of the Company.
OPTION REPRICING
In September 1998, the Board of Directors voted to reduce the exercise
price of the options and warrants held by Dr. Mitchell due to the general
decline in the stock market and the decline in the market price of the Company's
Common Stock. The options and warrants originally had exercise prices ranging
from $7 to $13 per share and the exercise price on all of them was reduced to
$3.25 per share, the closing price of the Common Stock on the date of repricing.
The Board felt that the market price of the Company's Common Stock had fallen to
a point so far below the average exercise price of the options and warrants that
they were no longer serving as compensatory or incentive tools. The Board also
felt that the reduction in the market price of the Company's Common Stock was
more a result of general economic trends and was not the fault of Dr. Mitchell.
The Board believed that the repricing of the options and warrants was in the
best interest of the Company and will serve to retain and motivate Dr. Mitchell.
The following table sets forth information concerning options or
warrants granted to any executive officer of the Company for which the exercise
price was adjusted in the last ten years. The repricing was unanimously approved
by the Board of Directors, except for Dr. Mitchell, who abstained from voting.
17
<PAGE> 20
TEN-YEAR OPTION/SAR REPRICINGS
<TABLE>
<CAPTION>
LENGTH OF
ORIGINAL
NUMBER OF OPTION
SECURITIES MARKET PRICE TERM
UNDERLYING OF STOCK AT EXERCISE PRICE REMAINING
OPTIONS/SARS TIME OF AT TIME OF NEW AT DATE OF
REPRICED OR REPRICING OR REPRICING OR EXERCISE REPRICING OR
NAME DATE AMENDED(#) AMENDMENT($) AMENDMENT($) PRICE($) AMENDMENT
- ---- ---- ----------- ------------ ------------ -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Jerry R. Mitchell, M.D., Ph.D...... 9/4/98 300,000 $ 3.25 $ 7 to $13 $3.25 3.4 years
Chairman of the Board,
President and Chief
Executive Officer
Jerry R. Mitchell, M.D., Ph.D........ 9/4/98 250,000 3.25 7.00 3.25 9.4 years
Michael F. Ankcorn................... 4/18/97 20,250 7.63 22.00 8.38 9.3 years
ClinTrials BioResearch Ltd.
Chairman of the Board,
President and Chief
Executive Officer
Barry B. Kanarek(1).................. 4/18/97 45,000 7.63 22.00 8.38 9.7 years
Albert J. Siemens(2)................. 4/18/97 6,750 7.63 12.92 8.38 8.7 years
</TABLE>
(1) Dr. Kanarek resigned from the Company effective April 2, 1998.
(2) Dr. Siemens resigned from the Company effective January 31, 1998.
The foregoing report on option repricing is provided by the Board of
Directors:
Edward G. Nelson
Roscoe R. Robinson, M.D.
Irwin B. Eskind, M.D.
Richard J. Eskind
18
<PAGE> 21
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's executive officers and directors, and
persons who own more than 10% of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission (the "SEC"). Such executive officers,
directors and greater than 10% stockholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.
Based solely upon the Company's review of copies of the Section 16(a) forms
furnished to the Company for the fiscal year ended December 31, 1999, the
Company believes that, during such fiscal year, its executive officers,
directors and greater than 10% stockholders complied with applicable Section
16(a) filing requirements.
COMPANY PERFORMANCE
The following graph sets forth the yearly percentage change in
cumulative total stockholder return during the preceding five years ended
December 31, 1999 on (a) the Company, (b) the Center for Research in Security
Prices ("CRSP") Index for Nasdaq Stock Market (U.S. Companies) ("Nasdaq U.S.
Stock Index") and (c) the CRSP Index for Nasdaq Health Services Stocks ("Nasdaq
Health Services Index"), assuming the reinvestment of all dividends.
