SCHEDULE 14a
Information Required in Proxy Statement
Reg. Section 240.14a-101.
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] 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 Section 240.14a-11(c) or Section 240.14a-12
SYNAPTIC PHARMACEUTICAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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SYNAPTIC PHARMACEUTICAL CORPORATION
April 11, 1997
To the Stockholders of SYNAPTIC PHARMACEUTICAL CORPORATION:
On behalf of the Board of Directors, I cordially invite you to attend
the 1997 Annual Meeting of Stockholders of Synaptic Pharmaceutical Corporation.
The Annual Meeting will be held on Thursday, May 15, 1997, at 10:00 a.m., local
time, at the offices of the Company located at 215 College Road, Paramus, New
Jersey 07652.
A description of the business to be conducted at the Annual Meeting is
set forth in the attached Notice of Annual Meeting and Proxy Statement. Also
enclosed is a copy of our 1996 Annual Report to Stockholders.
It is important that your views be represented at the Annual Meeting
whether or not you are able to be present. Accordingly, please mark, sign, date
and return the enclosed proxy card promptly in the accompanying envelope (to
which no postage need be affixed if mailed in the United States). By returning
the proxy card, you can help the Company avoid the expense of duplicate proxy
solicitations and possibly having to reschedule the Annual Meeting if a quorum
of outstanding shares is not present or represented by proxy. If you attend the
Annual Meeting and wish to change your proxy vote, you may do so simply by
voting in person at the Annual Meeting.
Sincerely,
/s/ Kathleen P. Mullinix
------------------------
Kathleen P. Mullinix
Chairman, President and
Chief Executive Officer
<PAGE>
SYNAPTIC PHARMACEUTICAL CORPORATION
215 College Road
Paramus, New Jersey 07652-1431
---------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
---------------------------
To the Stockholders of SYNAPTIC PHARMACEUTICAL CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Synaptic Pharmaceutical Corporation (the "Annual Meeting") will be held on
Thursday, May 15, 1997, at 10:00 a.m., local time at the offices of the Company
located at 215 College Road, Paramus, New Jersey 07652, for the following
purposes:
1. To elect two Class I directors to the Board of Directors to hold
office until the 2000 Annual Meeting of Stockholders or until such
director's successor shall have been elected and qualified;
2. To ratify the appointment by the Board of Directors of Ernst & Young
LLP as the independent auditors of the Company for the fiscal year
ending December 31, 1997; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
This Notice is accompanied by a form of proxy, a Proxy Statement and
the Company's 1996 Annual Report to Stockholders. The foregoing items of
business are more fully described in the Proxy Statement.
Stockholders entitled to notice of and to vote at the Annual Meeting
shall be determined as of the close of business on Thursday, March 27, 1997, the
record date fixed by the Board of Directors for such purpose. To ensure your
representation at the Annual Meeting, you are urged to mark, sign, date and
return the enclosed proxy as promptly as possible in the postage-paid envelope
provided. If you attend the Annual Meeting and vote in person, your proxy will
be revoked automatically and only your vote at the Annual Meeting will be
counted. The prompt return of your proxy will assist us in preparing for the
Annual Meeting.
By Order of the Board of Directors,
/s/ Lisa L. Reiter
------------------
Lisa L. Reiter
Secretary
Paramus, New Jersey
April 11, 1997
<PAGE>
SYNAPTIC PHARMACEUTICAL CORPORATION
215 College Road
Paramus, New Jersey 07652-1431
------------------------------------
PROXY STATEMENT
------------------------------------
For the Annual Meeting of Stockholders
To Be Held
May 15, 1997
GENERAL
This Proxy Statement is furnished to stockholders of Synaptic
Pharmaceutical Corporation (the "Company") in connection with the solicitation
by the Board of Directors of the Company of proxies to be voted at the Annual
Meeting of Stockholders to be held on Thursday, May 15, 1997, at 10:00 a.m.,
local time, or at any adjournment thereof (the "Annual Meeting"). The Annual
Meeting will be held at the offices of the Company located at 215 College Road,
Paramus, New Jersey 07652.
This Proxy Statement, together with the Notice of Annual Meeting of
Stockholders, the form of proxy and Synaptic's Annual Report to Stockholders,
are being mailed on or about April 11, 1997, to all stockholders of record at
the close of business on March 27, 1997 (the "Record Date").
Record Date, Outstanding Shares and Voting
Only stockholders of record at the close of business on the Record Date
will be entitled to vote at the Annual Meeting and any adjournment thereof. At
the Record Date, 7,635,756 shares of the Company's Common Stock, par value $.01
per share (the "Common Stock"), were issued and outstanding. Each share
outstanding as of the Record Date will be entitled to one vote, and stockholders
may vote in person or by proxy. Cumulative voting is not permitted with respect
to any proposal to be acted upon at the Annual Meeting. For information
concerning stock ownership of certain stockholders, see "Security Ownership of
Certain Beneficial Owners and Management."
The presence, in person or by proxy, of the holders of a majority of
the outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum. Votes withheld from any nominee for election
as director, abstentions and broker "non-votes" are counted as present for
purposes of determining the presence or absence of a quorum for the transaction
of business. A "non-vote" occurs when a nominee holding shares for a beneficial
owner votes on one proposal, but does not vote on another proposal because, in
respect of such other proposal, the nominee does not have discretionary voting
power and has not received instructions from the beneficial owner.
The election of directors by the stockholders shall be determined by a
plurality of the votes cast by stockholders entitled to vote, and votes withheld
will not be counted toward the achievement of a plurality. On all other matters
being submitted to the stockholders, the affirmative vote of a majority of the
shares present in person or represented by proxy at the meeting and entitled to
vote on each such matter is required for
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approval. An automated system administered by the Company's transfer agent
tabulates the votes. The vote on each matter submitted to stockholders is
tabulated separately. Abstentions are included in the number of shares present
and voting on each matter. Broker non-votes are not considered for the
particular matter and have the practical effect of reducing the number of
affirmative votes required to achieve a majority for such matter by reducing the
total number of votes from which the majority is calculated.
If properly executed and received by the Company before the Annual
Meeting, any proxy representing shares of Common Stock entitled to be voted at
the Annual Meeting and specifying how it is to be voted will be voted
accordingly. Any proxy representing shares of Common Stock entitled to be voted
at the Annual Meeting which fails to specify how it is to be voted on a proposal
for which a specification may be made will be voted on such proposal in
accordance with the recommendation of the Board of Directors.
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 Company a
written notice of revocation or a duly executed proxy bearing a later date or by
attending the Annual Meeting and voting in person.
Solicitation
The cost of soliciting proxies will be borne by the Company. In
addition, the Company expects to reimburse brokerage firms and other persons
representing beneficial owners of Common Stock for their expenses in forwarding
solicitation materials to such beneficial owners. The original solicitation of
proxies by mail may be supplemented by solicitation by certain of the Company's
directors, officers and regular employees, without additional compensation, in
person or by mail, telephone, facsimile or telegram.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's Amended and Restated Certificate of Incorporation, as
amended (the "Certificate"), provides that the authorized number of directors
shall be not less than three nor more than fifteen and that the number of
directors within this range shall be stated in the Company's Amended and
Restated By-laws, as they may be amended from time to time (the "By-laws"). In
addition, the Certificate divides the Board of Directors into three classes as
nearly equal in size as possible. The term of office of the Class I directors
expires at the Annual Meeting, the term of office of the Class II directors
expires at the 1998 Annual Meeting of Stockholders and the term of office of the
Class III directors expires at the 1999 Annual Meeting of Stockholders.
