<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 14A INFORMATION
Proxy Statement Pursuant to Section 12(a) of the Securities Exchange Act of 1934
(Amendment No. )
/X/ Filed by the Registrant
/_/ 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
Regeneron Pharmaceuticals, Inc.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Regeneron Pharmaceuticals, Inc.
------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing Fee (Check the appropriate box):
/X/ No fee required.
/_/ Fee computed on table below per Exchange Act Rule 14a-6(i)(l) 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:
___________________________________________________________________________
/_/ 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. Indentify the provious 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 No.:______________________________
3) Filing party:__________________________________________________
4) Date filed: April 30, 1999
<PAGE>
Regeneron Pharmaceuticals, Inc.
Proxy
Statement
<TABLE>
<S> <C>
Dear Shareholder:
The Annual Meeting of Shareholders of
Regeneron Pharmaceuticals, Inc. will be held
at the Westchester Marriott Hotel, 670 White
Plains Road, Tarrytown, New York 10591 at
10:30 a.m., Eastern Daylight Savings Time, on
Friday, June 11, 1999.
The purposes of the meeting are:
NOTICE OF ANNUAL MEETING OF o To elect three Directors to hold office for
SHAREHOLDERS a three-year term as Class II Directors, and
until their successors are duly elected and
qualified;
TO BE HELD ON JUNE 11, 1999
o To ratify, confirm, and approve the Board's
January 22, 1999 resolution of the increase
of 1,500,000 in the number of shares reserved
for issuance under Regeneron's Amended and
Restated 1990 Long-Term Incentive Plan;
o To approve the selection of
PricewaterhouseCoopers LLP as independent
accountants for the fiscal year ending
December 31, 1999; and
o To act upon such other matters as may
properly come before the meeting and any
adjournment or postponement thereof.
The Board of Directors has fixed the close of
business on April 16, 1999 as the record date
for the determination of shareholders
entitled to notice of and to vote at the
meeting and at any adjournment or
postponement thereof.
Whether or not you plan to attend the Annual
Meeting, please complete, sign, and date the
accompanying proxy and return it promptly in
the enclosed prepaid envelope. If you attend
the Annual Meeting, you may vote in person if
Regeneron Pharmaceuticals, Inc. you wish, even if you have previously
returned your proxy.
777 Old Saw Mill River Road
Tarrytown, New York 10591-6707 By Order of the Board of Directors,
(914) 345-7400
Paul Lubetkin
Secretary
Tarrytown, New York
May 7, 1999
</TABLE>
<PAGE>
Regeneron Pharmaceuticals, Inc.
777 Old Saw Mill River Road
Tarrytown, New York 10591
(914) 345-7400
May 7, 1999
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders
of Regeneron Pharmaceuticals, Inc. to be held on Friday, June 11, 1999 at 10:30
a.m. at the Westchester Marriott Hotel, 670 White Plains Road, Tarrytown, New
York 10591.
Whether or not you plan to attend the Annual Meeting, please mark,
sign, and date the accompanying proxy and return it promptly in the enclosed
prepaid envelope. If you attend the Annual Meeting, you may vote in person if
you wish, even if you have previously returned your proxy.
Sincerely,
P. Roy Vagelos, M.D.
Chairman of the Board of Directors
<PAGE>
Proxy Statement
1999 Annual Meeting of Shareholders of
Regeneron Pharmaceuticals, Inc.
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Proxy Solicitation
This Proxy Statement is furnished to the shareholders of Regeneron
Pharmaceuticals, Inc., a New York corporation (the "Company"), in connection
with the solicitation by its Board of Directors from holders of the Company's
Common Stock (the "Common Stock") and Class A Common Stock (the "Class A Stock")
of proxies to be voted at the Annual Meeting of Shareholders of the Company to
be held on Friday, June 11, 1999 at 10:30 a.m., at the Westchester Marriott
Hotel, 670 White Plains Road, Tarrytown, New York 10591, and at any adjournment
or postponement thereof (the "Annual Meeting"), for the purposes set forth in
the accompanying Notice of Annual Meeting of Shareholders. The Company's
executive offices are located at 777 Old Saw Mill River Road, Tarrytown, New
York 10591.
This Proxy Statement and form of proxy are first being mailed to shareholders of
the Company on or about May 7, 1999. All proxies duly executed and received
prior to or at the Annual Meeting, and not revoked, will be voted on all matters
presented at the meeting in accordance with the instructions indicated on such
proxies. In the absence of instructions, proxies so received will be voted (1)
FOR the named nominees to the Company's Board of Directors, (2) TO ratify,
confirm, and approve the Board's January 22, 1999 resolution of the increase of
1,500,000 in the number of shares reserved for issuance under the Company's
Amended and Restated 1990 Long-Term Incentive Plan, and (3) FOR the approval of
the selection of PricewaterhouseCoopers LLP as independent accountants for the
Company's fiscal year ending December 31, 1999. If any other matters are
properly presented at the Annual Meeting for consideration, the persons named in
the enclosed form of proxy will have discretion to vote on such matters in
accordance with their best judgment.
Any proxy given pursuant to this solicitation may be revoked by (i) filing with
the Secretary of the Company, at or before the taking of the vote at the Annual
Meeting, a written notice of revocation bearing a later date than the proxy,
(ii) duly executing a later dated proxy relating to the same shares and
delivering it to the Secretary of the Company before the taking of the vote at
the Annual Meeting, or (iii) attending the Annual Meeting and voting in person
(although attendance at the Annual Meeting will not in and of itself constitute
the revocation of a proxy). Any written notice of revocation or subsequent proxy
should be sent so as to be delivered to Regeneron Pharmaceuticals, Inc., 777 Old
Saw Mill River Road, Tarrytown, New York 10591, Attention: Secretary, or hand
delivered to the Secretary of the Company at or before the taking of the vote at
the Annual Meeting. The persons named as proxies in the enclosed form of proxy,
Leonard S. Schleifer and Paul Lubetkin, were selected by the Board of Directors
of the Company and are officers of the Company.
Record Date & Voting at the Annual Meeting
The Board of Directors of the Company has fixed the close of business on April
16, 1999 as the record date for the determination of the shareholders entitled
to notice of, and to vote at, the Annual Meeting. Accordingly, only holders of
record of Common Stock and Class A Stock on the record date will be entitled to
notice of, and to vote at, the Annual Meeting. As of April 16, 1999, 27,670,661
shares of Common Stock and 3,630,786 shares of Class A Stock were outstanding.
The Common Stock and the Class A Stock vote together on all matters as a single
class, with the Common Stock being entitled to one vote per share and the Class
A Stock being entitled to ten votes per share. No other voting securities of the
Company were outstanding on the record date. The holders of a majority of the
shares issued and outstanding attending personally or by proxy will constitute a
quorum for the transaction of business at the Annual Meeting.
Election of directors will be determined by a plurality of the votes cast in
person or by proxy at the Annual Meeting. All other matters presented to
shareholders will be determined by the affirmative vote of a majority of the
votes cast in person or by proxy at the Annual Meeting. Under applicable New
York law, in determining whether any proposal has received the requisite number
of affirmative votes and tabulating the votes for directors, abstentions and
broker nonvotes will be disregarded and will have no effect on the outcome of
the vote.
