<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
<TABLE>
<S> <C>
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 Section240.14a-11(c) or
Section240.14a-12
TRANSKARYOTIC THERAPIES, INC.
-----------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/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:
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(4) Date Filed:
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</TABLE>
<PAGE>
TRANSKARYOTIC THERAPIES, INC.
195 ALBANY STREET
CAMBRIDGE, MASSACHUSETTS 02139
(617) 349-0200
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 15, 2000
------------------------
The Annual Meeting of Stockholders of Transkaryotic Therapies, Inc. ("the
Company") will be held at the offices of Hale and Dorr LLP, 60 State Street,
Boston, Massachusetts on Thursday, June 15, 2000 at 10:00 a.m., Eastern Standard
Time, to consider and act upon the following matters:
1. To elect six directors to serve until the 2001 Annual Meeting of
Stockholders.
2. To approve the amendment of the Company's Amended and Restated Certificate
of Incorporation increasing the number of authorized shares of the Company's
Common Stock from 30,000,000 shares to 100,000,000 shares.
3. To transact such other business as may properly come before the meeting or
any adjournment thereof.
The Board of Directors presently has no knowledge of any other business to
be transacted at the meeting.
Stockholders of record at the close of business on April 21, 2000 will be
entitled to notice of and to vote at the meeting or any adjournment thereof. The
stock record books of the Company will remain open.
By Order of the Board of Directors,
Daniel E. Geffken, SECRETARY
Cambridge, Massachusetts
May 15, 2000
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER TO
ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF THE PROXY IS
MAILED IN THE UNITED STATES.
<PAGE>
TRANSKARYOTIC THERAPIES, INC.
195 ALBANY STREET
CAMBRIDGE, MASSACHUSETTS 02139
------------------------
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
JUNE 15, 2000
------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Transkaryotic Therapies, Inc. ("the
Company") for use at the Annual Meeting of Stockholders of the Company to be
held on June 15, 2000 (the "Annual Meeting") and at any adjournment of the
Annual Meeting. All shares of Common Stock will be voted in accordance with the
stockholders' instructions. If no choice is specified, proxies will be voted in
favor of the matters set forth in the accompanying Notice of Meeting. Any proxy
may be revoked by a stockholder at any time before its exercise by delivery of a
written revocation or a subsequently dated proxy to the Secretary of the Company
or by voting in person at the Annual Meeting. Attendance at the Annual Meeting
will not itself be deemed to revoke a proxy unless the stockholder gives
affirmative notice at the Annual Meeting that the stockholder intends to revoke
the proxy and vote in person.
THE NOTICE OF MEETING, THIS PROXY STATEMENT, THE ENCLOSED PROXY AND THE
COMPANY'S ANNUAL REPORT TO STOCKHOLDERS FOR THE YEAR ENDED DECEMBER 31, 1999 ARE
BEING MAILED TO STOCKHOLDERS ON OR ABOUT MAY 15, 2000. THE COMPANY WILL, UPON
WRITTEN REQUEST OF ANY STOCKHOLDER, FURNISH WITHOUT CHARGE A COPY OF ITS ANNUAL
REPORT ON FORM 10-K (OTHER THAN EXHIBITS) FOR THE YEAR ENDED DECEMBER 31, 1999,
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ("THE SEC"). PLEASE ADDRESS
ALL SUCH REQUESTS TO TRANSKARYOTIC THERAPIES, INC., ATTENTION: CORPORATE
COMMUNICATIONS, 195 ALBANY STREET, CAMBRIDGE, MASSACHUSETTS 02139.
VOTING SECURITIES AND VOTES REQUIRED
On April 21, 2000, the record date for the determination of stockholders
entitled to notice of and to vote at the Annual Meeting, there were outstanding
and entitled to vote an aggregate of 22,683,306 shares of Common Stock of the
Company, $0.01 par value per share (the "Common Stock"). Stockholders are
entitled to one vote per share.
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 meeting shall be
necessary to constitute a quorum for the transaction of business. Abstentions
and broker non-votes will be considered as present for purposes of determining
whether a quorum is present.
The affirmative vote of the holders of a plurality of the shares of Common
Stock present or represented and voting at the meeting is required for the
election of directors. The affirmative vote of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the meeting is required
for the approval of the amendment to the Company's Amended and Restated
Certificate of Incorporation ("the Charter") to increase the number of shares of
Common Stock authorized thereunder to 100,000,000 shares from 30,000,000 shares.