Vacancies on the Board of Directors and newly created directorships resulting
from any increase in the authorized number of directors constituting the whole
Board of Directors may be filled by a majority of the directors then in office.
A director elected to fill a vacancy or newly created directorship shall serve
for the remainder of the full term of the class of directors in which the
vacancy occurred or the directorship is created and until such director's
successor is elected and qualified, or until such director's earlier
resignation, removal, death or incapacity.
The By-laws provide that the number of directors constituting the whole
Board is eight. The Board of Directors is presently composed of eight members,
two of whom are Class I directors, three of whom are Class II directors and
three of whom are Class III directors. One of the Class I directors, Dr. Alison
Taunton-Rigby, has agreed to serve as a director for an additional term, if
elected. The other of such directors, Mr. Robert Walkingshaw, recently informed
the Company that, due to other business obligations, he is not available to
serve as a director for an additional term. In an effort to keep the number of
directors in each of the three classes of directors as nearly equal as possible,
the Board has nominated Dr. Sandra Panem, who is currently a Class III director,
to serve as a Class I director. If elected at the Annual Meeting, Dr. Panem will
immediately tender her resignation as a Class III director, effective upon such
election. While management and the Board of Directors have not determined
whether to fill the Class III vacancy that will be created if Dr. Panem is
elected as a Class I director at the Annual Meeting, they intend to assess the
Company's needs and, if appropriate, will fill the vacancy following the Annual
Meeting. If elected at the Annual Meeting, the two nominees will serve until the
2000 Annual Meeting and until their respective successors have been elected and
qualified, or until their earlier resignation, removal, death or incapacity.
Directors are elected by a plurality of the votes present in person or
by proxy and entitled to vote at the Annual Meeting. Unless otherwise
instructed, the proxy holders will vote the proxies received by them for the
nominees named below. Proxy holders will not vote the proxies received by them
for more than two nominees. In the event that either nominee of the Company is
unavailable to serve as a director at the time of the Annual Meeting, the
proxies will be voted for any substitute nominee who shall be designated by the
present Board of Directors. Management has no reason to believe that either
nominee will be unavailable to serve. The two individuals receiving the highest
number of affirmative votes will be elected as Class I directors of the Company.
Nominees for Election for a Three-Year Term Expiring at the 2000 Annual Meeting
Alison Taunton-Rigby, Ph.D., 52, became a director of the Company in
October 1993. Since 1996, Dr. Taunton-Rigby has been the President and Chief
Executive Officer of Aquila Biopharmaceuticals, Inc, the successor-in-interest
of the therapeutics business of Cambridge Biotech Corporation. From 1995 to
1996, Dr.
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Taunton-Rigby was the President and Chief Executive Officer of Cambridge Biotech
Corporation. In 1995, prior to Dr. Taunton-Rigby's joining the company,
Cambridge Biotech filed a Chapter 11 petition in Federal Bankruptcy Court. From
1993 to 1994, Dr. Taunton-Rigby was the Chief Executive Officer of Mitotix,
Inc., another biotechnology company. From 1987 to 1993, Dr. Taunton-Rigby was
Senior Vice President, Biotherapeutics at Genzyme Corporation. Dr. Taunton-Rigby
is also a director of Aquila Biopharmaceuticals, Inc. and CML Group. Dr.
Taunton-Rigby is a graduate of the Advanced Management Program at Harvard
Business School and holds a Ph.D. in Chemistry and a B.Sc. in Chemistry from the
University of Bristol in England.
Sandra Panem, Ph.D., 50, became a director of the Company in April
1996. Since August 1994, Dr. Panem has been the President of Vector Fund
Management, L.P., an affiliate of Vector Securities International, Inc., and is
responsible for managing the day-to-day operations of the Vector Later-Stage
Equity Fund, L.P., a $51.1 million fund the principal focus of which is
investing in emerging life science companies. From 1992 to 1994, Dr. Panem
served as Vice President and Portfolio Manager for the Oppenheimer Global
BioTech Fund, a $200 million mutual fund that invested in public and private
biotechnology companies. From 1988 to 1992, Dr. Panem was Vice President at
Salomon Brothers Inc where she acted as a principal member of the investment
team responsible for Salomon Brothers Venture Capital, a $40 million fund
focused on early and later-stage life sciences and technology investments. Dr.
Panem was also Assistant Professor at the University of Chicago, Department of
Pathology. She received a B.S. degree in Biochemistry and a Ph.D. in
Microbiology from the University of Chicago. Dr. Panem is a director of Martek
Biosciences Corporation and IBAH, Inc. and two private companies.
Directors Continuing in Office Until the 1998 Annual Meeting of Stockholders
Jonathan J. Fleming, 39, has served as a director of the Company since
October 1989. Mr. Fleming served as Chairman of the Board from October 1989
through March 1996. He has been a general partner of Oxford Bioscience Partners
II Management Corp., a venture capital fund manager, since 1996. Mr. Fleming has
also been a general partner of MVP Ventures, an international venture capital
group active in both Europe and North America, since 1988. From 1985 to 1988,
Mr. Fleming was a Vice President of TVM Techno Venture Management, a venture
capital firm. Mr. Fleming is a director of Selfcare Inc., a healthcare company,
and is also a director of several private companies. Mr. Fleming received a B.A.
from The University of California at Berkeley and an M.P.A. in Industrial
Economics from Princeton University.
Eric R. Kandel, M.D., 67, is one of the founders of the Company. He has
been a director of and consultant to the Company since 1987. Dr. Kandel has been
University Professor of Columbia University in the City of New York since 1983,
and a Senior Investigator of the Howard Hughes Institute since 1984. In
addition, Dr. Kandel is the founding director of the Center for Neurobiology and
Behavior of Columbia University in the City of New York, a member of the
National Academy of Sciences and the winner of numerous awards and honors,
including the National Medal of Science (1988) and the Lasker Award. Dr. Kandel
is the co-author with James H. Schwartz and Thomas J. Jessel of Principles of
Neural Science, the standard textbook in neurobiology, and a leading figure in
neuroscience.
John E. Lyons, 71, became a director of the Company in October 1991. From
1987 until his retirement in 1991, Mr. Lyons served as Vice Chairman and
Executive Vice President of Merck and Co., Inc. During the 35 years prior to
becoming Executive Vice President, Mr. Lyons served Merck in a variety of
positions. Mr. Lyons is also a director of Matrix Pharmaceutical Corporation and
Immunex Corporation. Mr. Lyons holds a B.Sc. in Chemistry from Fordham
University.
4
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Directors Continuing in Office Until the 1999 Annual Meeting of Stockholders
Zola P. Horovitz, Ph.D., 62, became a director of the Company in September
1994. Since 1994, Dr. Horovitz has served as a consultant to biotechnology and
pharmaceutical companies. From August 1991 to May 1994, Dr. Horovitz served as
Vice President, Business Development and Planning, Pharmaceutical Group of
Bristol-Myers Squibb ("BMS"). From 1989 to 1991, Dr. Horovitz served as Vice
President, Licensing of BMS, and from 1987 to 1989, Dr. Horovitz served as Vice
President, Scientific Liaison of E.R. Squibb, Inc. Prior to 1987, Dr. Horovitz
spent approximately 30 years in various management positions in biological
research. Dr. Horovitz is also a director of Avigene Inc., Biocryst
Pharmaceuticals, Clinicor Inc., Diacrin, Inc., Magainin Pharmaceuticals, Phyton
Inc., Procept, Inc. and Roberts Pharmaceutical Corporation and a number of
private companies.