Annual Report
The Company's Annual Report to Shareholders for the year ended December 31, 1998
is being furnished herewith to shareholders of record on or about May 7, 1999.
The Annual Report to Shareholders does not constitute a part of the proxy
soliciting material. The Company has also filed with the Securities and Exchange
Commission a report on Form 10-K for the year ending December 31, 1998, a copy
of which will be furnished (except for exhibits) without charge to any
shareholder upon written request addressed to the Investor Relations Department
of the Company at the address shown above.
1
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Security Ownership of Management
The following table sets forth, as of April 16, 1999, the number of shares of
the Company's Common Stock and Class A Stock beneficially owned by each of its
directors or nominees for directors, and all directors and executive officers as
a group, and the percentage that such shares represent of the total combined
number of outstanding Common Stock and Class A Stock, based upon information
obtained from such persons.
Management and Directors Stock Ownership Table as of April 16, 1999
<TABLE>
<CAPTION>
Percentage
Number of of
Number of Shares Shares of Common Stock
Name of Beneficial Owner of Class A Stock Common Stock & Class A Stock
Beneficially Beneficially Beneficially
Owned Owned Owned
(1) (1) (2)
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<S> <C> <C> <C>
Leonard S. Schleifer, M.D., Ph.D. 1,769,340 (3) 305,000 (8) 6.6%
P. Roy Vagelos, M.D. 0 923,001 (9) 3.0%
Charles A. Baker 62,384 (4) 50,591 (10) *
Michael S. Brown, M.D. 60,749 110,001 (11) *
Alfred G. Gilman, M.D., Ph.D. 124,912 114,701 (12) *
Joseph L. Goldstein, M.D. 52,000 91,668 (11) *
Fred A. Middleton c/o Sanderling Ventures 73,528 (5) 68,019 (10) *
Eric M. Shooter, Ph.D. 92,911 110,001 (11) *
George L. Sing 0 102,221 (10) *
Murray A. Goldberg 0 71,400 (13) *
Paul Lubetkin 30,912 (6) 80,800 (14) *
George D. Yancopoulos, M.D., Ph.D. 42,750 (7) 348,600 (15) 1.2%
Randall R. Rupp 0 88,300 (11) *
All Directors and Executive Officers 2,361,060 2,648,349 15.2%
as a Group (21 persons)
- ------------------------------------------
</TABLE>
* Represents less than 1%
(1) The inclusion herein of any Class A Stock or Common Stock, as the case may
be, deemed beneficially owned does not constitute an admission of beneficial
ownership of those shares. Unless otherwise indicated, each person listed above
has sole voting and investment power with respect to the shares listed.
(2) Number of shares outstanding includes 31,301,447 shares outstanding as of
April 16, 1999 plus any shares subject to options held by the person or entity
in question that are currently exercisable or exercisable within sixty days
after April 16, 1999.
(3) Includes 58,550 shares of Class A Stock held in trust for the benefit of Dr.
Schleifer's two sons, of which Dr. Schleifer disclaims beneficial ownership.
Excludes 33,000 shares of Class A Stock held by the Schleifer Family Foundation,
a charitable foundation, of which Dr. Schleifer disclaims beneficial ownership.
(4) Excludes shares owned by Sanderling Ventures, of which Mr. Baker is a
special limited partner.
(5) Fred A. Middleton, a Director of the Company, is a General Partner of
Sanderling Ventures, and the beneficial owner of the shares. Sanderling Ventures
consists of several entities: Sanderling Venture Partners II, L.P., Sanderling
Ventures Limited, L.P., and Sanderling Biomedical, L.P. Also includes 16,018
shares of Common Stock held directly by Mr. Middleton and 2,000 shares of Common
Stock held in trust for the benefit of Mr. Middleton's children, of which Mr.
Middleton disclaims beneficial ownership.
(6) Includes 4,800 shares of Class A Stock held in trust for the benefit of Mr.
Lubetkin's son and excludes 7,500 shares held by Mr. Lubetkin's wife. Mr.
Lubetkin disclaims beneficial ownership of all such shares.
(7) Includes 19,383 shares of Class A Stock held in trust for the benefit of Dr.
Yancopoulos's children and excludes 205 shares held by Dr. Yancopoulos's wife.
Dr. Yancopoulos disclaims beneficial ownership of all such shares.
2
<PAGE>
(8) Includes 240,000 shares of Common Stock purchasable upon the exercise of
options granted pursuant to the Long-Term Incentive Plan which are exercisable
or become so within sixty days from April 16, 1999.
(9) Includes 600,000 shares of restricted Common Stock purchased by Dr. Vagelos
in January 1995 pursuant to an agreement with the Company that provides, among
other things, that such restricted shares are not transferable, with such
restriction lapsing ratably over a five year period. Also includes 20,001 shares
of Common Stock purchasable upon the exercise of options granted pursuant to the
Long-Term Incentive Plan which are exercisable or become so within sixty days
from April 16, 1999.
(10) Includes 50,001 shares of Common Stock purchasable upon the exercise of
options granted pursuant to the Long-Term Incentive Plan which are exercisable
or become so within sixty days from April 16, 1999.
(11) All shares of Common Stock beneficially owned represents shares of Common
Stock purchasable upon the exercise of options granted pursuant to the Long-Term
Incentive Plan which are exercisable or become so within sixty days from April
16, 1999.
(12) Includes 110,001 of Common Stock purchasable upon the exercise of options
granted pursuant to the Long-Term Incentive Plan which are exercisable or become
so within sixty days from April 16, 1999.
(13) Includes 68,000 shares of Common Stock purchasable upon the exercise of
options pursuant to the Long-Term Incentive Plan which are exercisable or become
so within sixty days from April 16, 1999, and excludes 300 shares held jointly
as custodian for Mr. Goldberg's children, of which Mr. Goldberg disclaims
beneficial ownership.
(14) Includes 79,800 shares of Common Stock purchasable upon the exercise of
options pursuant to the Long-Term Incentive Plan which are exercisable or become
so within sixty days from April 16, 1999.
(15) Includes 333,600 shares of Common Stock purchasable upon the exercise of
options pursuant to the Long-Term Incentive Plan which are exercisable or become
so within sixty days from April 16, 1999.
Security Ownership of Certain Beneficial Owners as of April 16, 1999
Set forth below is the name, address, and stock ownership of each person or
group of persons known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock or Class A Stock.
<TABLE>
<CAPTION>
Percentage of
Shares of Common
Number of Shares Number of Shares Stock and Class A
of Class A Stock of Common Stock Stock Beneficially
Name and Address of Beneficial Owner Beneficially Owned Beneficially Owned Owned
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Leonard S. Schleifer, M.D., Ph.D. 1,769,340 (1) 305,000 6.6% (2)
777 Old Saw Mill River Road
Tarrytown, New York 10591
Amgen Inc. 788,766 3,650,000 14.2% (3)
1840 DeHavilland Drive
Thousand Oaks, California 91320
Procter & Gamble Pharmaceuticals, Inc. 0 5,150,000 16.5% (4)
10200 Alliance Road
Cincinnati, Ohio 45242
</TABLE>
- ---------------------------------
(1) Includes 58,550 shares of Class A Stock held in trust for the benefit of Dr.
