<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>
VIVUS, 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
VIVUS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 8, 1999
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of VIVUS,
Inc., a Delaware corporation (the "Company"), will be held on Tuesday, June 8,
1999, at 10:00 a.m., local time, at the Company's principal executive offices
which are located at 605 East Fairchild Drive, Mountain View, California 94043
for the following purposes:
1. To elect six directors to serve until the next Annual Meeting of
Stockholders and until their successors are duly elected and qualified.
2. To confirm the appointment of Arthur Andersen LLP as independent
public accountants for the fiscal year ending December 31, 1999.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
These items of business are more fully described in the Proxy Statement
accompanying this notice.
Only stockholders of record at the close of business on April 12, 1999 are
entitled to notice of and to vote at the meeting.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to sign and
return the enclosed Proxy as promptly as possible in the postage-prepaid
envelope enclosed for that purpose. Any stockholder attending the meeting may
vote in person even if the stockholder has returned a proxy.
By order of the Board of Directors
Leland F. Wilson
President and Chief Executive Officer
Mountain View, California
April 28, 1999
IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE AND
PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED.
<PAGE> 3
VIVUS, INC.
PROXY STATEMENT FOR 1999
ANNUAL MEETING OF STOCKHOLDERS
------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of the Board of Directors (the
"Board") of VIVUS, Inc., a Delaware corporation (the "Company" or "VIVUS"), for
use at the Annual Meeting of Stockholders to be held on Tuesday, June 8, 1999,
at 10:00 a.m., local time, or at any adjournment thereof, for the purposes set
forth in this Proxy Statement and in the accompanying Notice of Annual Meeting
of Stockholders. The Annual Meeting will be held at the Company's principal
executive offices which are located at 605 East Fairchild Drive, Mountain View,
California 94043. The Company's telephone number at that address is (650)
934-5200.
These proxy solicitation materials were mailed on or about April 28, 1999
to all stockholders entitled to vote at the meeting.
SHARE OWNERSHIP
Stockholders of record at the close of business on April 12, 1999 are
entitled to notice of the Annual Meeting of its Stockholders and to vote at the
meeting. At the record date, 31,946,800 shares of the Company's Common Stock
were issued and outstanding and held of record by approximately 807
stockholders.
The following table sets forth certain information known to the Company
with respect to beneficial ownership of the Company's Common Stock as of April
1, 1999 by (i) each stockholder known by the Company to be the beneficial owner
of more than 5% of the Company's Common Stock, (ii) each director, (iii) the
Company's Chief Executive Officer and the Company's four other most highly
compensated executive officers serving in that capacity as of December 31, 1998,
and (iv) all directors and executive officers as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(1)
FIVE PERCENT STOCKHOLDERS, --------------------
DIRECTORS AND EXECUTIVE OFFICERS NUMBER PERCENT
-------------------------------- --------- -------
<S> <C> <C>
Leland F. Wilson(2)...................................... 1,296,298 4.06%
Virgil A. Place, M.D.(3)................................. 848,574 2.66%
Brian H. Dovey(4)........................................ 42,427 *
Linda Jenckes(5)......................................... 28,500 *
Joseph E. Smith(6)....................................... 16,000 *
Neil Gesundheit, M.D.(7)................................. 211,017 *
Carol D. Karp(8)......................................... 26,479 *
Terry M. Nida(9)......................................... 171,114 *
Mario M. Rosati.......................................... 5,891 *
Mark B. Logan............................................ None N/A
Linda M. Shortliffe, M.D................................. None N/A
All directors and executive officers as a group
(11 persons)(10)....................................... 2,646,300 8.28%
</TABLE>
- ---------------
* Less than 1%
(1) Applicable percentage ownership based on 31,946,800 shares of Common Stock
as of April 1, 1999. Beneficial ownership is determined in accordance with
the rules of the Securities and Exchange
1
<PAGE> 4
Commission. Shares of Common Stock subject to options or warrants currently
exercisable or exercisable within 60 days after April 1, 1999 are deemed
outstanding for computing the percentage ownership of the person holding
such options or warrants, but are not deemed outstanding for computing the
percentage of any other person.
(2) Includes 814,457 shares subject to options exercisable within 60 days of
April 1, 1999.
(3) Includes 26,600 shares held by Dr. Place as Custodian for V. Aristophanes
Kamehameha A.H. Place under the Hawaii Uniform Transfers to Minors Act, and
3,125 shares subject to options exercisable within 60 days of April 1,
1999.
(4) Includes 41,150 shares subject to options exercisable within 60 days of
April 1, 1999.
(5) Includes 28,500 shares subject to options exercisable within 60 days of
April 1, 1999.
(6) Includes 16,000 shares subject to options exercisable within 60 days of
April 1, 1999.
(7) Includes 119,660 shares subject to options exercisable within 60 days of
April 1, 1999.
(8) Includes 25,479 shares subject to options exercisable within 60 days of
April 1, 1999.
(9) Includes 158,672 shares subject to options exercisable within 60 days of
April 1, 1999.
(10) Includes 1,207,403 shares subject to options exercisable within 60 days of
April 1, 1999, held by the Company's directors and executive officers as a
group.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Secretary of the
Company a written notice of revocation or a duly executed proxy bearing a later
date or by attending the meeting and voting in person.
VOTING AND SOLICITATION
Each share of Common Stock outstanding on the record date is entitled to
one vote.
The cost of soliciting proxies will be borne by the Company. The Company
may elect to retain the services of an outside company to solicit proxies, for
which the Company estimates that it would pay a fee not to exceed $5,000. The
Company expects to reimburse brokerage firms and other persons representing
beneficial owners of shares for their expenses in forwarding solicitation
materials to such beneficial owners. Proxies may be solicited by certain of the
Company's directors, officers and regular employees, without additional
compensation, in person or by telephone or facsimile.
RECORD DATE; QUORUM; REQUIRED VOTE
The holders of Common Stock of record at the close of business on April 12,
1999 are entitled to vote at the Annual Meeting. As of April 12, 1999,
31,946,800 shares of Common Stock were issued and outstanding. Each share of
Common Stock is entitled to one vote. Stockholders will not be entitled to
cumulate their votes in the election of directors.