Kathleen P. Mullinix, Ph.D., 53, Chairman of the Board, President and Chief
Executive Officer, is one of the founders of the Company. Dr. Mullinix joined
the Company in October 1987 as its Senior Vice President and Treasurer and
became a director in November 1987. In November 1988, Dr. Mullinix became the
Company's President, in October 1989, Dr. Mullinix became the Company's Chief
Executive Officer and in April 1996, Dr. Mullinix became the Chairman of the
Board. From 1981 until 1987, Dr. Mullinix was Vice Provost of Columbia
University in the City of New York. Dr. Mullinix holds a Ph.D. in Chemical
Biology from Columbia University in the City of New York, completed a
Postdoctoral Fellowship at Harvard University and received a B.A. in Chemistry
from Trinity College.
Recommendation of the Board of Directors
The Board of Directors recommends a vote "FOR" the nominees for
director listed above.
Committees of the Board of Directors
The Company has an Audit Committee and a Compensation Committee. During
the fiscal year ended December 31, 1996, the Company did not have a nominating
committee or a committee performing functions typically performed by a
nominating committee.
The Compensation Committee makes recommendations to the Board of
Directors regarding salaries and incentive compensation for directors and
employees of and consultants to the Company and administers the Company's 1988
Amended and Restated Incentive Plan and 1996 Incentive Plan. The Compensation
Committee currently consists of Mssrs. Fleming and Walkingshaw and Drs. Panem
and Taunton-Rigby. The Compensation Committee held four meetings during the
fiscal year ended December 31, 1996.
The Audit Committee oversees actions taken by the Company's independent
auditors and reviews the Company's internal accounting controls. The Audit
Committee currently consists of Messrs. Fleming and Horovitz. The Audit
Committee held one meeting during the fiscal year ended December 31, 1996.
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Attendance at Meetings of the Board of Directors and Committees Thereof
The Board of Directors of the Company held a total of seven meetings
during the fiscal year ended December 31, 1996. Each incumbent director attended
at least 75% of the aggregate of: (i) the total number of meetings of the Board
of Directors held during the period in 1996 for which such director served as a
director; and (ii) the total number of meetings of the committees of the Board
of Directors on which such director served that were held during the period in
1996 for which such director served as a member of such committee, except Mr.
Lyons and Dr. Kandel, each of whom attended five out of the seven meetings of
the Board of Directors, and Dr. Panem, who attended three out of the five
meetings of the Board of Directors held during the period for which she served
as a director and the only meeting of the Compensation Committee held during the
period in 1996 for which she served as a member of such committee.
Compensation Committee Interlocks and Insider Participation
Dr. Panem, a member of the Compensation Committee of the Board of
Directors, is the President of Vector Fund Management, L.P. ("Vector
Management"), the asset management affiliate of Vector Securities International,
Inc. ("Vector Securities"). Vector Securities served as one of the Company's
managing underwriters in the Company's initial public offering consummated in
December 1995 and, in connection therewith, received customary underwriters'
fees from the Company in December 1995 and again in January 1996 when the
underwriters exercised the over-allotment option. Dr. Panem received certain
benefits in respect of the fees paid by the Company to Vector Securities.
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COMPENSATION AND OTHER INFORMATION
CONCERNING OFFICERS, DIRECTORS AND CERTAIN STOCKHOLDERS
Executive Officers
The executive officers of the Company are appointed annually by the
Board of Directors and serve at the discretion of the Board of Directors. Set
forth below are the names of and certain biographical information regarding the
executive officers of the Company.
Name Age Position
- --------------------------- --- --------------------------------------
Kathleen P. Mullinix 53 Chairman of the Board, President and
Chief Executive Officer
Robert I. Taber, Ph.D 60 Senior Vice President for Research
and Development
Robert L. Spence 50 Senior Vice President, Chief
Financial Officer and Treasurer
Lisa L. Reiter 37 Vice President, General Counsel and
Secretary
Richard L. Weinshank 40 Vice President of Business Development
Robert I. Taber, Ph.D., Senior Vice President for Research and
Development, joined the Company in February 1994. From 1991 until 1994, Dr.
Taber was Vice President of Pharmaceuticals Research, responsible for research
in all therapeutical areas, and, most recently, Vice President, Extramural
Research and Development, responsible for acquisition of technology, at The
DuPont Merck Pharmaceutical Company. From 1982 until 1990, Dr. Taber held senior
management positions at DuPont Pharmaceuticals, including the position of
Director, Pharmaceutical and Biotechnology Research, which involved
responsibility for all drug discovery research. From 1974 until 1982, Dr. Taber
held several positions of increasing responsibility, including the position of
Director of Biological Research, responsible for all biology in new drug
discovery at Schering-Plough Pharmaceutical Research Division. Dr. Taber holds a
Ph.D. in Pharmacology from the Medical College of Virginia and a B.S. in
Pharmacy from Rutgers University.
Robert L. Spence, Senior Vice President, Chief Financial Officer and
Treasurer, joined the Company in March 1990 as the Company's Controller. In June
1991, Mr. Spence became the Company's Chief Financial Officer, Treasurer and
Secretary. Mr. Spence held the position of Secretary until February 1994. In
December 1996, Mr. Spence became a Senior Vice President of the Company. During
the twenty years prior to his joining the Company, Mr. Spence held various
financial and operating positions with Becton Dickinson & Company, a medical
supplies manufacturing and distribution company. His last position with Becton
Dickinson before he joined the Company was Director of Finance and Operations of
the Primary Care Diagnostics Division. Mr. Spence holds an M.B.A. in Accounting
and a B.S. in Business Management from Fairleigh Dickinson University.
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Lisa L. Reiter, Vice President, General Counsel and Secretary, joined the
Company in February 1994 as General Counsel and Secretary. In September 1995,
Ms. Reiter became a Vice President of the Company. From 1985 to 1994, Ms. Reiter
was an attorney with the law firm of O'Sullivan Graev & Karabell in New York
City. Ms. Reiter holds an LL.M. in Taxation from New York University School of
Law, a J.D. from The University of Houston Law Center and a B.A. from Vanderbilt
University.
Richard L. Weinshank, Ph.D., Vice President of Business Development, joined
the Company in October 1988 as Staff Scientist in the Company's Molecular and
Cell Biology Department. In March 1990, Dr. Weinshank assumed the position of
Director, Department of Molecular and Cell Biology, and in February 1995, became
Director of Business Development. In January 1996, Dr. Weinshank became Vice
President of Business Development. From April 1985 to September 1988, Dr.
Weinshank was a Postdoctoral Fellow at Memorial Sloan-Kettering Cancer Center.
Dr. Weinshank holds a B.A. in Philosophy from The State University of New York
at Buffalo and a Ph.D. in Biochemistry from The University of California at
Riverside.
See "Proposal No. 1 - Election of Directors" for biographical information
regarding Dr. Kathleen P. Mullinix, who is also a director.
Certain Relationships and Related Transactions
Novartis Produkte A.G., an owner of more than five percent of the
Company's outstanding shares of Common Stock, is an affiliate of Novartis Pharma
A.G. ("Novartis"). Both companies are subsidiaries of Novartis A.G., the company
that was recently formed through the consolidation of Ciba-Geigy Limited
("Ciba-Geigy") and Sandoz Limited. Ciba-Geigy provided research funding to the
Company during the fiscal year ended December 31, 1996, pursuant to the terms of
the Research and License Agreement dated as of August 4, 1994, as amended, and
the Research and License Agreement dated as of May 31, 1996. The aggregate
amount of such research funding in 1996 was $3,319,000 and the aggregate amount
of research funding which the Company expects to receive pursuant to such
agreements in 1997 is $3,400,000.