[GRAPH]
<TABLE>
<CAPTION>
12/30/94 12/29/95 12/31/96 12/31/97 12/31/98 12/31/99
<S> <C> <C> <C> <C> <C> <C>
ClinTrials Research 100.0 216.0 364.0 126.1 63.0 66.1
Nasdaq Stock Market (US Companies) 100.0 141.3 173.9 213.1 300.2 546.7
Nasdaq Health Services Stocks 100.0 126.8 126.6 129.0 109.3 88.6
</TABLE>
19
<PAGE> 22
INDEPENDENT AUDITORS
The accounting firm of Ernst & Young LLP has served as the Company's
independent auditors for the fiscal year ended December 31, 1999. A
representative of that firm will be present at the meeting and will have the
opportunity to make a statement if he so desires and to respond to appropriate
questions.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 2001 Annual
Meeting must be received by the Company not later than December 20, 2000 for
inclusion in its Proxy Statement and form of proxy relating to that meeting. Any
such proposals, as well as any questions relating thereto, should be directed to
S. Colin Neill, Senior Vice President, Chief Financial Officer and Secretary,
11000 Weston Parkway, Cary, North Carolina 27513.
OTHER BUSINESS
It is not anticipated that any other business will arise during the
Annual Meeting as the management of the Company has no other business to present
and does not know that any other person will present any other business.
However, if any other business should be presented at the meeting, the persons
named in the enclosed proxy intend to take such action as will be in harmony
with the policies of the management of the Company.
MISCELLANEOUS
It is important that proxies be returned promptly to avoid unnecessary
expense. Therefore, stockholders who do not expect to attend in person are
urged, regardless of the number of shares of stock owned, to date, sign and
return the enclosed proxy promptly.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1999 MAY BE OBTAINED, WITHOUT CHARGE, BY ANY STOCKHOLDER TO
WHOM THIS PROXY STATEMENT IS SENT, UPON WRITTEN REQUEST TO S. COLIN NEILL,
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER, 11000 WESTON PARKWAY, CARY,
NORTH CAROLINA 27513.
20
<PAGE> 23
PROXY CLINTRIALS RESEARCH INC. PROXY
ANNUAL MEETING OF STOCKHOLDERS, MAY 25, 2000
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints S. Colin Neill and Jerry R. Mitchell, M.D.,
Ph.D., as proxies, with power of substitution, to vote all shares of the
undersigned at the Annual Meeting of Stockholders of ClinTrials Research Inc.,
to be held on Thursday, May 25, 2000, at 9:00 a.m. Central Daylight Time, at
Bank of America, Bank of America Plaza, 3rd Floor Board Room, Nashville,
Tennessee, and at any adjournments or postponements thereof, in accordance with
the following instructions:
(1) ELECTION OF DIRECTORS:
<TABLE>
<S> <C> <C> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote
(except as marked to the contrary below) for all nominees listed
below
</TABLE>
(INSTRUCTION: To withhold authority to vote for any individual nominee
check the box to vote "FOR" all nominees and strike a line through the
nominee's name in the list below.)
Jerry R. Mitchell, M.D., Ph.D., Irwin B. Eskind, M.D.,
Richard J. Eskind, Edward G. Nelson, Roscoe R. Robinson, M.D.
(2) IN THEIR DISCRETION, ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING.
[ ] FOR DISCRETION [ ] AGAINST DISCRETION [ ] ABSTAIN
THE SHARES REPRESENTED HEREBY WILL BE VOTED AS SPECIFIED. IF NO
SPECIFICATION IS MADE, THE SHARES WILL BE VOTED FOR THE NOMINEES IN THE ELECTION
OF DIRECTORS AND IN THE DISCRETION OF THE PROXIES ON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING.
PLEASE SIGN AND DATE BELOW AND RETURN PROMPTLY.
Dated: , 2000
----------------
------------------------------
Dated: , 2000
----------------
------------------------------
Signature(s) of shareholder(s)
should correspond exactly with
the name(s) printed hereon.
Joint owners should each sign
personally. Executors,
administrators, trustees,
etc., should give full title
and authority.