The presence, in person or by proxy, of stockholders entitled to vote at
least a majority of the shares of Common Stock issued and outstanding as of
April 12, 1999 constitutes a quorum for adopting the proposals at the Annual
Meeting. A plurality of the shares present, in person or represented by proxy,
at the Annual Meeting and entitled to vote on the election of directors is
required for the election of directors. In the other proposals, the affirmative
vote of the majority of the shares present, in person or represented by proxy,
at the Annual Meeting and entitled to vote on the proposals is required for
approval.
Under the Delaware General Corporation Law, abstentions and broker
"non-votes" are treated as shares that are entitled to vote and are, therefore,
included for purposes of determining whether a quorum of shares is present at
the Annual Meeting. A broker "non-vote" occurs when a nominee holding shares for
a beneficial owner does not vote on a particular proposal because the nominee
does not have discretionary voting power with respect to that proposal or has
not received voting instructions from the beneficial owner.
2
<PAGE> 5
Abstentions are treated as shares that are present at the Annual Meeting,
but not as an affirmative vote on any matter submitted to the stockholders for a
vote. Thus, abstentions are included in the tabulation of the voting results on
the proposals requiring an affirmative vote of a majority of the shares present
at the Annual Meeting and, therefore, have the effect of votes in opposition. On
the contrary, broker "non-votes" are not treated as shares that are present at
the Annual Meeting. Thus, broker "non-votes" are not included in the tabulation
of the voting results on the proposals requiring an affirmative vote of a
majority of the shares present at the Annual Meeting and, therefore, do not have
the effect of votes in opposition in such tabulations.
Any proxy which is returned using the form of proxy enclosed and which is
not marked as to a particular item will be voted FOR the election of directors,
FOR the ratification of the appointment of Arthur Anderson LLP, and as the proxy
holders deem advisable, on other matters that may come before the meeting.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Stockholders who intend to present a proposal for inclusion in the
Company's proxy materials for the 2000 Annual Meeting of Stockholders must
submit the proposal to the Company no later than December 31, 1999. Stockholders
who intend to present a proposal at the 2000 Annual Meeting of Stockholders
without inclusion of such proposal in the Company's proxy materials for the 2000
Annual Meeting are required to provide notice of such proposal to the Company no
later than thirty-five (35) days nor more than sixty (60) days prior to the 2000
Annual Meeting of Stockholders. The Company reserves the right to reject, rule
out of order, or take other appropriate action with respect to any proposal that
does not comply with these and other applicable requirements.
3
<PAGE> 6
PROPOSAL ONE:
ELECTION OF DIRECTORS
NOMINEES
A board of six directors is to be elected at the Annual Meeting of
Stockholders. The Company's Bylaws authorize a board of five to seven directors.
Unless otherwise instructed, the proxy holders will vote the proxies received by
them for the Company's nominees named below. In the event that any nominee of
the Company is unable or declines to serve as a director at the time of the
Annual Meeting of Stockholders, the proxies will be voted for any nominee who
shall be designated by the present Board to fill the vacancy. It is not expected
that any nominee will be unable or will decline to serve as a director. In the
event that additional persons are nominated for election as directors, the proxy
holders intend to vote all proxies received by them in such a manner as will
assure the election of as many of the nominees listed below as possible.
The nominees, and certain information about them as of April 1, 1999, are
set forth below.
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE POSITION SINCE
--------------- --- -------- --------
<S> <C> <C> <C>
Virgil A. Place, M.D. ............... 74 Chairman of the Board and Chief 1991
Scientific Officer
Leland F. Wilson..................... 54 President and Chief Executive Officer 1991
Joseph E. Smith(1)(3)................ 60 Director 1997
Mario M. Rosati(2)................... 52 Secretary and Director 1999
Mark B. Logan(2)..................... 60 Director 1999
Linda M. Shortliffe, M.D. ........... 50 None --
</TABLE>
- ---------------
(1) Member of Audit Committee
(2) Member of Compensation Committee
(3) Member of Nominating Committee
All directors hold office until the next Annual Meeting of Stockholders or
until their successors have been elected and qualified. Officers serve at the
discretion of the Board. There are no family relationships between any of the
directors or executive officers of the Company.
VIRGIL A. PLACE, M.D. is the founder of VIVUS and has been its Chief
Scientific Officer and Chairman of the Board since the Company was formed in
April 1991. Before joining VIVUS, Dr. Place was Principal Scientist and held a
variety of executive positions including Vice President of Medical and
Regulatory Affairs at ALZA Corporation ("Alza") from 1969 to 1993. In addition,
Dr. Place served nine years on the Alza Board of Directors. He received a B.A.
in Chemistry from Indiana University and an M.D. from Johns Hopkins University.
He is Board Certified in Internal Medicine, with specialty training at Mayo
Clinic.
LELAND F. WILSON has been President and a director of VIVUS since April
1991 and Chief Executive Officer since November 1991. Prior to joining VIVUS,
Mr. Wilson was Vice President of Marketing and Corporate Development of Genelabs
Technologies, Inc. from 1989 to 1991. Mr. Wilson was Group Product Director,
later promoted to Director of Marketing at LifeScan, a Johnson & Johnson
company, from 1986 to 1989. From 1973 to 1986, Mr. Wilson served in several
research, marketing and sales positions for Syntex Research and Syntex
Laboratories, Inc. Mr. Wilson received a B.S. and an M.S. from Pennsylvania
State University.
JOSEPH E. SMITH has been a director of VIVUS since June 1997. Mr. Smith
served as Corporate Vice President with Warner-Lambert Company from March 1989
until he retired in September 1997. His responsibilities at Warner-Lambert
included President of Pharmaceuticals and President of Shaving Products. Mr.
Smith is a director of Boren, Lepore, Inc., a company that provides promotional,
marketing and educational services to the pharmaceutical industry, Roberts
Pharmaceutical Corporation, Avanir
4
<PAGE> 7
Pharmaceuticals, and Sensus Drug Development Corporation, a privately-held
biotechnology company. Mr. Smith earned his MBA degree from the Wharton School
of the University of Pennsylvania.