See also "Compensation Committee Interlocks and Insider Participation"
above.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, executive officers and ten
percent stockholders to file reports of ownership of equity securities of the
Company and changes in such ownership with the Securities and Exchange
Commission (the "SEC") and The Nasdaq Stock Market and to furnish copies of such
reports to the Company. Based solely upon a review of copies of such reports
furnished to the Company during or with respect to the fiscal year ended
December 31, 1996, or written representations that no such filings were
required, the Company believes that, during the fiscal year ended December 31,
1996, all such filing requirements were met.
Director Compensation
Beginning as of January 1, 1996, each nonemployee director is entitled
to receive $1,500 for each meeting of the Board of Directors attended by such
director and each nonemployee director who is a member
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of a committee of the Board of Directors is entitled to receive $250 for each
meeting of such committee attended by such director. Each nonemployee director
is also entitled to reimbursement for all of such director's reasonable
out-of-pocket expenses incurred in connection with attending such meetings. In
addition, each nonemployee director is automatically granted, on June 1 of each
year (or on such later date as of which he or she is first elected as director)
for so long as such individual is a nonemployee director of the Company, a
nonstatutory stock option to purchase 2,500 shares of Common Stock. Each such
option has an exercise price per share equal to the last trade price of the
Common Stock as reported on The Nasdaq Stock Market on the date of grant. The
option becomes exercisable as to 1/24th of the shares covered thereby at the end
of each full calendar month following the grant date and has a term of ten years
beginning on such date, subject to earlier termination upon the optionee's
cessation of service on the Board of Directors.
Dr. Eric R. Kandel, a director of and consultant to the Company, was a
party to a consulting agreement with the Company that expired in March 1996.
Pursuant to the terms of the consulting agreement, Dr. Kandel provided general
consulting services to the Company, including services relating to its ongoing
and projected activities and research proposals. For his services under this
agreement, Dr. Kandel was paid $24,000 per year. For the period from January 1
to March 1, 1996, Dr. Kandel received $6,000 of cash compensation pursuant to
the consulting agreement for services rendered by him as a consultant to the
Company. Dr. Kandel continues to provide general consulting services to the
Company on an ad hoc basis. In consideration for these services, Dr. Kandel is
entitled to receive $1,500 of cash compensation per day from the Company.
In December 1994, the Compensation Committee approved the sale to Dr.
Zola P. Horovitz, a director of the Company, of 4,500 shares of Common Stock at
a per share purchase price of $2.00, subject to and in consideration for Dr.
Horovitz's entering into a consulting agreement with the Company. In January
1995, Dr. Horovitz entered into a two-year consulting agreement with the Company
and purchased all of such shares. Pursuant to the terms of the consulting
agreement, Dr. Horovitz provides general consulting and advisory services to the
Company with respect to its business policies and affairs. Dr. Horovitz is not
entitled to additional compensation for these services, but is entitled to
reimbursement for all of his reasonable out-of-pocket expenses incurred in
connection therewith.
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Executive Compensation
Summary of Cash and Certain Other Compensation
The following tables set forth certain information concerning the
compensation paid or accrued by the Company for services rendered to the Company
in all capacities for each of the fiscal years ended December 31, 1996, 1995 and
1994, by the Company's Chief Executive Officer and its four other executive
officers (collectively, the "Named Executive Officers"):
Long-Term
Name and Compen-
Principal sation
Position Annual Compensation Awards
-------- ------------------- ------
Securi-
Other ties All
Annual Under- Other
Compen- lying Compen-
Year Salary Bonus sation(1) Options sation(2)
---- ------ ----- --------- ------- -----------
Kathleen P. Mullinix
Chairman of the Board,
President and Chief
Executive Officer 1996 $218,400 $115,000 -- 35,000(3) $ 4,061 (4)
1995 206,938 100,000 -- 250 1,751 (4)
1994 200,000 75,000 -- -- 2,610 (4)
Robert I. Taber
Senior Vice President
for Research
and Development 1996 196,560 30,000 -- 5,000 4,061 (5)
1995 186,244 30,000 -- 10,250 1,751 (5)
1994 158,885(6) 30,000 -- 39,148 18,846 (5)
Robert L. Spence
Senior Vice President,
Chief Financia1
Officer and Treasurer 1996 145,600 45,000 -- 30,000(3) 306 (7)
l995 137,958 25,000 -- 250 306 (7)
1994 125,000 25,000 -- 2,500 300 (7)
Lisa L. Reiter
Vice President, General
Counsel and Secretary 1996 137,280 45,000 -- 25,000(3) 4,061 (8)
1995 130,075 35,000 -- 250 2,249 (8)
1994 112,740(9) 40,000 -- 22,898 1,897 (8)
Richard L. Weinshank(10)
Vice President of
Business Development 1996 125,000 10,000 -- 15,500 47,441(11)
1995 103,469 37,000 26,035(12) 2,750 1,061(11)
1994 90,000 22,000 23,473(12) 3,892 1,675(11)
(1) Other Annual Compensation for each Named Executive Officer does not
include perquisites and other personal benefits for 1996, 1995 and
1994, the aggregate annual amount of which for such Officer was less
than the lesser of $50,000 and 10% of the total annual salary and
bonus reported for such Officer.
(2) All Other Compensation of a Named Executive Officer includes matching
contributions, if any, made by the Company to the account of such
Named Executive Officer pursuant to the Company's 401(k) plan, which
was adopted by the Company in 1990. From 1990 through 1995, the
Company made matching contributions in an amount equal to the lesser
of 25% of the participant's contributions and 5% of such participant's
compensation. Beginning in January 1996, the Company increased its
matching contributions to an amount equal to 50% of the lesser of the
participant's contributions and 5% of such participant's compensation.
Each participant becomes fully vested in the Company's contributions
allocated to his or her account upon completion of six years of
service (not including any service prior to the time an employee
attained 18 years of age).
(3) The number of securities underlying options includes 10,000 shares of
Common Stock subject to an option granted in March 1996 to compensate
the Named Executive Officer for performance during the fiscal year
ended December 31, 1995.
(4) All Other Compensation for 1996, 1995 and 1994 includes: $3,750,
$1,440 and $2,310, respectively, in matching contributions by the
Company to the 401(k) account of Dr. Mullinix; and $311, $311 and
$300, respectively, in life insurance premiums.
10
<PAGE>
(5) All Other Compensation for 1996, 1995 and 1994 includes: $3,750,
$1,440 and $2,191, respectively, in matching contributions by the
Company to the 401(k) account of Dr. Taber; $0, $0 and $16,355,
respectively, in relocation expense reimbursement; and $311, $311 and
$300, respectively, in life insurance premiums.
(6) Dr. Taber joined the Company in February 1994 at an annual base salary
of $180,000.
(7) All Other Compensation for 1996, 1995 and 1994 represents life
insurance premiums.
(8) All Other Compensation for 1996, 1995 and 1994 includes: $3,750,
$1,938 and $1,597, respectively, in matching contributions by the
Company to the 401(k) account of Ms. Reiter; and $311, $311 and $300,
respectively, in life insurance premiums.
(9) Ms. Reiter joined the Company in February 1994 at an annual base
salary of $125,000.
(10) Dr. Weinshank became an executive officer of the Company in April
1995. Prior to that time, Dr. Weinshank served as the Company's
Director of Molecular and Cell Biology.
(11) All Other Compensation for 1996, 1995 and 1994 includes: $44,000, $0
and $0, respectively, in tuition costs; $3,130, $750 and $1,375,
respectively, in matching contributions by the Company to the 401(k)
account of Dr. Weinshank; and $311, $311 and $300, respectively, in
life insurance premiums.