Schleifer's two sons, of which Dr. Schleifer disclaims beneficial ownership.
Excludes 33,000 shares of Class A Stock held by the Schleifer Family Foundation,
a charitable foundation, of which Dr. Schleifer disclaims beneficial ownership.
(2) Number of shares deemed outstanding includes 31,301,447 shares outstanding
as of April 16,1996 plus 240,000 shares subject to options held by Dr. Schleifer
that are currently exercisable or exercisable within sixty days after April 16,
1999.
(3) Number of shares deemed outstanding includes 31,301,447 shares outstanding
as of April 16, 1996, and does not include a warrant held by Amgen to purchase
700,000 shares of Common Stock.
(4) Number of shares deemed outstanding includes 31,301,447 shares outstanding
as of April 16, 1999, and does not include a warrant held by Procter & Gamble
to purchase 1,450,000 shares of Common Stock.
3
<PAGE>
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ELECTION OF DIRECTORS
Nominees
The Board of Directors is divided into three classes, denominated Class I, Class
II, and Class III, with members of each class holding office for staggered
three-year terms. There are currently three Class I Directors, whose terms
expire at the 2001 Annual Meeting, three Class II Directors, whose terms expire
at the 1999 Annual Meeting, and three Class III Directors, whose terms expire at
the 2000 Annual Meeting (in all cases subject to the election and qualification
of their successors and to their earlier death, resignation, or removal).
At each annual meeting of shareholders, the successors to directors whose terms
expire shall be elected to serve from the time of election and qualification
until the third annual meeting following their election and until a successor
has been duly elected and qualified. All of the nominees for Class II Directors
are currently Class II Directors of the Company. All of these nominees have
indicated a willingness to serve if elected, but if any should be unable or
unwilling to serve, proxies may be voted for substitute nominees designated by
the Board of Directors.
The following table contains information, as of April 16, 1999, with respect to
the persons who serve on the Board, including the persons who have been
nominated to serve a three-year term as directors.
<TABLE>
<CAPTION>
Served as a
Director Class
Name Age Position with the Company Since of Dir.
- ---- --- ------------------------- ----- -------
<S> <C> <C> <C> <C>
P. Roy Vagelos, M.D. (1) 69 Chairman of the Board 1995 II
Leonard S. Schleifer, M.D., Ph.D. 46 Director, Chief Executive Officer, 1988 I
and President
Eric M. Shooter, Ph.D. (1) 75 Director and Member of 1988 I
Scientific Advisory Board
Fred A. Middleton (2) 49 Director 1990 I
Joseph L. Goldstein, M.D. (1) 59 Director and Member of Scientific 1991 II
Advisory Board
Alfred G. Gilman, M.D., Ph.D. (1) 57 Director and Member of Scientific 1990 II
Advisory Board
George L. Sing (2)(3) 50 Director 1988 III
Charles A. Baker (2)(3) 66 Director 1989 III
Michael S. Brown, M.D. (1) 58 Director and Member of Scientific 1991 III
Advisory Board
</TABLE>
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(1) Member of the Technology Committee.
(2) Member of the Audit Committee.
(3) Member of the Compensation Committee.
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Background of Nominees for Class II Directors
ALFRED G. GILMAN, M.D., Ph.D., 57, a co-founder of the Company, has been a
Director of the Company since July 1990 and a member of the Scientific Advisory
Board since 1988. Dr. Gilman has been the Raymond and Ellen Willie Professor of
Molecular Neuropharmacology and Chairman of the Department of Pharmacology at
The University of Texas Southwestern Medical Center at Dallas since 1981 and was
named a Regental Professor in 1995. Dr. Gilman is a member of the National
Academy of Sciences. He is the Consulting Editor of "Goodman and Gilman's The
Pharmacological Basis of Therapeutics," the leading medical pharmacology
textbook. Dr. Gilman received the Nobel Prize for Physiology or Medicine in
1994. Dr. Gilman is a member of the Board of Directors of Eli Lilly & Company.
JOSEPH L. GOLDSTEIN, M.D., 59, has been a Director of the Company since June
1991 and a Member of the Company's Scientific Advisory Board since January 1988.
Dr. Goldstein has been the Professor of Medicine and Genetics and Chairman of
the Department of Molecular Genetics at The University of Texas Southwestern
Medical Center at Dallas for more than five years. Dr. Goldstein is a member of
the National Academy of Sciences. Drs. Goldstein and Brown jointly received the
Nobel Prize for Physiology or Medicine in 1985.
4
<PAGE>
P. ROY VAGELOS, M.D., 69, has been a Director of the Company, Chairman of the
Board, and member of the Scientific Advisory Board since January 1995. Dr.
Vagelos was Chairman of the Board and Chief Executive Officer of Merck & Co.,
Inc. He joined Merck in 1975, became a director in 1984, President and Chief
Executive Officer in 1985, and Chairman in 1986. Dr. Vagelos retired from all
positions with Merck in 1994. He is also currently Chairman of the Board of
Trustees of the University of Pennsylvania and a member of the Board of
Directors of PepsiCo, Inc., The Prudential Insurance Company of America, and
Estee Lauder Companies.
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Background of Directors Whose Terms are Continuing
- --------------------------------------------------------------------------------
Directors Whose Terms Expire at the 2001 Annual Meeting (Class I)
LEONARD S. SCHLEIFER, M.D., Ph.D., 46, founded Regeneron in 1988 and has been
its President and Chief Executive Officer since its inception and served as
Chairman of the Board from 1990 through 1994. In 1992, Dr. Schleifer was
appointed Clinical Professor of Neurology at the Cornell University Medical
School, and from 1984 to 1988 he was Assistant Professor at the Cornell
University Medical School in the Departments of Neurology and Neurobiology. Dr.
Schleifer received his M.D. and Ph.D. in Pharmacology from the University of
Virginia. Dr. Schleifer is a licensed physician and is certified in Neurology by
the American Board of Psychiatry and Neurology.
ERIC M. SHOOTER, Ph.D., 75, a co-founder of the Company, has been a director of
the Company and member of the Scientific Advisory Board since 1988. Dr. Shooter
has been a Professor at Stanford University School of Medicine since 1968. He
was the founding Chairman of the Department of Neurobiology at Stanford
University School of Medicine in 1975 and served as its Chairman until 1987. He
is a Fellow of the Royal Society of England, a Fellow of the American Academy of
Arts and Sciences, and a Foreign Associate of the Institute of Medicine of the
National Academy of Sciences.
FRED A. MIDDLETON, 49, has been a Director of the Company since July 1990. Mr.
Middleton also served as the Company's Chief Financial Officer and Treasurer
from October 1988 to May 1991. Mr. Middleton is a General Partner of Sanderling
Ventures, a venture capital firm he co-founded with Dr. Robert McNeil in
December 1987 specializing in early stage biomedical companies. Sanderling
Ventures is a shareholder of the Company. See "Security Ownership of
Management." Between 1984 and 1987, he was Managing General Partner of Morgan
Stanley Ventures and, from 1978 through 1984, was Vice President and Chief
Financial Officer of Genentech, Inc., and President, Genentech Development
Corporation. He is also a member of the Board of Directors of Vical, Inc.