MARIO M. ROSATI has been a director of VIVUS since March 1999, and has been
the Secretary of VIVUS since April 1991. For more than the past five years, he
has been a member of Wilson Sonsini Goodrich & Rosati, a law firm that provides
counsel to the Company. Mr. Rosati is also a director of Genus, Inc., a
manufacturer of semiconductor equipment, Ross Systems, Inc., a software
applications company, Meridian Data, Inc., a network server company, and Sanmina
Corporation, an electronics contract manufacturer.
MARK B. LOGAN has been a director of VIVUS since March 1999. Since August
1997, Mr. Logan has served as a director of Abgenix, Inc., a biopharmaceutical
company. Mr. Logan has served as the Chairman of the Board, President and Chief
Executive Officer of VISX, Incorporated, a medical device company, since 1994.
From January 1992 to October 1994, he was Chairman of the Board and Chief
Executive Officer of INSMED Pharmaceuticals, Inc., a pharmaceutical company.
Previously, Mr. Logan held several senior management positions at Baush & Lomb,
Inc., a medical products company, including Senior Vice President, Healthcare
and Consumer Group and also served as member of its board of directors. Mr.
Logan received a B.A. from Hiram College and P.M.D. from Harvard Business
School.
LINDA M. DAIRIKI SHORTLIFFE, M.D., is a nominee for the Board of Directors
of the Company. Dr. Shortliffe has been a professor at Stanford University
School of Medicine since 1993 and Chair of the Urology Department since 1995.
Dr. Shortliffe is also the Chief of Pediatric Urology of the Lucile Salter
Packard Children's Hospital since 1991. Dr. Shortliffe is a Fellow of the
American College of Surgeons and the American Academy of Pediatrics and has also
served as a member of the special grants review committee for the National
Institute of Health. Dr. Shortliffe has authored numerous publications and her
works appear in several prominent medical journals. Dr. Shortliffe received a BA
from Radcliffe College and her M.D. from Stanford University.
REQUIRED VOTE
The six nominees receiving the highest number of the affirmative votes of
the Votes Cast will be elected as directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
ELECTION OF THE NOMINEES.
BOARD MEETINGS, COMMITTEES AND DIRECTOR COMPENSATION
The Board held ten meetings and acted by unanimous written consent once
during fiscal 1998. The Compensation Committee held seven meetings during fiscal
1998. The Audit Committee held four meetings during fiscal 1998. No nominee who
was a director during fiscal 1998 attended fewer than 75% of the meetings of the
Board and Committees of which they were members.
The Board has a Compensation Committee that makes recommendations
concerning salaries and incentive compensation for employees of the Company.
During fiscal 1998, the Compensation Committee consisted of Richard L. Casey,
Elizabeth A. Fetter and director Smith. The Board has an Audit Committee that
reviews the results and scope of the audit and other services provided by the
Company's independent auditors. During fiscal 1998, the Audit Committee
consisted of directors Dovey and Jenckes, both of whom are not seeking
re-election to the Board. The Company also has a Nominating Committee that makes
recommendations on membership and composition of the Board. During fiscal 1998,
the Nominating Committee consisted of directors Dovey and Smith.
The directors are reimbursed for travel and related expenses incurred by
them in attending meetings. Directors who are not employees of the Company
("Outside Directors") will be paid an annual retainer of $10,000 and a fee of
$1,000 per quarter for attending board meetings.
5
<PAGE> 8
The Company's 1994 Director Option Plan provides that each new Outside
Director that joins the Board will automatically be granted an option at fair
market value to purchase 32,000 shares of Common Stock upon the date on which
such person first becomes an Outside Director. These options vest at a rate of
25% per year following the date of grant so long as the optionee remains a
director of the Company. It also provides for the grant of options to Outside
Directors pursuant to a nondiscretionary, automatic grant mechanism, whereby
each Outside Director is granted an option at fair market value to purchase
8,000 shares on the date of each Annual Meeting of Stockholders, provided such
director is reelected. These shares vest at the rate of 12.5% per month
following the date of grant so long as the optionee remains a director of the
Company.
EXECUTIVE OFFICERS
The executive officers of the Company and certain information about them as
of April 1, 1999 are listed below:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Virgil A. Place, M.D. ............... 74 Chairman of the Board and Chief Scientific
Officer
Leland F. Wilson..................... 54 President, Chief Executive Officer and
Director
Neil Gesundheit, M.D. ............... 46 Vice President, Clinical Research and Chief
Medical Officer
Carol D. Karp........................ 46 Vice President, Regulatory Affairs
Terry M. Nida........................ 50 Vice President, Worldwide Marketing and
Corporate Development
Richard Walliser..................... 55 Vice President, Finance and Chief Financial
Officer
</TABLE>
MR. WILSON'S and DR. PLACE'S backgrounds are summarized previously under
"Election of Directors".
NEIL GESUNDHEIT, M.D., M.P.H. has been Vice President, Clinical Affairs and
Chief Medical Officer for VIVUS since September 1997 and August 1998,
respectively. From January 1994 to September 1997, Dr. Gesundheit was Vice
President, Clinical and Regulatory Affairs. Prior to joining VIVUS, Dr.
Gesundheit was Associate Director of Clinical Research (Endocrinology) at
Genentech, Inc. from 1989 to 1993. He received an A.B. from Harvard University,
an M.P.H. from the University of California at Berkeley, and an M.D. from the
University of California at San Francisco. Dr. Gesundheit is Board Certified in
Internal Medicine and in the subspecialty of Endocrinology and Metabolism.
CAROL D. KARP has been Vice President, Regulatory Affairs for VIVUS since
September 1997. Prior to joining VIVUS, Ms. Karp served as Executive Director,
Regulatory Affairs for Cygnus, Inc. from June 1994 to August 1997. From February
1993 to August 1994, Ms. Karp served as Director, Regulatory Affairs for Cygnus
Therapeutic Systems. Ms. Karp held various positions in regulatory affairs at
Janssen Pharmaceutica, a Johnson & Johnson company from 1979 to 1989. She
received a B.A. in Biology from the University of Rochester and has completed
postgraduate studies in Biochemistry at New York University.
TERRY M. NIDA has been Vice President, Worldwide Marketing and Corporate
Development for VIVUS since August 1998. From November 1995 to August 1998, Mr.