(12) Other Annual Compensation for 1995 and 1994 includes $26,035 and
$23,473, respectively, in health care premiums and reimbursements.
11
<PAGE>
Option Grants In Last Fiscal Year
The following table sets forth certain information regarding options
granted during the fiscal year ended December 31, 1996, by the Company to the
Named Executive Officers:
Potential Realizable
Value at
Assumed Annual Rates of
Stock Price Appreciation
Individual Grants for Option Term (1)
------------------------------------------ ------------------------
% of
Total
(#) Options Exer- Market
Secur- Granted cise Price
ities to or on
Under- Employ- Base Date of
lying ees in Price Grant Expir-
Options Fiscal ($/per ($/per ation
Name Granted 1996 share) share) Date 0%($) 5%($) 10%($)
- ---- ------- ---- ------ ------ ---- ----- ----- -------
Kathleen P.
Mullinix 10,000(2) 2.25% $16.75 $16.75 03/21/06 -- 272,800 434,500
25,000(3) 5.64% 12.00 12.00 12/13/06 -- 488,750 778,000
Robert I.
Taber 5,000(3) 1.13% 12.00 12.00 12/13/06 -- 97,750 155,600
Robert L.
Spence 10,000(2) 2.25% 16.75 16.75 03/21/06 -- 272,800 434,500
20,000(3) 4.51% 12.00 12.00 12/13/06 -- 391,000 622,400
Lisa L.
Reiter 10,000(2) 2.25% 16.75 16.75 03/21/06 -- 272,800 434,500
15,000(3) 3.38% 12.00 12.00 12/13/06 -- 293,250 466,800
Richard L.
Weinshank 2,500(4) 0.56% 13.00 16.75 03/21/06 9,375(5) 68,200 108,625
13,000(3) 2.93% 12.00 12.00 12/13/06 -- 254,150 404,560
(1) The potential realizable value of each option grant is calculated by
assuming that the market price of the underlying securities at the date of
grant appreciates in value from such date to the end of the option term at
the annual rates of five percent and ten percent, respectively.
(2) This option was granted in March 1996 to compensate the optionee for
performance during the fiscal year ended December 31, 1995. Such option is
currently exercisable as to 50% of the shares and becomes exercisable as to
an additional 25% of the shares on January 1 of each of 1998, and 1999.
Exercisability of this option is subject to acceleration on the occurrence
of certain events.
(3) This option becomes exercisable as to 25% of the shares on January 1 of
each of 1998, 1999, 2000, and 2001. Exercisability of this option is
subject to acceleration on the occurrence of certain events.
(4) This option became exercisable as to 25% of the shares on January 1, 1997,
and becomes exercisable as to an additional 25% of the shares on January 1
of each of 1998, 1999 and 2000. Exercisability of this option is subject to
acceleration on the occurrence of certain events.
(5) This figure represents the difference between the aggregate market price of
the underlying securities at the date of grant over the aggregate exercise
price of the option.
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<PAGE>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Value
The following table sets forth certain information concerning each
exercise of stock options during the fiscal year ended December 31, 1996, by the
Named Executive Officers and unexercised stock options held by the Named
Executive Officers as of the end of such fiscal year.
Number of
Securities Value of
Underlying Unexercised
Unexercised In-The-Money
Options at Options at
12/31/96 (#) 12/31/96 ($)(1)
---------------- ------------------
Shares
Acquired Aggregate
on Value Exer- Unexer- Exer- Unexer-
Name Exercise Realized($) cisable cisable cisable cisable
- -------------------- -------- ----------- ------- ------- --------- -------
Kathleen P. Mullinix -- -- 112,074 37,750 1,122,034 53,700
Robert I. Taber 19,574 288,521(2) 1,250 33,574 12,800 291,333
Robert L. Spence 21,708 208,722(2) 3,849 33,423 13,817 60,585
Lisa L. Reiter 2,783 25,019(2) 10,853 34,512 85,537 122,935
Richard L. Weinshank -- -- 11,157 22,757 114,099 73,803
(1) Value of each unexercised in-the-money option was determined by multiplying
the number of shares underlying the option by the excess of the fair market
value of the Common Stock on December 31, 1996 ($12.00 per share, the last
trade price on such date, as reported by The Nasdaq Stock Market), over the
per share exercise price of the option.
(2) Aggregate value realized was determined by multiplying the number of shares
acquired on exercise of the options by the excess of the fair market value
of the Common Stock on the date of exercise over the per share exercise
prices of the options.
All of the agreements pursuant to which options have been granted to
the Named Executive Officers include provisions pursuant to which such options
become immediately exercisable in connection with the occurrence of certain
types of corporate transactions specified therein.
Employment Agreements
Kathleen P. Mullinix
Dr. Mullinix is employed under a four-year employment agreement with
the Company entered into effective as of October 1, 1993. The employment
agreement permits either Dr. Mullinix or the Company to terminate Dr. Mullinix's
employment upon 90 days' prior written notice. If the termination is initiated
by the Company without cause, Dr. Mullinix is entitled to receive severance
compensation equal to her base salary for a period of nine months following her
termination and immediate vesting of any restricted stock and/or options then
held by her. If Dr. Mullinix's employment with the Company is terminated under
certain circumstances in connection with a "change in control" (as defined in
the employment agreement), Dr. Mullinix is entitled to receive severance
compensation equal to her base salary for a period of 12 months following such
termination, as well as continuation of benefits during such period and
immediate vesting of any restricted stock and/or options then held by her.
Other Named Executive Officers
Each of Dr. Taber, Mr. Spence, Ms. Reiter and Dr. Weinshank is employed under a
four-year employment agreement with the Company effective as of February 14,
1994, January 1, 1994, February 7, 1994, and April 6, 1995, respectively. The
four employment agreements are in substantially the same form,
13
<PAGE>
except for terms relating to compensation and duties and responsibilities. Each
of such agreements provides that if the Named Executive Officer is terminated by
the Company without cause, such officer will be entitled to receive severance
compensation equal to such officer's base salary for a period of six months
following his or her termination. In addition, if the employment of any such
Named Executive Officer is terminated under certain circumstances in connection
with a "Change in Control" (as defined in his or her employment agreement), then
such Named Executive Officer is entitled to receive severance compensation equal
to such officer's base salary for a period of six months following such
termination, and all of the stock options, stock bonus awards and restricted
stock grants then held by such Named Executive Officer will immediately become
exercisable or vest, as the case may be.
Under the terms of their employment agreements with the Company, in
addition to their current base salaries of $207,000, $160,000 and $158,000, Dr.
Taber, Mr. Spence and Ms. Reiter are eligible to receive cash bonuses in amounts
equal to at least $30,000, $15,000 and $25,000, respectively, per annum based
upon their achievement of performance milestones set by the President of the
Company. The Board of Directors may, however, determine to award bonuses in
excess of such amounts based upon the recommendations of the Compensation
Committee. See "Compensation Committee Report on Executive Compensation" below.
Dr. Taber is also entitled to receive a payment in the amount of $10,000 per
annum during each of the first five years of his employment with the Company.