- --------------------------------------------------------------------------------
Directors Whose Terms Expire at the 2000 Annual Meeting (Class III)
CHARLES A. BAKER, 66, has been a Director of the Company since February 1989.
Since December 1989, he has been the Chairman, President, and Chief Executive
Officer of The Liposome Company, Inc., a publicly held company. During his
career, Mr. Baker served in senior management capacities in various
pharmaceutical companies, including the positions of Group Vice President,
Squibb Corporation (now Bristol-Myers Squibb) and President, Squibb
International. He also held various senior executive positions at Abbott
Laboratories and Pfizer, Inc. Mr. Baker is a special limited partner in
Sanderling Ventures, which is a shareholder of the Company. See "Security
Ownership of Management."
MICHAEL S. BROWN, M.D., 58, has been a Director of the Company since June 1991
and a Member of the Company's Scientific Advisory Board since January 1988. Dr.
Brown is Professor of Medicine and Genetics and the Director of the Center for
Genetic Diseases at The University of Texas Southwestern Medical Center at
Dallas. He is a member of the National Academy of Sciences. He is a Director of
Pfizer, Inc. His scientific contributions in cholesterol and lipid metabolism
were made in collaboration with Dr. Joseph L. Goldstein. Drs. Brown and
Goldstein jointly received the Nobel Prize for Physiology or Medicine in 1985.
GEORGE L. SING, 50, has been a Director of the Company since January 1988. From
February 1990 until February 14, 1991, Mr. Sing served as a consultant to
Merrill Lynch Venture Capital Inc. with respect to the Company. From 1982 to
February 1990, Mr. Sing was a Vice President and member of the Board of
Directors of Merrill Lynch Venture Capital, Inc., a venture capital firm, which
was the management company for ML Venture Partners II, L.P., a shareholder of
the Company. Since 1987, Mr. Sing has been a limited partner of MLVPII Co.,
L.P., a general partner of ML Venture Partners II, L.P. Since 1993, Mr. Sing has
been a general partner of Zitan Partners, an investment and advisory firm.
- --------------------------------------------------------------------------------
Board Committees
The Company's Board of Directors has an Audit Committee of which Messrs. Baker,
Middleton, and Sing are members. The Audit Committee is responsible for
reviewing the Company's financial results, the scope and results of audits, and
the evaluation of the Company's system of internal controls. It also recommends
the appointment of independent accountants. The Audit Committee is comprised of
directors who are not officers or employees of Regeneron.
The Board of Directors has a Compensation Committee of which Messrs. Baker and
Sing are members. The Compensation Committee has responsibility for
administering and approving cash compensation of all corporate officers and of
other employees of the Company, and for the administration of the Company's
Executive Stock Purchase Plan and Long-
5
<PAGE>
Term Incentive Plan. Members of this committee are directors who are not
officers or employees of Regeneron.
The Board of Directors also has a Technology Committee of which Drs. Brown,
Gilman, Goldstein, Shooter, and Vagelos are members. The Technology Committee
has the responsibility for reviewing the Company's scientific and medical
programs and policies. The Technology Committee members are also members of the
Regeneron Scientific Advisory Board.
During the last fiscal year, the Board of Directors held five meetings, the
Audit Committee held two meetings, the Compensation Committee held three
meetings, and the Technology Committee held four meetings. No director attended
fewer than 75 percent of the number of Board of Directors meetings and meetings
of committees on which he served.
- --------------------------------------------------------------------------------
Compensation of Directors
Non-employee directors receive an annual retainer of
$5,000 and a payment of $2,000 for each Board meeting attended in person. No
additional retainer is paid for committee service. Directors who are not
employees are reimbursed for their actual expenses relating to their attendance
at Board of Directors meetings. For his service as Chairman of the Board in
1998, Dr. Vagelos received an additional $70,000. In accordance with an
agreement dated as of January 8, 1995 between Dr. Vagelos and the Company, Dr.
Vagelos purchased 600,000 restricted shares of Common Stock ("Restricted
Shares") for $300,000. He also received an option to purchase up to 285,000
shares of the Company's Common Stock. The Restricted Shares are nontransferable,
with such restriction lapsing ratably over a five year period. The stock options
entitle Dr. Vagelos to purchase an equal number of shares of Common Stock at the
fair market value of the Common Stock as of the date of grant, or $3.50 per
share. On December 31, 1998, Dr. Vagelos entered into a five-year employment
agreement with Regeneron, pursuant to which, effective January 1, 1999, he
became a part-time employee. Dr. Vagelos did not become an officer of Regeneron
or change his title. His annual compensation as an employee will be $100,000. In
accordance with the employment agreement, the Company issued Dr. Vagelos an
option, pursuant to the Long-Term Incentive Plan, to purchase up to 162,500
shares of Regeneron Common Stock at an exercise price of $7.41 per share; the
option will vest over five years. In addition, the Company agreed to recommend
to the Compensation Committee that Dr. Vagelos be granted additional stock
option grants on or about January 1, 2000 through 2004 in the amount of the
greater of (a) 125,000 shares or (b) 125% of the highest annual option grant
made to an officer of the Company at the time of each respective year's annual
grant to officers. Such additional option grants are subject to a number of
conditions. If Dr. Vagelos dies or is disabled while he is employed by
Regeneron, all options granted by Regeneron to him will immediately become
exercisable at the time of death or disability.
Pursuant to the Company's Long-Term Incentive Plan, each member of the Board of
Directors who is not at the time of grant an employee of the Company or any
subsidiary of the Company (an "Outside Director") receives an automatic grant of
an option to purchase 10,000 shares of Common Stock with an exercise price per
share equal to the fair market value of a share of Common Stock on the date of
grant. The grant occurs on March 1 of each year prior to the termination of the
Long-Term Incentive Plan. An option so granted is exercisable as to one-third of
the shares on the anniversary of the date of grant on each of the three
subsequent calendar years, and will expire ten years following the date of
grant. If prior to the option's expiration or exercise the grantee ceases to be
a voting member of the Board of Directors, then the portion of the option that
at that time is not exercisable will expire and the portion of the option, if
any, that is exercisable may be exercised during the three months after the
director ceases to be a voting member of the Board of Directors. In 1998, the
Company paid Dr. Shooter $60,000 for services provided as Chairman of the
Scientific Advisory Board. Effective in 1999, the Scientific Advisory Board will
have no permanent chair. In addition, in 1998 the Company paid Drs. Brown,
Gilman, Goldstein, and Vagelos $15,000 each as members of the Scientific
Advisory Board.