Nida was Vice President, Europe and effective March 28, 1996 was appointed an
executive officer. Prior to joining VIVUS, Mr. Nida was Vice President, Sales,
Marketing and Business Development at Carrington Laboratories, with
responsibility for all sales, marketing and business development activities. Mr.
Nida was Senior Director, Worldwide Sales, Marketing and Business Development
for Centocor, Inc. from 1993 to 1994, and Director of Sales and Marketing in
Europe for Centocor, Inc. from 1990 to 1993. He received a B.A. in English and
his Masters in Administration of Justice from Wichita State University.
RICHARD WALLISER has been Vice President, Finance and the Chief Financial
Officer for VIVUS since January 1999, after serving 4 months as the interim
Chief Financial Officer of the Company. Prior to joining VIVUS, Mr. Walliser
served as a consultant for The Brenner Group, a consulting firm specializing in
providing Interim Chief Financial Officers, and as the Chief Financial Officer
at Gyration, Inc, a high technological gyroscope design company for consumer
applications. From 1989 to 1999, Mr. Walliser also consulted to several high
technology companies including Federal Technology, Microdyne, Productivity
6
<PAGE> 9
Training, and Advance Micro Devices. From 1982 to 1989, Mr. Walliser was the
Vice President of Finance and Administration for Novell. He received a B.S.
Degree in Management from Arizona State University and his Masters in Business
Administration from the University of Southern California.
CERTAIN TRANSACTIONS AND REPORTS
The Company's founding scientist, Chairman of the Board and Chief
Scientific Officer, Virgil A. Place, M.D., invented the Company's transurethral
system for erection (MUSE) while serving as Alza's Executive Director of Medical
and Regulatory Affairs. Dr. Place formed VIVUS in April 1991 to further develop
the MUSE technology. In August 1991, Dr. Place entered into a letter agreement
with Alza covering the MUSE technology. This was superseded by an assignment
agreement between Alza and the Company that was executed on December 31, 1993.
The assignment agreement provides for the assignment by Alza of patent
applications related to the MUSE technology. In consideration of the rights
granted to the Company under the assignment agreement, the Company issued shares
of Common Stock to Alza and is required to pay certain royalties on the sale of
any products for the transurethral treatment of erectile dysfunction. To
maintain exclusive rights beyond December 31, 1998, the Company issued an
additional 200,000 shares of Common Stock to Alza in May 1996.
In July 1998, the Board of Directors approved a Change of Control Agreement
for all senior executives. The Change of Control Agreement was adopted
immediately following the reorganization and the subsequent downsizing of all
locations where the Company conducts business. The Change of Control Agreement
recognizes that there may be periods where another company or other entity
considers the possibility of acquiring the Company or that a change in the
management of the Company may otherwise occur (collectively, "a Change of
Control"), with or without the approval of the Company's Board of Directors. The
Change of Control Agreement recognizes that such an event may cause a
distraction to employees, which may in turn, cause employees to consider
alternative employment opportunities. The Board determined that it was in the
best interest of the Company to give such employees an incentive to continue his
or her employment during periods where the threat or occurrence of a Change of
Control may exist. The Change of Control Agreements are discussed in more detail
subsequently under "Executive Compensation."
FILING OF REPORTS BY DIRECTORS AND OFFICERS
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file certain reports of
ownership with the SEC and with the National Association of Securities Dealers.
Such officers, directors and stockholders are also required by SEC rules to
provide the Company with copies of all Section 16(a) forms that they file. Based
solely on its review of copies of such forms received by the Company, or on
written representations from certain reporting persons, the Company believes
that, during the period from January 1, 1998 to December 31, 1998, its executive
officers, directors and ten percent stockholders filed all required Section
16(a) reports on a timely basis.
7
<PAGE> 10
EXECUTIVE COMPENSATION
COMPENSATION TABLES
Summary Compensation Table. The following table sets forth the compensation
paid by the Company during the fiscal years ended December 31, 1998, 1997 and
1996 to the Chief Executive Officer and its four other most highly compensated
executive officers:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION ALL OTHER
NAME AND PRINCIPAL FISCAL ----------------------- SECURITIES UNDERLYING COMPENSATION
POSITION YEAR SALARY($)(1) BONUS($) OPTIONS(#) ($)
------------------ ------ ------------ -------- --------------------- ------------
<S> <C> <C> <C> <C> <C>
Leland F. Wilson................ 1998 319,032 -- 829,998(2)
President and Chief 1997 310,000 139,500(3) 100,000
Executive Officer 1996 282,983 -- 89,998
Neil Gesundheit, M.D............ 1998 212,629 -- 218,936(4)
Vice President, Clinical 1997 209,777 54,542(3) 35,000
Research and Chief Medical
Officer 1996 192,352 -- 40,000
Virgil A. Place, M.D............ 1998 163,635 -- 40,000
Chief Scientific Officer 1997 221,537 52,000(3) --
1996 214,778 -- --
Terry M. Nida................... 1998 192,938 -- 258,750(5) 33,120(6)
Vice President, Worldwide 1997 182,965 46,000(3) 26,250 45,124(6)
Marketing and Corporate 1996 173,817 -- 30,000 64,950(7)
Development
Carol D. Karp................... 1998 164,764(9) -- 115,625(8) --
Vice President, Regulatory 1997 52,820 53,200(9) 63,125 --
Affairs 1996 -- -- --
</TABLE>
- ---------------
(1) All named executive officers, except for Dr. Place who elected to take an
annual salary reduction to $14,000 (equivalent to the annual fees paid to
outside directors) effective as of on October 1, 1998, elected to defer a
portion of their salary beginning in the third quarter of 1998. Therefore,
amounts reported under the "Salary" column for 1998 include amounts earned
in 1998 but not yet paid. The salary deferral is discussed in more detail
under "Executive Salary Deferral" below.
(2) Consists of 150,000 shares underlying an option granted in December 1998 and
679,998 shares underlying options granted prior to 1998 that were cancelled
and re-granted in connection with the repricing -- see "Report of the
Compensation Committee -- stock option repricing".
(3) This bonus was earned in fiscal 1997 but paid in February 1998.
(4) Consists of 52,500 shares underlying an option granted in December 1998 and
166,436 shares underlying options granted prior to 1998 that were cancelled
and re-granted in connection with the repricing -- see "Report of the
Compensation Committee -- stock option repricing".