In connection with his transition from the Director, Department of
Molecular and Cell Biology, to the Director of Business Development in April
1995, the Company and Dr. Weinshank entered into an employment agreement. Under
the terms of his employment agreement with the Company, Dr. Weinshank was
entitled to receive an annual base salary of $105,000 until January 1, 1996, at
which time he became Vice President of Business Development and entitled to
receive an annual base salary of $125,000 subject to increase at the discretion
of the Board of Directors. Beginning in 1996, Dr. Weinshank also became eligible
to receive a cash bonus with respect to each calendar year during the employment
period in an amount equal to at least $10,000 based upon his achievement of
performance milestones set by the President of the Company. In any year the
Board of Directors may determine to award a cash bonus in excess of $10,000
based upon the recommendation of the Compensation Committee. Pursuant to the
terms of his employment agreement, in April 1995, Dr. Weinshank was granted an
option to purchase 2,500 shares of Common Stock and in March 1996, he was
granted another option to purchase an additional 2,500 shares of Common Stock.
In consideration of his assumption of business development responsibilities, the
Company paid Dr. Weinshank a $27,000 bonus in May 1995. Dr. Weinshank is
required to repay $15,000 of the bonus (or a pro-rated portion thereof) in the
event of a voluntary termination of his employment with the Company prior to
January 1, 1998. Under the terms of the employment agreement, Dr. Weinshank is
also entitled to receive reimbursement of business school tuition costs. In
1996, the Company paid $44,000 of such costs.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors has furnished the
following report on its policies with respect to the compensation of executive
officers of the Company. The report is not deemed to be "soliciting material" or
to be "filed" with the SEC or subject to the SEC's proxy rules or to the
liabilities of Section 18 of the Exchange Act, and the report shall not be
deemed to be incorporated by reference into any prior or subsequent filing by
the Company under the Securities Act of 1933, as amended, or the Exchange Act.
Decisions regarding compensation of the Company's executive officers
generally are made by the Compensation Committee of the Board of Directors. The
Compensation Committee consists entirely of
14
<PAGE>
outside directors. During the entire fiscal year ended December 31, 1996,
Jonathan J. Fleming, Alison Taunton-Rigby and Robert Walkingshaw served as
members of the Compensation Committee. In addition, in November 1996, Sandra
Panem was elected as a member of the Compensation Committee. All decisions of
the Compensation Committee regarding the compensation of the Company's executive
officers are reviewed by the Board of Directors, except for decisions regarding
grants under the Company's option plans, which must be made solely by the
Compensation Committee.
General Executive Compensation Policy
The Company's executive compensation policy is designed to attract to
the Company qualified individuals who have the potential as executive officers
to contribute to the long-term growth and success of the Company and thereby
enhance stockholder value, to motivate such executive officers to perform at the
highest of professional levels so as to maximize their contribution to the
Company and to retain such executive officers. Accordingly, the Company's
executive compensation policy is to offer the Company's executive officers
competitive compensation opportunities which are tied to their contribution to
the growth and success of the Company and their personal performance. Each
executive officer's compensation package is comprised of three elements: (i)
base salary which reflects individual performance and, together with annual
bonus awards, is designed primarily to be competitive with compensation levels
in the industry, (ii) annual bonus awards which are payable in cash and tied to
corporate performance for the year, as well as individual performance goals, and
(iii) periodic stock option grants which strengthen the mutuality of interests
between the executive officer and the Company's stockholders.
Implementation of Executive Compensation Policy
The following describes the manner in which the Compensation
Committee's executive compensation policy was implemented with respect to the
fiscal year ended December 31, 1996. Also summarized below are several of the
more important factors which were considered in establishing the components of
each executive officer's compensation package for the 1996 fiscal year.
Additional factors were also taken into account, and the Compensation Committee
may, in its discretion, apply entirely different factors, particularly different
measures of performance, in setting executive compensation for future fiscal
years, but all compensation decisions will be designed to further the general
compensation policy set forth above.
Base Salary. Each year, the Chief Executive Officer recommends to the
Compensation Committee new base salary levels for the Company's executive
officers (such new base salary levels being subject to the floor provided in the
respective employment agreements of such officers). In formulating such
recommendations, the Chief Executive Officer considers industry, peer group and
national surveys, as well as the past and expected future contributions of the
individual executive officers. The Compensation Committee then reviews the
recommendations in light of its assessment of each officer's past performance
and its expectation as to future contributions, as well as the survey data, and
arrives at new base salary levels for each of the Named Executive Officers,
including the Chief Executive Officer. These new base salary levels are then
recommended by the Compensation Committee to the Board of Directors for
approval.
Annual Bonus Awards. Annual bonus awards are earned by each of the
Company's executive officers based upon his or her satisfaction of performance
milestones set at the beginning of the year. These milestones may be based upon
corporate performance or individual performance, or both. The minimum amount of
such awards, assuming satisfaction of the performance milestones, is set forth
in each executive officer's employment agreement. The Compensation Committee may
determine that such bonus awards should be higher than the minimum amounts set
forth in the employment agreements based upon any
15
<PAGE>
number of factors, including those factors (such as past and expected future
contributions and survey data) which it considers in arriving at new base salary
levels and other indicia of performance that may not have been taken into
account in setting the performance milestones. Such other indicia of performance
may include, among other things, the progress of the Company's research and
development programs and business development activities, as well as the
Company's success in securing capital sufficient to assist it in furthering its
research activities. Each year, the Chief Executive Officer determines whether
each of the other executive officers has satisfied his or her performance
milestones, whether, in light of such determination, cash bonus awards should be
made to such executive officers and if such awards should be made, whether the
amounts thereof should be higher than the minimum amounts set forth in the
employment agreements. Thereafter, the Chief Executive Officer makes
recommendations to the Compensation Committee. The Compensation Committee then
reviews the Chief Executive Officer's recommendations and determines the amount
of each bonus award to recommend to the Board of Directors for approval. With
respect to the fiscal year ended December 31, 1996, each of the Named Executive
Officers earned a cash bonus award based upon his or her satisfaction of
performance milestones, combined with a subjective assessment of individual
performance. In determining the amount of each cash bonus award, the
Compensation Committee also considered survey data to ensure, where appropriate,
that the total compensation of each executive officer was competitive within the
industry. These cash bonus awards ranged from approximately 8% to 53% of the
base salaries of the Named Executive Officers.
Stock Option Grants. Beginning as of January 1, 1996, all grants of stock
options by the Company to its executive officers are made pursuant to its 1996
Incentive Plan (the "1996 Incentive Plan"). On March 21, 1996, the Compensation
Committee approved four grants of stock options to certain of the Company's
executive officers under the 1996 Incentive Plan. Three of such grants were made
to such executive officers in respect of their performance during the fiscal
year ended December 31, 1995. In determining the number of shares of Common
Stock covered by each of these three grants, the Compensation Committee
considered the same factors which it generally considers in determining the
salaries and cash bonus awards of executive officers. The fourth grant was made
pursuant to and in accordance with the terms of the employment agreement between
the Company and one of such executive officers, which employment agreement was
entered into by the Company for the purpose of furthering its general executive
compensation policy set forth above. On December 13, 1996, the Compensation
Committee also approved the grant of stock options to all of its executive
officers. These grants were also designed to further the Company's executive
compensation policy.
CEO Compensation
In setting the compensation payable to Kathleen P. Mullinix, the
Compensation Committee has sought to be competitive with other companies in the
industry, while at the same time tying a significant portion of such
compensation to Company performance. An employment agreement dated as of October
1, 1993, sets forth the terms and conditions of Dr. Mullinix's employment with
the Company.
Dr. Mullinix's base salary for the fiscal year ended December 31, 1996,
was established based upon the Compensation Committee's evaluation of the
Company's performance and Dr. Mullinix's personal performance, as well as its
objective of having Dr. Mullinix's base salary remain competitive with salaries
being paid to similarly situated chief executive officers. Accordingly, her 1996
base salary was set by the Compensation Committee at $218,400.