6
<PAGE>
- --------------------------------------------------------------------------------
Executive Compensation
Set forth below is information concerning the annual and long-term compensation
for services performed during each of the last three fiscal years for
Regeneron's Chief Executive Officer and its four other highest-compensated
executive officers (the "Named Officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
Awards
------------------------------------------------------------------------------------------
Other Securities
Name and Annual Underlying All Other
Principal Position Year Salary Bonus Compensation Options Compensation (1)
- ------------------ ---- ------ ----- ------------ ------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Leonard S. Schleifer, M.D., Ph.D 1998 $410,000 $100,000 $1,640 160,000 $4,800
President and Chief 1997 415,077 100,000 1,670 80,000 0
Executive Officer 1996 363,683 60,000 2,790 80,000 0
George D. Yancopoulos, M.D., Ph.D 1998 $299,000 0 0 0 $4,800
Senior Vice President of Research 1997 269,448 0 0 130,000 0
and Chief Scientific Officer 1996 195,500 0 0 0 0
Murray A. Goldberg 1998 $210,000 0 0 30,000 $4,800
Vice President, Finance & 1997 192,231 0 0 25,000 0
Administration, Treasurer, 1996 174,615 0 0 30,000 0
and Chief Financial Officer
Paul Lubetkin 1998 $200,000 0 0 20,000 $4,800
Vice President, General 1997 196,823 0 0 20,000 0
Counsel, and Secretary 1996 179,615 0 0 20,000 0
Randall R. Rupp 1998 $195,000 0 0 30,000 $4,650
Vice President, Manufacturing and 1997 185,885 0 0 20,000 0
Process Science 1996 169,231 0 0 25,000 0
------------------------------------------------------------------------------------------
</TABLE>
- ----------------------
(1) Represents a matching Company contribution under the Regeneron
Pharmaceuticals, Inc. 401(k) Savings Plan.
7
<PAGE>
Options
All options to purchase Regeneron Common Stock granted to the Named Officers
have been granted under the Company's Long-Term Incentive Plan. Set forth below
is information about grants of options during 1998 to the Named Officers. No
Restricted Share Rights, Stock Appreciation Rights, Incentive Stock Rights, or
Incentive Unit Rights have been granted by the Company.
Options Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Number of Percent of
Securities Total Options
Underlying Granted to Exercise
Options Employees Price Expiration
Name Granted (#)(1) In Fiscal Year ($/Share) Date
- ---- -------------- -------------- --------- ----
<S> <C> <C> <C> <C>
Leonard S. Schleifer, M.D., Ph.D 160,000 21.3% $8.625 1/01/08
George D. Yancopoulos, M.D., Ph.D 0 - - -
Murray A. Goldberg 14,324 1.9% $8.625 1/01/08
15,676 2.1% $8.625 1/01/08
Paul Lubetkin 16,000 2.1% $8.625 1/01/08
4,000 0.5% $8.625 1/01/08
Randall R. Rupp, Ph.D 24,000 3.2% $8.625 1/01/08
6,000 0.8% $8.625 1/01/08
</TABLE>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price
Appreciation for
Option Term
Name 5% ($) 10% ($)
- ---- -------- ---------
Leonard S. Schleifer, M.D., Ph.D 867,875 2,199,365
George D. Yancopoulos, M.D., Ph.D - -
Murray A. Goldberg 77,696 196,898
85,030 215,483
Paul Lubetkin 86,787 219,936
21,697 54,984
Randall R. Rupp, Ph.D 130,181 329,905
32,545 82,476
- --------------------------------------------
(1) All options granted expire ten years from the date of grant and become
exercisable ratably over five years beginning one year from the date of
grant.
8
<PAGE>
- --------------------------------------------------------------------------------
Aggregated Option Exercise in Last Fiscal Year and Fiscal Year-End Option Values
The following table shows information with respect to the Named Officers
concerning options exercised during 1998 and the value of stock options held as
of the end of 1998.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money
Acquired on Value Options at Options at
Name Exercise (#) Realized ($) Fiscal Year-End (#) Fiscal Year-End ($) (1)
- ----------------------------------- ------------- ------------- ----------------------------- ------------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Leonard S. Schleifer, M.D., Ph.D. 0 0 208,000 272,000 0 0
George D. Yancopoulos, M.D., Ph.D. 0 0 300,600 191,650 754,167 204,812
Murray A. Goldberg 2,000 4,438 39,000 92,000 30,954 33,768
Paul Lubetkin 5,000 30,940 65,800 68,200 152,122 57,496
Randall R. Rupp 0 0 76,300 63,200 209,213 49,650
</TABLE>
- ------------------------------------
(1) Based on the closing sales price of the Company's Common Stock on December
31, 1998 reported on the Nasdaq Stock Market of $7.032, less the exercise
price.
- --------------------------------------------------------------------------------
Employment Agreement
On February 12, 1998, the Company entered into an employment agreement with Dr.
Schleifer providing for his employment with the Company through December 31,
2002. During the term of his employment, the Company will pay Dr. Schleifer a
base salary of $410,000 (retroactive to January 1, 1998), with such increases as
may be determined by the Compensation Committee and approved by the Board of
Directors. Under his employment agreement, Dr. Schleifer may participate in all
Company benefit and incentive programs. During his employment term, the Company
will maintain life insurance on Dr. Schleifer's life in the amount of $1,000,000
payable to beneficiaries designated by Dr. Schleifer. Also under the employment
agreement, the Company has agreed that in the event that Dr. Schleifer's
employment is terminated other than for cause (as defined in the agreement) or
is terminated by Dr. Schleifer for good reason (as defined in the agreement to
include specified acts of constructive termination, as well as the first year
following a change in control of the Company) (collectively, an "Involuntary
Termination"), the Company will pay Dr. Schleifer his base salary for 15 months,
continue to provide Dr. Schleifer and his dependents medical, dental, and life
insurance for 18 months, and accelerate certain otherwise unexercisable stock
options granted to Dr. Schleifer. Upon an involuntary Termination within three
years after a change in control of the Company or within three months prior
thereto, the Company will pay Dr. Schleifer an amount equal to two times his
base salary in effect, continue to provide Dr. Schleifer and his dependents
medical, dental, and life insurance for 24 months, and accelerate certain
otherwise unexercisable stock options granted to Dr. Schleifer. Notwithstanding
the foregoing, if payments resulting from the change in ownership as defined in
Section 280G(b)(2) of the Internal Revenue Code exceed certain thresholds, the
amounts and benefits provided under the employment agreement will be
automatically reduced to an amount that would not subject Dr. Schleifer to the
excise tax under Section 4999 of the Internal Revenue Code or the Company to a
loss of deductibility under Section 280G.
- --------------------------------------------------------------------------------
Compensation Committee
Report on Executive Compensation
The Company's executive compensation program is administered by the Compensation
Committee, which is comprised of two directors. Subject to approval by the Board
of Directors, the Compensation Committee is responsible for (among other things)
determining the compensation package of each executive officer. The Compensation
Committee considers the views and recommendations of other directors, including
those of Dr. Schleifer, in making decisions regarding the compensation of the
Company's executive officers.
The Company's executive compensation program is designed to promote the
achievement of the Company's business objectives and, thereby, to maximize
long-term corporate performance and shareholder value. The compensation of the
executive officers consists of a combination of base salary, bonuses, and
long-term stock-based incentives through the Company's Long-Term Incentive Plan.