(5) Consists of 52,500 shares underlying an option granted in December 1998 and
206,250 shares underlying options granted prior to 1998 that were cancelled
and re-granted in connection with the repricing -- see "Report of the
Compensation Committee -- stock option repricing".
(6) Amounts received for housing and automobile allowance.
(7) Includes $34,950 for housing and automobile allowance and $30,000 for
relocation allowance.
(8) Consists of 52,500 shares underlying an option granted in December 1998 and
63,125 shares underlying options granted prior to 1998 that were cancelled
and re-granted in connection with the repricing -- see "Report of the
Compensation Committee -- stock option repricing".
(9) This bonus was made up of a sign-on bonus of $30,000 and a performance bonus
of $23,200 which was earned in fiscal 1997 but paid in February 1998.
8
<PAGE> 11
Employment Agreements. There are no employment agreements between the
Company and any of its executive officers, except that Leland F. Wilson is
entitled to severance pay of four months salary, in the event of termination of
employment without cause.
Executive Salary Deferral. Beginning on September 16, 1998, all named
executive officers, except for Dr. Place who elected to reduce his annual salary
to $14,000 effective as of October 1, 1998, voluntarily elected to defer a
portion of their salaries as a result of the major restructuring of the Company.
Therefore, amounts reported as salary in annual compensation for 1998 in the
Summary Compensation Table above, include amounts earned in 1998 and not yet
paid in accordance with this voluntary deferral of salary. The salary deferral
will cease when the Company is profitable in the determination of the Chief
Financial Officer of the Company but in no event prior to March 31, 1999. In
fiscal 1998, Mr. Wilson elected to defer $26,250 in salary, Dr. Gesundheit
elected to defer $11,223 in salary, Mr. Nida elected to defer $9,647 in salary,
and Ms. Karp elected to defer $6,180 in salary. As noted previously, Dr. Place
elected to reduce his annual compensation on October 1, 1998 to $14,000, the
amount equivalent to the annual fees paid to outside directors of the Company.
Change of Control Agreements. On July 8, 1998, the Company entered into
Change of Control Agreements with Leland F. Wilson, Neil Gesundheit, Terry M.
Nida and Carol D. Karp (collectively, the "Executive Officers") containing the
same terms and conditions. Upon the involuntary termination of an Executive
Officer's employment without cause in connection with a change of control, the
Executive Officer is entitled to receive the following benefits:
(1) Monthly severance payments for twenty-four (24) months following the
effective date of termination equal to the monthly salary that the
Executive Officer was receiving immediately prior to the change of
control;
(2) Monthly severance payments equal to one-twelfth ( 1/12) of the
Executive Officer's target bonus for the fiscal year in which the
termination occurs;
(3) Pro-rated amount of the Executive Officer's target bonus for the fiscal
year in which the termination occurs, calculated based on the number of
months during such fiscal year that the Executive Officer was employed
by the Company;
(4) Continuation of benefits through the end of the severance period that
are identical to those the Executive Officer was entitled to
immediately prior to the Change of Control; and
(5) Outplacement services not to exceed Twenty thousand dollars
($20,000.00).
9
<PAGE> 12
STOCK OPTION INFORMATION
Option Grants in Last Fiscal Year. The following table sets forth certain
information for the year ended December 31, 1998, with respect to each grant of
stock options to the individuals named in the Summary Compensation Table:
OPTION GRANTS IN 1998
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------
% OF TOTAL POTENTIAL REALIZABLE VALUE
OPTIONS AT ASSUMED ANNUAL RATES OF
NUMBER OF GRANTED TO STOCK PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OPTION TERM($)(4)
OPTIONS IN FISCAL PRICE PER EXPIRATION ----------------------------
NAME GRANTED(1) YEAR(2) SHARE($)(3) DATE 5% 10%
---- ---------- ---------- ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Leland F. Wilson............ 150,000 14.24% 2.6875 12/08/09 253,523.15 642,477.43
Neil Gesundheit, M.D........ 52,500 4.98% 2.6875 12/08/09 88,733.10 224,867.10
Virgil A. Place, M.D........ 40,000 3.80% 2.6875 12/08/09 67,606.17 171,327.31
Terry M. Nida............... 52,500 4.98% 2.6875 12/08/09 88,733.10 224,867.10
Carol D. Karp............... 52,500 4.98% 2.6875 12/08/09 88,733.10 224,867.10
</TABLE>
- ---------------
(1) The stock options granted in 1998 are generally exercisable starting one
year after the date of grant, with 25% of the shares covered thereby
becoming exercisable at that time and with an additional 1/48 of the total
number of option shares becoming exercisable at the end of each month
thereafter, with full vesting occurring on the fourth anniversary of the
date of grant.
(2) Based on an aggregate of 1,053,338 options granted in 1998, including
options granted to the individuals named in the Summary Compensation Table
above.
(3) Options are granted at an exercise price equal to the closing market per
share price on the date of grant.
(4) In accordance with the rules of the SEC, shown are the gains or "option
spreads" that would exist for the respective options granted. These gains
are based on the assumed rates of annual compound stock price appreciation
of 5% and 10% from the date the option was granted over the full option
term. These assumed annual compound rates of stock price appreciation are
mandated by the rules of the SEC and do not represent the Company's estimate
or projection of future Common Stock prices.
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End
Values. The following table sets forth certain information concerning the stock
options exercised by the executive officers named in the Summary Compensation
Table during the year ended December 31, 1998 and the value of unexercised stock
options held by such individuals at the end of the year.
AGGREGATE OPTION EXERCISES IN 1998 AND 1998 YEAR-END VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS AT
NUMBER OF VALUE OPTIONS AT DECEMBER 31, 1998
SHARES REALIZED DECEMBER 31, 1998(#) ($)(1)
ACQUIRED UPON --------------------------- ---------------------
NAME ON EXERCISE EXERCISE($) EXERCISABLE UNEXERCISABLE
---- ------------ ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Leland F. Wilson......... -- -- 254,668 829,998(2) 494,436.70 --
Neil Gesundheit, M.D..... 10,000 136,250.00 42,750 218,936(3) 62,791.20 --
Virgil A. Place, M.D..... 146,875 1,009,765.63 3,125 40,000 -- --
Terry M. Nida............ -- -- -- 258,750(4) -- --
Carol D. Karp............ -- -- -- 115,625(5) -- --
</TABLE>
- ---------------
(1) Based upon a fair market value of $2.5938 per share as of December 31, 1998
less the exercise price per share.