The remaining components of Dr. Mullinix's compensation in respect of
the fiscal year ended December 31, 1996, were entirely dependent upon Dr.
Mullinix's performance during such year, which was
16
<PAGE>
in turn tied directly to the Company's performance. The Compensation Committee
determined to award Dr. Mullinix a $115,000 cash bonus, as well as stock options
to purchase 25,000 shares of Common Stock. These awards reflected the
Compensation Committee's assessment of her very favorable performance, which
included her satisfaction of the performance goals established by the
Compensation Committee at the beginning of the fiscal year ended December 31,
1996, as well as the corporate performance of the Company during such year. In
particular, the Compensation Committee considered the extension and expansion in
scope of the Company's collaboration with Novartis Pharma A.G., the expansion of
the Company's collaboration with Eli Lilly and Company, the extension of the
Company's collaboration with Merck & Co., Inc., as well as the scientific
progress made in each of these collaborations and in internal programs, the
Company's conclusion of a collaborative agreement with The DuPont Merck
Pharmaceutical Company and the Company's successful transition from a private to
a public company. The stock options were granted at exercise prices equal to the
fair market value of the Common Stock on the date of grant and are subject to
vesting.
Submitted by the
Members of the Compensation Committee
Jonathan J. Fleming
Sandra Panem
Alison Taunton-Rigby
Robert Walkingshaw
17
<PAGE>
Stock Performance Graph
The following graph compares the percentage change in the cumulative
stockholder return on the Company's Common Stock with the cumulative total
return on The Nasdaq Stock Market Index and the BioCentury 100 Index (the
"Line-Of-Business Index"). The Line-Of-Business Index, which is calculated and
published on a weekly basis, represents the cumulative weekly close of 100
bioscience stocks. The comparison assumes that $100 was invested in each of the
following: (i) the Company's Common Stock at the initial public offering price
prior to trading on December 14, 1995, (ii) the Nasdaq Market Index prior to
trading on December 14, 1995 and (iii) the Line-Of-Business Index after closing
on December 15, 1995. (This date was chosen for the Line-Of-Business Index since
it was the date nearest the Company's initial public offering date for which the
Line-Of-Business Index was published.) Total return assumes reinvestment of
dividends, however, the Company has not paid dividends on its Common Stock and
no dividends are included in the representation of Company stock performance.
The stock price performance on the graph is not necessarily indicative of future
price performance.
[GRAPHIC OMITTED]
Actual values expressed in the above performance graph are disclosed in
the following table:
Beginning of December 31, December 31,
Period 1995 1996
------------ ------------ ------------
Company $100.00 $106.00 $ 96.00
Nasdaq Market Index $100.00 $ 99.63 $122.55
Line-Of-Business Index $100.00 $114.30 $105.50
18
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Common Stock as of March 3, 1997, with respect to
(i) each person known by the Company to be the beneficial owner of more than 5%
of the Common Stock, (ii) each of the Company's directors, (iii) each of the
Named Executive Officers and (iv) all directors and officers as a group.
Amount
and Nature
of Beneficial Percentage
Name and Address of Beneficial Owner(1) Ownership of Total(2)
- --------------------------------------- ------------ -----------
Novartis Produkte A.G........... 695,715 9.1%
Klybeckstrasse 141
CH-4002 Basle
Switzerland
T. Rowe Price Associates, Inc... 655,000 (3) 8.6%
100 East Pratt Street
Baltimore, Maryland 21202
Weiss Peck & Greer, L.L.C....... 396,000 (4) 5.2%
One New York Plaza
New York, New York 10004
Jonathan J. Fleming............. 312,240 (5) 4.1%
Zola P. Horovitz, Ph.D.......... 5,637 (6) *
Eric R. Kandel, M.D............. 37,984 (7) *
John E. Lyons................... 5,534 (8) *
Kathleen P. Mullinix, Ph.D...... 206,909 (9) 2.7%
Sandra Panem, Ph.D.............. 1,937 (10) *
Alison Taunton-Rigby, Ph.D...... 5,637 (11) *
Robert Walkingshaw.............. 16,943 (12) *
Lisa L. Reiter.................. 22,839 (13) *
Robert L. Spence................ 47,741 (14) *
Robert I. Taber, Ph.D........... 34,089 (15) *
Richard L. Weinshank, Ph.D...... 21,967 (16) *
All officers and directors as
a group (12 persons) 719,457 (17) 9.2%
* Less than 1%.
(1) Except as otherwise indicated above, the address of each stockholder
identified above is c/o the Company, 215 College Road, Paramus, New
Jersey 07652. Except as indicated in the other footnotes to this
table, the persons named in this table have sole voting and investment
power with respect to all shares of Common Stock.
(2) Share ownership in the case of each person listed above includes
shares issuable upon the exercise of options held by such person as of
March 3, 1997, that may be exercised within 60 days after such date
for purposes of computing the percentage of Common Stock owned by such
person, but not for purposes of computing the percentage of Common
Stock owned by any other person.
(3) These securities are owned by various individual and institutional
investors to which T. Rowe Price Associates, Inc. ("Price Associates")
serves as investment adviser with power to direct investments
19
<PAGE>
and/or sole power to vote the securities. For purposes of the
reporting requirements of the Exchange Act, Price Associates is deemed
to be a beneficial owner of such securities; however, Price
Associates expressly disclaims that it is, in fact, the beneficial
owner of such securities. The information relating to T. Rowe Price
Associates Inc. contained herein was obtained from the Schedule 13G
filed by such entity with the SEC.
(4) Weiss, Peck & Greer, L.L.C. ("WPG") is registered as a broker-dealer
under the Exchange Act and is an investment adviser under the
Investment Advisers Act of 1940, as amended, and holds these
securities for the discretionary accounts of certain clients. Under
the Exchange Act, WPG may be deemed to be a beneficial owner of such
securities. WPG and each of its principals expressly disclaim
beneficial ownership of such securities. The information relating to
WPG contained herein was obtained from the Schedule 13G filed by such
entity with the SEC.
(5) Consists of an aggregate of (a) 309,703 shares of Common Stock held by
Chestnut III Limited Partnership ("CIII"), Chestnut Capital
International III Limited Partnership ("CCI"), MVP Investors Limited
Partnership ("MVP"), Late Stage Fund 1990 Limited Partnership ("LSFI")
and Late Stage Fund 1991 Limited Partnership ("LSFII"), (b) 200 shares
of Common Stock owned by the individual retirement account of Amy
Fleming, Mr. Fleming's spouse, (c) 200 shares of Common Stock owned by
the individual retirement account of Mr. Fleming, (d) 1,000 shares of
Common Stock owned jointly by Mr. Fleming and his spouse, Amy Fleming
and (e) 1,137 shares of Common Stock which Mr. Fleming has the right
to acquire within 60 days after March 3, 1997. Mr. Fleming, a director
of the Company, is a general partner of each of (i) MVP Capital
Limited Partnership, which is investment general partner of CCI, LSFI
and LSFII, (ii) Chestnut III Management Limited Partnership, which is
investment general partner of CIII and (iii) MVP. Mr. Fleming has
shared voting and investment power with respect to the shares referred
to in the foregoing clause (a) and may be deemed to be the beneficial
owner of such shares. Mr. Fleming disclaims beneficial ownership of
all of such shares, except those shares representing his pro rata
interest in the partnerships referred to therein. Mr. Fleming may also
be deemed to be the beneficial owner of the other shares referred to
in the foregoing clauses (b) through (e). Mr. Fleming expressly
disclaims beneficial ownership of the shares referred to in clauses
(b) and (e).