The Compensation Committee believes it is important for stock incentives to
constitute a significant portion of the compensation package in order to help
align executive and shareholder interests. In determining the total amount and
mixture of the compensation package for each executive officer, including Dr.
Schleifer and the other Named Officers, the Compensation Committee and
9
<PAGE>
the Board consider numerous factors, the most important of which are (i) the
Company's needs and objectives, including attracting, motivating, and retaining
key management personnel, (ii) individual performance, including the expected
contribution to the Company's objectives of each executive officer, (iii)
compensation of persons holding comparable positions, including data obtained
from outside studies and proxy materials on the payment of executive officers at
comparable companies, as well as the Company's most direct competitors, and (iv)
the overall value to each executive of his or her compensation package. No
specific numerical weight is given to any of these factors.
The 1998 base salaries of the Named Officers as a group (other than Dr.
Schleifer) increased by an average of 7.06 percent over 1997. These increases
were made in January 1998 and reflected the Committee's review in late 1997 of
individual performance and internal and outside compensation studies of
competitive and regional factors.
Dr. Schleifer's 1998 compensation package was based on the same factors as
described above for all executive officers pursuant to the Company's executive
compensation objectives. In 1998, Dr. Schleifer's base salary increased 1.7
percent over 1997. In addition, the Compensation Committee directed that Dr.
Schleifer be paid a bonus of $100,000 in 1998 based on his achievements in 1997.
The Compensation Committee considered, among other things, the clinical progress
of brain-derived neurotrophic factor and neurotrophin-3 during 1997, the
Company's progress in its preclinical programs aimed at obesity and diabetes
associated with obesity as well as other diseases and conditions outside of the
nervous system, and other significant accomplishments that occurred during 1997,
including significant fund-raising activities and the commencement of several
important collaborations with corporate partners. These achievements were guided
and managed by Dr. Schleifer and the Named Officers.
Section 162(m) of the Internal Revenue Code limits the deductibility of
compensation over $1 million to the Chief Executive Officer and the other Named
Officers unless certain conditions are met. The Company's Chief Executive
Officer and the other Named Officers have not received compensation over $1
million.
Charles A. Baker, Chairman
George L. Sing
- --------------------------------------------------------------------------------
Certain Relationships and Related Transactions
There is no information required to be disclosed by Item 404 of Regulation S-K
under the Securities Act of 1933. This Item requires disclosure of certain
transactions between Regeneron or a subsidiary of Regeneron and a director,
officer, or holder of five percent of any class of Regeneron voting securities
(or any member of the immediate family of the foregoing persons).
10
<PAGE>
Performance Graph
Set forth below is a line graph comparing the cumulative total stockholder
return on the Company's Common Stock with the cumulative total return of (i) The
Nasdaq Pharmaceutical Stocks Index and (ii) The Nasdaq Stock Market (U.S.) Index
for the period from December 31, 1993 through December 31, 1998.
[LINE GRAPH]
<TABLE>
<CAPTION>
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
---------------- --------------- -------------- -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Regeneron $100 $19 $ 82 $101 $ 56 $ 45
Nasdaq Pharm 100 75 138 139 143 183
Nasdaq-US 100 98 138 170 209 293
</TABLE>
The above graph assumes $100 investments on December 31, 1993 in the Company's
Common Stock, The Nasdaq Pharmaceutical Stocks Index, and The Nasdaq Stock
Market (U.S.) Index, with all dividends reinvested.
- --------------------------------------------------------------------------------
Officers of the Registrant
All officers of the Company are appointed annually and serve at the pleasure of
the Board of Directors. The names, positions, ages, and background of the
Company's senior managers who are not nominees for or currently Directors as of
April 16, 1999, are set forth below:
GEORGE D. YANCOPOULOS, M.D., Ph.D., 39, has been Senior Vice President, Research
since June 1997 and Chief Scientific Officer since January 1998. Dr. Yancopoulos
was Vice President, Discovery from January 1992 until June 1997, and was
employed by the Company since March 1989 as Senior Staff Scientist, and Head of
Discovery from January 1991 to January 1992. From January 1988 to February 1989,
he was a Lucille P. Markey Scholar at Columbia University. He received his Ph.D.
in Biochemistry and Molecular Biophysics and his M.D. from Columbia University.
JESSE M. CEDARBAUM, M.D., 47, has been Vice President, Clinical Affairs since
January 1993, and was Program Director of Clinical Affairs of the Company from
July 1990 until December 1992. He was Associate Professor of Neurology and
Neuroscience at Cornell University Medical College and director of the Parkinson
and Movement Disorders Clinics, New York Hospital and The Burke Rehabilitation
Center from 1983 to 1990 and is currently Clinical Associate Professor of
Neurology at Mt. Sinai Medical School in New York. Dr. Cedarbaum is a board
certified neurologist. Dr. Cedarbaum received his M.D. from the Yale University
School of Medicine.
MURRAY A. GOLDBERG, 54, has been Vice President, Finance & Administration,
Treasurer, and Chief Financial Officer since March 1995. Prior to joining the
Company, Mr. Goldberg was Vice President, Finance, Treasurer, and Chief
Financial Officer of PharmaGenics, Inc. from February 1991 and a Director of
that Company from May 1991. From 1987 to 1990, Mr. Goldberg was Managing
Director, Structured Finance Group at the Chase Manhattan Bank, N.A. and from
1973 to 1987 he served in various managerial positions in finance and corporate
development at American Cyanamid Company.
HANS-PETER GULER, M.D., 50, has been Vice President, Clinical Sciences since
April 1998. From 1994 until joining the Company, Dr. Guler was employed by
Chiron Corporation, most recently as Senior Director of
11
<PAGE>
Clinical Development. From 1989 to 1994, he was Associate Director of Drug
Development in the Pharmaceuticals Divisions of CIBA-GEIGY Corporation. Dr.
Guler received his M.D. from the University of Zurich.
STEVEN L. HOLST, 57, has been Vice President, Quality Assurance and Regulatory
Affairs since October 1997. From 1993 until October 1997, Mr. Holst was employed
by Novo Nordisk A/S, most recently as Senior Regulatory Officer and Responsible
Head of its worldwide Health Care group. From 1990 to 1993, he was Director of
Regeneron's regulatory affairs and quality assurance groups.
RICHARD X. HORNE, 48, has been Staff Vice President, Human Resources since
August 1998. Immediately prior to joining Regeneron, he was Vice President,
Human Resources at Braintree Hospital in Braintree, MA, serving in that capacity
since 1990. Mr. Horne also was a member of the Board of Directors of The
Rehabilitation Hospital of Rhode Island in North Smithfield, RI from October
1997 until April 1998.
PAUL LUBETKIN, 48, has been Vice President, General Counsel, and Secretary since
January 1992. From September 1994 through March 1995, Mr. Lubetkin also served
as Acting Chief Financial Officer and Treasurer of the Company. From April 1990
to December 1991, he was the General Counsel and Secretary of the Company.
Immediately before joining Regeneron, Mr. Lubetkin was a partner of the law firm
Kelley Drye & Warren.