10
<PAGE> 13
(2) Includes 525,000 shares which are vested but not exercisable due to
"Blackout" period for repriced options.
(3) Includes 105,394 shares which are vested but not exercisable due to
"Blackout" period for repriced options.
(4) Includes 137,186 shares which are vested but not exercisable due to
"Blackout" period for repriced options.
(5) Includes 18,906 shares which are vested but not exercisable due to
"Blackout" period for repriced options.
COMPENSATION COMMITTEE REPORT
The following report is provided to stockholders by the members of the
Compensation Committee of the Board of Directors.
GENERAL
Since VIVUS' initial public offering in April 1994, the Compensation
Committee (the "Committee") of the Board has administered the Company's
management compensation policies and plans. The Committee is a standing
committee comprised of outside Directors. The Committee determines the annual
base salary for each executive officer, including the Chief Executive Officer
("CEO"), and the criteria under which cash incentive bonuses, if any, may be
paid. The Committee also exercises the authority to grant options under the
Company's 1991 Incentive Stock Plan and other equity incentive plans.
COMPENSATION VEHICLES
In the first half of fiscal 1998, the Company's cash- and equity-based
compensation program focused on attracting and retaining key employees to work
in a rapidly developing public company. During the second half of fiscal 1998,
the Company focused on cash and equity-based compensation programs focused on
retaining key employees that were necessary to maintain normal business
conditions following the restructuring of the Company in July and September and
subsequent downsizing of the business. The Committee approved a Change of
Control Agreement for remaining officers and a Retention Incentive Bonus for all
employees.
Cash Compensation. Before determining the compensation with respect to
executive officers, the Committee's policy is to review base salaries proposed
by the CEO and evaluate each executive officer's experience and proposed
responsibilities and the salaries of similarly situated executives, including a
comparison to base salaries for comparable positions at other companies. In
determining its recommendations for adjustments to officers' base salaries, the
Committee's policy is to focus primarily on the officers' contributions towards
the Company's success in moving toward its long-term goals during the fiscal
year and the quality of the services rendered by the officers. Based on the
overall performance of the Company during fiscal 1998 and as a result of the
reorganization of the Company, the Committee adopted a Salary Deferral Program
for all officers of the Company. As previously noted, the Salary Deferral
Program shall continue until the Company is profitable in the determination of
the Chief Financial Officer of the Company but in no event prior to March 31,
1999. In recommending the CEO's fiscal 1999 salary, the Committee used the same
criteria it applies to other officers. Based on the overall performance of the
Company during fiscal 1998 and as a result of the reorganization of the Company,
the Committee agreed to include the CEO in the Salary Deferral Program. However,
the Committee approved a stock option grant for the CEO in recognition of taking
measures designed to make the Company to profitable. No cash bonuses were earned
for fiscal 1998.
Stock Option Program. The Committee grants options as an incentive to
employees who are expected to contribute materially to the Company's future
success. The Committee believes stock options encourage the achievement of
superior results over time and align employee and stockholder interests. The
option program incorporates four-year vesting periods to encourage employees to
continue in the Company's employ. In fiscal 1998, the Company continued its
policy of granting stock options to all new employees, and granted additional
stock options to employees who had made exceptional contributions to the
Company's development.
11
<PAGE> 14
The Committee approved initial stock option grants for all officers in
connection with commencement of the officer's employment. These stock option
grants were based primarily on the scope of the officer's responsibilities at
VIVUS, the cash compensation that the officer had received in his prior
employment and the cash compensation proposed to be paid by the Company. With
the Board's approval, additional options were granted in some cases in light of
the individual's achievement of specific goals set jointly by the officer and
the CEO, and the individual's level of vested and unvested options.
POLICY ON DEDUCTIBILITY OF COMPENSATION
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code") limits the tax deduction to $1 million for compensation paid to its five
most highly compensated executive officers, unless certain requirements are met.
One requirement is that the Committee consist entirely of outside directors as
defined in the Code, and VIVUS's Committee meets this requirement. Another
requirement is that compensation over $1 million must be based upon Company
attainment of pre-established, objective performance goals. VIVUS believes that
all compensation paid to its five most highly compensated executive officers in
fiscal 1998 is fully deductible. The Committee's present intention is to comply
with the requirements of Section 162(m) unless and until the Committee
determines that compliance would not be in the best interest of VIVUS and its
stockholders.
STOCK OPTION REPRICING
On October 5, 1998, the Board of Directors offered all employees (except
the named officers below) and certain consultants holding options to purchase
Common Stock of the Company at exercise prices greater than $4.00 per share, the
opportunity to reprice their options to the fair market value of the Company's
Common Stock as of the closing of the stock market on October 19, 1998
($2.9375). On October 5, 1998, the Board of Directors also offered Leland F.
Wilson, Neil Gesundheit, Terry M. Nida, Carol D. Karp and William L. Smith the
option to reprice (i) one-half of the options to purchase Common Stock of the
Company at exercise prices greater than $4.00 per share, to the fair market
value of the Company's Common Stock as of the closing of the stock market on
October 19, 1998 ($2.9375), and (ii) one-half of the options to purchase Common
Stock of the Company at exercise prices greater than $4.00 per share, to one
hundred fifty percent of the fair market value of the Company's Common Stock as
of the closing of the stock market on October 19, 1998 ($4.4063). The stock
option repricing was an acknowledgment of the importance to the Company of its
employees and of the incentive to employees represented by stock options,
especially in considering alternative opportunities. The Board considered such
factors as the competitive environment for obtaining and retaining qualified
employees and the overall benefit to the stockholders from a highly motivated
group of employees.
The following table sets forth, as to all executive officers of the
Company, certain information concerning the repricing of all such officers'
options since the Company's inception.