(6) Consists of an aggregate of (a) 4,500 shares of Common Stock and (b)
1,137 shares of Common Stock which Dr. Horovitz has the right to
acquire within 60 days after March 3, 1997.
(7) Consists of an aggregate of (a) 36,847 shares of Common Stock and (b)
1,137 shares of Common Stock which Dr. Kandel has the right to acquire
within 60 days after March 3, 1997.
(8) Consists of an aggregate of (a) 4,397 shares of Common Stock and (b)
1,137 shares of Common Stock which Mr. Lyons has the right to acquire
within 60 days after March 3, 1997.
(9) Consists of (a) 92,210 shares of Common Stock and (b) 114,699 shares
of Common Stock which Dr. Mullinix has the right to acquire within 60
days after March 3, 1997.
(10) Consists of an aggregate of (a) 800 shares of Common Stock and (b)
1,137 shares of Common Stock which Dr. Panem has the right to acquire
within 60 days after March 3, 1997.
(11) Consists of an aggregate of (a) 4,500 shares of Common Stock and (b)
1,137 shares of Common Stock which Dr. Taunton-Rigby has the right to
acquire within 60 days after March 3, 1997.
(12) Consists of an aggregate of (a) 15,806 shares of Common Stock and (b)
1,137 shares of Common Stock which Mr. Walkingshaw has the right to
acquire within 60 days after March 3, 1997.
(13) Consists of (a) 3,636 shares of Common Stock and (b) 19,203 shares of
Common Stock which Ms. Reiter has the right to acquire within 60 days
after March 3, 1997.
(14) Consists of (a) 31,708 shares of Common Stock, (b) 7,684 shares of
Common Stock held by Linda Spence, Mr. Spence's spouse, as custodian
for Blake Spence, Mr. Spence's son, under the Uniform Gifts to Minors
Act, and (c) 8,349 shares of Common Stock which Mr. Spence has the
right to acquire within
20
<PAGE>
60 days after March 3, 1997. Mr. Spence disclaims beneficial
ownership of the shares held by Linda Spence.
(15) Consists of (a) 20,427 shares of Common Stock and (b) 13,662 shares of
Common Stock which Dr. Taber has the right to acquire within 60 days
after March 3, 1997.
(16) Consists of (a) 7,684 shares of Common Stock and (b) 14,283 shares of
Common Stock which Dr. Weinshank has the right to acquire within 60
days after March 3, 1997.
(17) Includes (a) 541,302 shares of Common Stock and (b) 178,155 shares of
Common Stock which such persons have the right to acquire within 60
days of March 3, 1997. Included are shares held by venture capital
funds with which directors and officers listed above are associated.
21
<PAGE>
PROPOSAL NO. 2
RATIFICATION OF
INDEPENDENT AUDITORS
The Company is asking the stockholders to ratify the appointment of Ernst
& Young LLP as the Company's independent auditors for the fiscal year ending
December 31, 1997. The affirmative vote of the holders of a majority of the
shares represented and voting at the Annual Meeting will be required to ratify
the appointment of Ernst & Young LLP.
In the event the stockholders fail to ratify the appointment, the Board of
Directors will reconsider the appointment. Even if the appointment is ratified,
the Board of Directors, in its discretion, may direct the appointment of a
different independent auditing firm at any time during the year if the Board of
Directors believes that such a change would be in the Company's and its
stockholders' best interests.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting, will have the opportunity to make a statement if they desire to
do so and will be available to respond to appropriate questions.
Recommendation of the Board of Directors
The Board of Directors recommends that the stockholders vote "FOR" the
ratification of the appointment of Ernst & Young LLP to serve as the Company's
independent auditors for the fiscal year ending December 31, 1997.
STOCKHOLDER PROPOSALS FOR 1998 PROXY STATEMENT
Stockholder proposals that are intended to be presented at the Company's
annual meeting of stockholders to be held in 1998 must be received by the
Company no later than January 1, 1998, in order to be included in the proxy
statement and related proxy materials.
ANNUAL REPORT ON FORM 10-K
THE COMPANY WILL MAIL WITHOUT CHARGE, UPON WRITTEN REQUEST, A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS,
SCHEDULES AND LIST OF EXHIBITS. THE COMPANY WILL FURNISH A COPY OF ANY EXHIBIT
TO SUCH REPORT UPON WRITTEN REQUEST AND PAYMENT OF THE COMPANY'S REASONABLE
EXPENSES IN FURNISHING SUCH EXHIBIT. REQUESTS SHOULD BE SENT TO THE CHIEF
FINANCIAL OFFICER OF THE COMPANY AT 215 COLLEGE ROAD, PARAMUS, NEW JERSEY 07652.
22
<PAGE>
OTHER BUSINESS
The Board of Directors knows of no other business that will be presented
for consideration at the Annual Meeting. If other matters are properly brought
before the Annual Meeting, however, it is the intention of the persons named in
the accompanying proxy to vote the shares represented thereby on such matters in
accordance with their best judgment.
Dated: April 11, 1997
By Order of the Board of Directors
Lisa L. Reiter
Secretary
23
<PAGE>
SYNAPTIC PHARMACEUTICAL CORPORATION
215 College Road
Paramus, New Jersey 07652
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints Lisa L. Reiter and Robert L. Spence,
the Secretary and the Treasurer, respectively, of Synaptic Pharmaceutical
Corporation (the "Company"), or each of them, as proxies, with all powers of
substitution, to represent and vote, as set forth on the reverse side, the
shares of Common Stock of the Company held of record by the undersigned at the
close of business on March 27, 1997, at the 1997 Annual Meeting of Stockholders
of the Company, which is being held at the offices of the Company at 215 College
Road, Paramus, New Jersey, on Thursday, May 15, 1997, at 10:00 a.m., local time,
and at any postponements or adjournments of such meeting, with all powers which
the undersigned would possess if personally present at such meeting or at any
such postponement or adjournment, and, in their discretion, to vote such shares
upon any other business that may properly come before the meeting or any
adjournment thereof.
(TO BE MARKED, SIGNED AND DATED ON THE REVERSE SIDE)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
SYNAPTIC PHARMACEUTICAL CORPORATION
ANNUAL MEETING OF STOCKHOLDERS -- MAY 15, 1997
|X| PLEASE MARK VOTES AS IN THIS EXAMPLE
The Board of Directors recommends a vote "FOR" Items 1 and 2 below.
1. Election of Directors
FOR [_] WITHHOLD [_] FOR ALL NOMINEES LISTED BELOW EXCEPT [_]
Nominees: Alison Taunton-Rigby, Sandra Panem
(INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"For All Nominees Listed Below Except" and write that nominee's name in the
space to the right hereof.)
2. Ratification of Appointment of Independent Auditors
FOR [_] WITHHOLD [_] ABSTAIN [_]
Unless otherwise specified by the undersigned, the proxy will be voted "FOR"
Proposal Nos. 1 and 2 and will be voted by the proxyholders at their discretion
upon any other business that may properly come before the Annual Meeting or any
adjournment thereof.
CHECK HERE IF YOU PLAN TO ATTEND THE ANNUAL MEETING. [_]
Signature Signature Date
---------------------------- --------------------- ---------
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
FOLD AND DETACH HERE
- --------------------------------------------------------------------------------
PROPOSALS TO BE VOTED UPON AT THE ANNUAL MEETING
Proposal No. 1. To elect two Class I directors to the Board of Directors.
Proposal No. 2. To ratify the appointment of Ernst & Young as the independent
auditors of the Company for the fiscal year ending
December 31, 1997.