RANDALL G. RUPP, Ph.D., 52, has been Vice President, Manufacturing and Process
Science since January 1992, and was Regeneron's Director of Manufacturing from
July 1991 until December 1992. From July 1990 to July 1991, Dr. Rupp was Vice
President, Research at Biohybrid Technologies, Inc. and from April 1989 to July,
1990 he served as Vice President of Development and Manufacturing at Somatogen
Corp. From 1986 to 1989, he served as Vice President of Development and Director
of Cell Biology at Invitron Corporation, and from 1985 to 1986, he was Assistant
Director, Cell Biology Department, at SmithKline Beckman, Inc. He received his
Ph.D. in Biomedical Sciences from the University of Texas, M.D.
Anderson Hospital and Tumor Institution, Houston.
NEIL STAHL, Ph.D., 42 , has been Vice President, Biomolecular Sciences since
July 1997. He joined Regeneron in 1991 and was Director, Cytokines and Signal
Transduction immediately before becoming an officer. Dr. Stahl received his
Ph.D. in Biochemistry from Brandeis University.
DAVID VALENZUELA, Ph.D., 48, has been Vice President, Genomics and
Bioinformatics since January 1998. Dr. Valenzuela joined Regeneron in 1990 and
most recently was Senior Director, Genomics and Bioinformatics. He received his
Ph.D. in molecular biology from the Albert Einstein College of Medicine, Yeshiva
University.
DOUGLAS S. McCORKLE, 42, has been Controller of the Company since May 1998 and
Assistant Treasurer since June 1998. Before joining Regeneron, Mr. McCorkle was
the Controller at Intergen Company from January 1997. He was a manager from 1995
to 1996, Senior Associate from 1992 to 1995, and Associate from 1990 to 1991,
with PricewaterhouseCoopers LLP.
BEVERLY C. DUBS, 44, has been Administrative Controller of the Company since May
1998 and Assistant Treasurer of the Company since August 1990. Ms. Dubs has
served in various finance and administration capacities at Regeneron since 1989.
- --------------------------------------------------------------------------------
AMENDMENT OF THE LONG-TERM INCENTIVE PLAN
The Board of Directors Unanimously Recommends a Vote FOR Amendment and
Restatement of the Long-Term Incentive Plan.
On January 22, 1999, the Board of Directors adopted, subject to shareholder
approval, an amendment to the Long-Term Incentive Plan (the "Plan"), to increase
by 1,500,000 the number of shares of Regeneron Common Stock available for the
grant of options and rights and the award of restricted stock and to clarify and
update the Plan. The Board believes that this amendment is reasonable and
appropriate to meet the Company's objectives of attracting, motivating, and
retaining officers, employees, and nonemployee service providers with
appropriate experience and ability, and increasing the alignment of interests of
officers, employees, and other grantees with those of the Company's
shareholders. The Plan provides for the grant and award of Restricted Share
Rights, Performance Unit Rights, Stock Options, Stock Appreciation Rights,
Incentive Stock Rights (each as defined below). Capitalized terms not otherwise
defined herein are as defined in the Plan. A copy of the amended and revised
Plan is set forth as Exhibit A to this Proxy Statement.
- --------------------------------------------------------------------------------
Description of Principal Features of the Long-Term Incentive Plan
In 1990, the Company adopted, and in February 1991, June 1991, June 1994, June
1995, June 1996, and June 1997 the Company amended and restated the Plan, under
which there are reserved for issuance a total of 5,400,000 shares of Common
Stock. The Plan is administered by the Compensation Committee of the Board of
Directors (the "Committee") comprised of non-employee directors, each of whom is
a "non-employee director" (as defined in Rule 16b-3 promulgated under Section 16
of the Securities Exchange Act of 1934, as amended) and an "outside director"
(as defined in Section 162(m)). Company officers, employees, nonemployee
directors, and other nonemployee service providers are eligible to participate
in the Plan. Restricted Share Rights consist of a grant of shares of restricted
Common Stock. A holder of restricted stock may vote and, if he or she remains in
the service of the Company throughout the restricted period as defined in the
Plan (the "Restricted Period"), may generally receive all dividends on
12
<PAGE>
all such shares. However, such holder may not transfer such shares except for
limited circumstances during the Restricted Period. If for any reason during the
Restricted Period, a holder of restricted stock ceases to be in the service of
the Company (other than as the result of such holder's death) the holder may be
required under certain circumstances, to transfer and return to the Company such
restricted stock, and may not receive dividends on such restricted stock.
Consistent with Section 162(m), the Plan provides that (i) restrictions on
restricted stock may, in the sole discretion of the Committee, lapse upon the
achievement of certain preestablished performance goals based upon the criteria
described below, and (ii) the maximum number of such performance based
Restricted Share Rights that may be granted to an employee in any year is
200,000.
Performance Unit Rights entitle the holder to receive either cash or shares of
Common Stock, as determined by the Committee or Administrator, to the extent
that preestablished performance goals, based upon the criteria described below,
are achieved. Each Performance Unit Right granted is given a maximum value at
the beginning of the performance period. The actual value of each right that may
be distributed to the recipient is determined by the extent to which the
predetermined objective is made. The Plan provides that the maximum unit value
of Performance Unit Rights that may be granted to an employee in any year is
$500,000. The Plan provides that performance goals will be based on one or more
of the following criteria: (i) the attainment of certain target levels of, or a
percentage increase in, after-tax or pre-tax profits of the Company including,
without limitation, that attributable to continuing or other operations of the
Company; (ii) the attainment of certain target levels of, or a specified
increase in, operational cash flow of the Company; (iii) the achievement of a
certain level of, reduction of, or other specified objectives with regard to
limiting the level of increase in all or a portion of, the Company's bank debt
or other long-term or short-term public or private debt or other similar
financial obligations of the Company, which may be calculated net of such cash
balances and/or other offsets and adjustments as may be established by the
Committee; (iv) the attainment of a specified percentage increase in earnings
per share or earnings per share from continuing operations of the Company; (v)
the attainment of certain target levels of, or a specified percentage increase
in, revenues, net income, or earnings before income tax of the Company; (vi) the
attainment of certain target levels of, or a specified increase in, return on
capital employed or return on investment; (vii) the attainment of certain target
levels of, or a percentage increase in, after-tax or pre-tax return on
shareholders' equity of the Company; (viii) the achievement of certain target
levels of discovery or development of products, including, without limitation,
of regulatory approval of new products; (ix) the achievement of certain target
levels of sales of new products or licensing in or out of new drugs; and (x) the
formation of joint ventures or the completion of other corporate transactions.
In addition, the Plan provides that such performance goals may be based upon the
attainment of specified levels of Company performance under one or more of the
measures described above relative to the performance of other corporations. To
the extent permitted under Section 162(m), the Committee may: (i) designate
additional business criteria on which the performance goals may be based or (ii)
adjust, modify, or amend the aforementioned business criteria.