<TABLE>
<CAPTION>
LENGTH OF
ORIGINAL
NUMBER OF OPTION TERM
SECURITIES MARKET EXERCISE NEW REMAINING AT
UNDERLYING ORIGINAL PRICE AT PRICE AT TIME EXERCISE DATE OF
NAME AND PRINCIPAL POSITION OPTIONS GRANT DATE REPRICING OF REPRICING PRICE REPRICING
--------------------------- ---------- ---------- --------- ------------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Leland F. Wilson, 125,000 10/13/94 $2.9375 $ 6.5625 $2.9375 5.98 Yrs.
President, Chief Executive
Officer 125,000 10/13/94 $2.9375 $ 6.5625 $4.4063 5.98 Yrs.
and Director 60,000 1/17/95 $2.9375 $ 6.7500 $2.9375 6.24 Yrs.
60,000 1/17/95 $2.9375 $ 6.7500 $4.4063 6.24 Yrs.
60,000 1/2/96 $2.9375 $15.0000 $2.9375 7.20 Yrs.
60,000 1/2/96 $2.9375 $15.0000 $4.4063 7.20 Yrs.
44,999 12/11/96 $2.9375 $16.7500 $2.9375 8.15 Yrs.
44,999 12/11/96 $2.9375 $16.7500 $4.4063 8.15 Yrs.
50,000 12/8/97 $2.9375 $21.6250 $2.9375 9.14 Yrs.
50,000 12/8/97 $2.9375 $21.6250 $4.4063 9.14 Yrs.
-------
679,998
=======
</TABLE>
12
<PAGE> 15
<TABLE>
<CAPTION>
LENGTH OF
ORIGINAL
NUMBER OF OPTION TERM
SECURITIES MARKET EXERCISE NEW REMAINING AT
UNDERLYING ORIGINAL PRICE AT PRICE AT TIME EXERCISE DATE OF
NAME AND PRINCIPAL POSITION OPTIONS GRANT DATE REPRICING OF REPRICING PRICE REPRICING
--------------------------- ---------- ---------- --------- ------------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Neil Gesundheit, M.D., 20,718 1/17/95 $2.9375 $ 6.7500 $2.9375 6.24 Yrs.
Vice President, Clinical
Research 20,718 1/17/95 $2.9375 $ 6.7500 $4.4063 6.24 Yrs.
and Chief Medical Officer 25,000 1/2/96 $2.9375 $15.0000 $2.9375 7.20 Yrs.
25,000 1/2/96 $2.9375 $15.0000 $4.4063 7.20 Yrs.
20,000 12/11/96 $2.9375 $16.7500 $2.9375 8.15 Yrs.
20,000 12/11/96 $2.9375 $16.7500 $4.4063 8.15 Yrs.
17,500 12/8/97 $2.9375 $21.6250 $2.9375 9.14 Yrs.
17,500 12/8/97 $2.9375 $21.6250 $4.4063 9.14 Yrs.
-------
166,436
=======
Terry M. Nida, 46,875 12/1/95 $2.9375 $11.8750 $2.9375 7.12 Yrs.
Vice President, 103,125 12/1/95 $2.9375 $11.8750 $4.4063 7.12 Yrs.
Worldwide Marketing and 30,000 12/11/96 $2.9375 $16.7500 $2.9375 8.15 Yrs.
Corporate Development 26,250 12/8/97 $2.9375 $21.6250 $2.9375 9.14 Yrs.
-------
206,250
=======
Carol D. Karp, 25,000 9/2/97 $2.9375 $28.2500 $2.9375 8.87 Yrs.
Vice President, Regulatory
Affairs 25,000 9/2/97 $2.9375 $28.2500 $4.4063 8.87 Yrs.
6,562 12/8/97 $2.9375 $21.6250 $2.9375 9.14 Yrs.
6,563 12/8/97 $2.9375 $21.6250 $4.4063 9.14 Yrs.
-------
63,125
=======
William L. Smith,
Vice President,
Research and Development(1)
</TABLE>
- ---------------
(1) Options to purchase 145,000 shares of Common Stock of the Company were
repriced but all such options were subsequently cancelled upon the
termination of Mr. Smith's employment in 1998.
SUMMARY
The Committee believes that the Company's compensation policy as practiced
to date by the Committee and the Board has been successful in attracting and
retaining qualified employees and in tying compensation directly to corporate
performance relative to corporate goals. The Company's compensation policy will
evolve over time as the Company attempts to achieve the many short-term
challenges it faces while maintaining its focus on building long-term
stockholder value.
Respectfully submitted,
The Compensation Committee
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Committee is responsible for determining salaries, incentives and other
forms of compensation for directors, officers and other employees of the
Company. The Committee also administers various incentive compensation and
benefit plans. In fiscal year 1998, the Committee consisted of Richard L. Casey
(Chairman), Elizabeth A. Fetter and director Smith. Mr. Wilson, who is President
and Chief Executive Officer of the Company, participates in all discussions and
decisions regarding salaries and incentive compensation for all employees and
consultants to the Company, except that Mr. Wilson is excluded from discussions
regarding his own salary and incentive compensation.
13
<PAGE> 16
CORPORATE PERFORMANCE GRAPH
The following graph shows a comparison of total stockholder return for
holders of the Company's Common Stock from April 7, 1994, the date of the
Company's initial public offering, through December 31, 1998 compared with The
NASDAQ Stock Market and NASDAQ Pharmaceutical Stocks. This graph is presented
pursuant to SEC rules. The Company believes that while total stockholder return
can be an important indicator of corporate performance, the stock prices of
medical technology stocks like VIVUS are subject to a number of market-related
factors other than company performance, such as competitive announcements,
mergers and acquisitions in the industry, the general state of the economy, and
the performance of other medical technology stocks.