Stock options (which may be "incentive stock options" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"))
entitle the holder to purchase shares of the Common Stock during a specified
period at a purchase price of not less than 50% (100% in the case of incentive
stock options) of the fair market value of the Common Stock on the day the
option is granted. The Plan provides that the maximum number of shares of Common
Stock for which Stock Options may be granted to an employee in any year is
500,000, except that such number is 1,000,000 with respect to the employee's
initial year of employment with the Company. As amended, the Plan provides that
(i) the Committee may in its discretion grant stock options that are
transferable, (ii) the exercise price of stock options and any tax withholding
may be paid in cash or by the use of withheld or already owned shares, and (iii)
stock options that are exercisable as of the date of the termination of an
option holder's employment with the Company may be exercised after such date for
the period set forth in the option agreement or as otherwise determined by the
Committee.
Stock Appreciation Rights may be granted only to recipients of Stock Options,
and the number of shares that may be received pursuant to such Rights is limited
to the number of shares subject to the Option. Stock Appreciation Rights may be
exercised in lieu of purchasing shares under a related Option and entitles the
holder, without payment to the Company, to a number of shares or cash, at the
election of the Committee or the Administrator, determined by the increase, if
any, in the market value of the shares under the Option between the dates of
grant and exercise. The Plan provides that the maximum number of shares of
Common Stock for which Stock Appreciation Rights may be granted to an employee
in any year is 500,000, except that such number is 1,000,000 with respect to the
employee's initial year of employment with the Company.
Incentive Stock Rights are composed of Incentive Stock Units, each of which
gives the holder the right to receive, without cash payment to the Company, one
share of Common Stock, automatically, at the end of the relevant incentive
periods fixed by the Committee or Administrator. Holders of Incentive Stock
Rights receive payments equal to any cash dividends that are paid on the Common
Stock. In the event of a Change in Control of the Company, as defined in the
Plan, the vesting, exercisability and/or payout of Options and Rights may become
accelerated, and the value of rights may be determined by the change in control
price, as defined in the Plan.
Because awards and grants under the Plan are discretionary, it is not possible
to determine the size of future awards. Grants of stock options made to the
Named Officers during the last Fiscal Year are set forth above. During the last
fiscal year, stock options were granted as follows; to all current executive
officers as a group, 310,500 and to all employees other than executive officers,
351,240.
13
<PAGE>
The agreements evidencing grants and awards under the Plan may provide that such
grants and awards will vest or become payable upon a "Change in Control" of the
Company, as defined in the Plan.
Approximately 371 employees and an indeterminate number of nonemployee service
providers are eligible to participate in the Plan. As of December 31, 1998,
options for 4,173,625 shares were held by 410 employees and nonemployee service
providers at option prices averaging $8.084 per share and expiring during the
period from January 2001 to December 2008. No Restricted Share Rights,
Performance Unit Rights, Stock Appreciation Rights, or Incentive Stock Rights
have been granted under the Plan. The market price per share of Common Stock on
April 16, 1999 was approximately $6.88.
- --------------------------------------------------------------------------------
Certain Federal Income Tax Consequences
Set forth below is a discussion of certain federal income tax consequences with
respect to Stock Options (including incentive stock options ("ISOs") and
nonqualified stock options ("NQSOs)) that may be granted pursuant to the Plan.
Nonqualified Stock Options. In the case of a NQSO, an option holder generally
will not be taxed upon the grant of an option. Rather, at the time of exercise
of such NQSO (and in the case of an untimely exercise of an ISO), the option
holder will generally recognize ordinary income for federal income tax purposes
in an amount equal to the excess of the then fair market value of the shares
purchased over the option price. The Company will generally be entitled to a tax
deduction at the time when, and in the amount that, the employee recognizes
ordinary income.
Incentive Stock Options. In the case of an ISO, an option holder will generally
be in receipt of taxable income upon the disposition of the shares acquired upon
exercise of the ISO, rather than upon the grant of the ISO or upon its timely
exercise. If certain holding period requirements have been satisfied with
respect to outstanding shares so acquired, taxable income will constitute
long-term capital gain. The tax consequences of any untimely exercise of an ISO
will be determined in accordance with the rules applicable to NQSOs. The amount
by which the fair market value of the stock on the exercise date of an ISO
exceeds the option price will be an item of tax adjustment for purposes of the
"alternative minimum tax" imposed by Section 55 of the Code. An option holder
who pays the option price upon exercise of an option, in whole or in part, by
delivering already owned shares of the Company's Common Stock will generally not
recognize gain or loss on the shares surrendered at the time of such delivery,
except under certain circumstances relating to ISOs. Rather, such gain or loss
recognition will generally occur upon disposition of the shares acquired in
substitution for the shares surrendered.
- --------------------------------------------------------------------------------
APPROVAL OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors Unanimously Recommends a Vote FOR the Selection of
PricewaterhouseCoopers LLP.
The Board of Directors, at the recommendation of the Audit Committee, has
selected PricewaterhouseCoopers LLP as the Company's independent accountants for
the fiscal year ending December 31, 1999. This appointment is subject to the
approval of the Company's shareholders. Accordingly, the following resolution
will be offered at the Annual Meeting:
"RESOLVED, that the appointment, by the Board of Directors of Regeneron
Pharmaceuticals, Inc., of PricewaterhouseCoopers LLP as the independent
accountants of the Company for the year ending December 31, 1999 is hereby
approved."
PricewaterhouseCoopers LLP has been the Company's independent accountants for
the past ten years and has advised the Company that it will have in attendance
at the Annual Meeting a representative who will be afforded an opportunity to
make a statement, if such representative desires to do so, and will respond to
appropriate questions presented at the Annual Meeting.
Proxies solicited by management will be voted "FOR" ratification of the
selection of PricewaterhouseCoopers LLP as independent accountants unless
shareholders indicate in their proxies their desire to have their shares voted
"AGAINST" such ratification.
- --------------------------------------------------------------------------------
Other Matters
The Board of Directors of the Company does not intend to present any other items
of business and knows of no other items of business that are likely to be
brought before the Annual Meeting, except those set forth in the accompanying
Notice of the Annual Meeting of Shareholders. However, if any other matters
should properly come before the Annual Meeting, the persons named in the
enclosed proxy will have discretionary authority to vote such proxy on such
matters in accordance with their best judgment.
14
<PAGE>
- --------------------------------------------------------------------------------
Shareholder Proposals for 2000 Annual Meeting of Shareholders
A shareholder wishing to present a proposal at the 2000 Annual Meeting of
Shareholders must submit the proposal in writing and be received by the Company
at its principal executive offices (777 Old Saw Mill River Road, Tarrytown, New
York 10591) by January 21, 2000 in order for such proposal to be considered for
inclusion in the Company's proxy statement and form of proxy relating to that
meeting.
- --------------------------------------------------------------------------------
Cost of Solicitation
This solicitation is made on behalf of the Board of Directors of the Company.
The cost of solicitation of proxies in the accompanying form will be paid by the
Company. The Company will also, pursuant to regulations of the Securities and
Exchange Commission, make arrangements with brokerage houses and other
custodians, nominees, and fiduciaries to send proxies and proxy materials to
their principals and will reimburse them for their reasonable expenses in so
doing. In addition to solicitation by use of the mails, certain directors,
officers, and employees of the Company may solicit the return of proxies by
telephone, telegram, or personal interviews.
By Order of the Board of Directors,
PAUL LUBETKIN
Secretary
Tarrytown, New York
May 7, 1999
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