COMPARISON OF TOTAL RETURNS OF VIVUS, INC., THE NASDAQ STOCK MARKET AND
NASDAQ PHARMACEUTIAL STOCKS
<TABLE>
<CAPTION>
THE NASDAQ STOCK MARKET NASDAQ PHARMACEUTICAL
VIVUS, INC. -U.S. STOCKS - U.S. & FOREIGN
----------- ----------------------- -----------------------
<S> <C> <C> <C>
4/7/94 100.000 100.000 100.000
4/29/94 103.390 96.990 95.991
5/31/94 94.915 97.228 94.693
6/30/94 94.915 93.672 87.297
7/29/94 93.220 95.595 89.938
8/31/94 93.220 101.690 99.697
9/30/94 88.136 101.430 98.321
10/31/94 89.831 103.423 94.961
11/30/94 89.831 99.992 95.380
12/30/94 103.390 100.271 92.289
1/31/95 89.831 100.844 97.677
2/28/95 101.695 106.177 101.368
3/31/95 116.949 109.325 99.919
4/28/95 88.136 112.770 102.726
5/31/95 77.153 115.678 104.020
6/30/95 101.695 125.053 116.208
7/31/95 103.390 134.246 126.213
8/31/95 162.712 136.967 141.141
9/29/95 139.837 140.116 145.202
10/31/95 137.288 139.307 139.714
11/30/95 176.271 142.578 146.730
12/29/95 211.864 141.819 169.269
1/31/96 191.105 142.517 184.081
2/29/96 170.346 147.941 180.523
3/29/96 210.169 148.428 176.125
4/30/96 205.085 160.739 185.229
5/31/96 200.854 168.120 191.501
6/28/96 222.034 160.542 171.092
7/31/96 247.458 146.225 152.541
8/30/96 237.288 154.418 163.595
9/30/96 257.627 166.228 175.019
10/31/96 227.119 164.392 167.120
11/29/96 233.058 174.554 164.737
12/31/96 245.763 174.397 169.796
1/31/97 413.559 186.791 184.074
2/28/97 374.576 176.460 185.264
3/31/97 271.186 164.937 161.258
4/30/97 250.427 170.094 151.699
5/30/97 277.125 189.370 174.560
6/30/97 322.888 195.170 174.089
7/31/97 405.085 215.770 179.045
8/29/97 362.712 215.441 176.917
9/30/97 508.475 228.173 195.281
10/31/97 357.627 216.360 185.341
11/28/97 303.390 217.443 179.575
12/31/97 144.068 213.955 175.322
1/31/98 200.854 220.704 173.648
2/28/98 157.627 241.426 179.334
3/31/98 159.322 250.343 192.723
4/30/98 144.068 254.593 187.970
5/31/98 125.424 240.619 181.503
6/30/98 81.776 257.591 178.622
7/31/98 89.831 254.871 180.164
8/31/98 40.678 204.900 138.005
9/30/98 47.037 233.200 169.028
10/31/98 38.563 242.730 180.161
11/30/98 41.098 266.642 188.917
12/31/98 35.173 300.766 224.424
</TABLE>
14
<PAGE> 17
PROPOSAL TWO:
CONFIRMATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
PROPOSAL
The Board has selected Arthur Andersen LLP to audit the consolidated
financial statements of the Company for the year ending December 31, 1999 and
recommends that the stockholders confirm the selection. In the event of a
negative vote, the Board will reconsider its selection. Representatives of
Arthur Andersen LLP are expected to be present at the meeting, will have the
opportunity to make a statement if they so desire, and are expected to be
available to respond to appropriate questions.
REQUIRED VOTE; RECOMMENDATION OF THE BOARD OF DIRECTORS
Confirmation of the appointment of Arthur Andersen LLP as the Company's
independent public accountants requires the affirmative vote of a majority of
the Votes Cast.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THIS
PROPOSAL. THE EFFECT OF AN ABSTENTION IS THE SAME AS THAT OF A VOTE AGAINST THE
PROPOSAL.
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If
any other matters properly come before the meeting, it is the intention of the
persons named in the enclosed proxy card to vote the shares they represent as
the Board may recommend.
It is important that your stock be represented at the meeting, regardless
of he number of shares that you hold. You are, therefore, urged to execute and
return the accompanying proxy in the enclosed envelope at your earliest
convenience.
15
<PAGE> 18
PROXY PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
VIVUS, INC.
1999 ANNUAL MEETING OF STOCKHOLDERS - JUNE 8, 1999
The undersigned stockholder of VIVUS, INC., a Delaware corporation, hereby
acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy
Statement each dated April 28, 1999, and the 1998 Annual Report to Stockholders
and hereby appoints Leland F. Wilson and Richard Walliser, and each of them,
proxies and attorneys-in-fact, with full power to each of substitution, on
behalf and in the name of the undersigned, to represent the undersigned at the
1999 Annual Meeting of Stockholders of VIVUS, INC. to be held on June 8, 1999,
at 10:00 a.m., local time, at the Company's principal executive offices which
are located at 605 East Fairchild Drive, Mountain View, California 94043 and at
any adjournments thereof, and to vote all shares of Common Stock that the
undersigned would be entitled to vote if then and there personally present, on
the matters set forth below.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NOT CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE RATIFICATION OF
THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS, AND AS
SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE
THE MEETING.
(Continued and to be signed on reverse side.)
<PAGE> 19
VIVUS, INC.
PLEASE MARK VOTE ON OVAL IN THE FOLLOWING MANNER USING DATED MARK ONLY
<TABLE>
<S> <C> <C> <C>
For Withhold For All For Against Abstain
1. Election of Directors All All Except 2. Proposal to ratify the appointment / / / / / /
If you wish to withhold authority to / / / / / / of Arthur Anderson LLP a the Inde-
vote for any integral nominees, strike pendent Public Accountants of the
a line through that nominee's name in Company for fiscal 1999:
the line below. For Against Abstain
3. To transact such other business / / / / / /
2. Virgil A. Place, M.D., Leland F. Wilson, in their discretion, and may properly
Mark B. Logan, Linda M. Shortliffe, M.D. come before the Meeting or any ad-
Mario M. Rosati and Joseph E. Smith journments thereof.
- -------------------------------------------------------------------------------- Either of such attorneys of substitutes shall
have and may exercise all of the powers of said
THIS SPACE RESERVED FOR ADDRESSING attorneys-in-fact thereunder.
(key lines do not print)
- --------------------------------------------------------------------------------
This Proxy should be marked, dated and signed by the stockholders exactly as his,
her or its her or his name appears hereon, and returned properly in the enclosed
envelope. Persons signing in a fiduciary capacity should so indicate. If shares
are held by joint tenants or as community property, both should sign.
- ----------------------------------------------------------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY FORM PROMPTLY USING THE ENCLOSED ENVELOPE
</TABLE>