Shares that abstain from voting as to a particular matter and shares held in
"street name" by brokers of nominees who indicate on their proxies that they do
not have discretionary authority to vote such shares as to a particular matter
will not be counted as votes in favor of such matter. Accordingly, abstentions
and broker non-votes will have the same effect as a vote against the Charter
Amendment. Abstentions and broker non-votes will have no effect on the other
proposal scheduled to be considered at the Annual Meeting.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of February 20, 2000,
regarding the ownership of the Company's Common Stock by (i) each person known
by the Company to own more than 5% of the outstanding shares of Common Stock,
(ii) each of the Directors of the Company, (iii) each of the Executive Officers
of the Company named in the Summary Compensation Table and (iv) all directors
and Executive Officers of the Company as a group.
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
COMMON STOCK COMMON STOCK
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) OUTSTANDING(2)
- ------------------------------------ --------------------- --------------
<S> <C> <C>
Biotech Target S.A. ............................. 2,811,500(3) 12.4%
c/o BB Biotech AG
Vordergasse 3
8200 Schaffhausen
CH/Switzerland
Putnam Investments, Inc. ........................ 2,760,872(4) 12.2%
One Post Office Square
Boston, MA 02109
Aventis Pharmaceuticals Inc. .................... 2,187,408(5) 9.7%
10236 Marion Park Drive
Kansas City, MO 64137-1405
Capital Research and Management.................. 1,250,000(6) 5.5%
1 Market Street, Steuart Tower, Suite 1800
San Francisco, CA 94105
Daniel E. Geffken................................ 68,333(7) *
Walter Gilbert, Ph.D............................. -- *
Kurt C. Gunter, M.D. ............................ 46,243(8) *
William R. Miller................................ 45,678(9) *
Rodman W. Moorhead, III.......................... 54,466 *
c/o E. M. Warburg, Pincus & Co. LLC
466 Lexington Avenue, 10th Floor
New York, NY 10017-3147
William H. Pursley............................... 41,667(10) *
Richard F Selden, M.D., Ph.D. ................... 752,593(11) 3.3%
James E. Thomas.................................. 15,307 *
c/o E. M. Warburg, Pincus & Co. LLC
466 Lexington Avenue, 10th Floor
New York, NY 10017-3147
Douglas A. Treco, Ph.D. ......................... 256,880(12) 1.1%
Wayne P. Yetter.................................. -- *
All directors and executive officers as a 1,338,382(13) 5.8%
group..........................................
(12 individuals)
</TABLE>
- ------------------------
* Percentage is less than 1% of the total number of outstanding shares of
Common Stock of the Company.
2
<PAGE>
(1) The number of shares beneficially owned by each person is determined under
rules of the SEC, and the information is not necessarily indicative of
beneficial ownership for any other purpose. Under such rules, beneficial
ownership includes any shares as to which the person has the sole or shared
voting power or investment power and also any shares which the person has
the right to acquire within 60 days of February 20, 2000 through the
exercise of any stock option or other right. Unless otherwise indicated,
each person has sole investment and voting power (or shares such power with
his or her spouse) with respect to the shares set forth in the table. The
inclusion herein of any shares deemed beneficially owned does not constitute
an admission of beneficial ownership of such shares.
(2) The number of shares deemed outstanding with respect to a named person or
entity includes 22,626,447 shares outstanding as of February 20, 2000, plus
any shares subject to issuance upon exercise of options held by the person
or entity in question that were exercisable on or exercisable within
60 days after February 20, 2000.
(3) The information presented herein is as reported in, and based in part upon,
a Schedule 13G/A filed with the SEC on August 28, 1998 by Biotech Target
S.A., a Panamanian corporation ("Biotech Target"), and BB Biotech AG, a
Swiss corporation ("BB Biotech"). Biotech Target is a wholly owned
subsidiary of BB Biotech. Each of Biotech Target and BB Biotech reported
beneficial ownership of and shared voting and dispositive power with respect
to all of the shares listed as beneficially owned. These stockholders may be
deemed to be a group for purposes of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended ("the Exchange Act").
(4) The information presented herein is as reported in, and based solely upon, a
Schedule 13G/A filed with the SEC on February 18, 2000 by Marsh & McLennan
Companies, Inc., a Delaware corporation ("MMC"), Putnam Investments, Inc., a
Massachusetts corporation ("PI"), Putnam Investment Management, Inc., a
Massachusetts corporation ("PIM") and The Putnam Advisory Company, Inc., a
Massachusetts corporation ("PAC"). PI, which is a wholly-owned subsidiary of
MMC, wholly owns PIM and PAC, each a registered investment adviser. PIM is
the investment adviser to the Putnam family of mutual funds, in which
capacity it has shared dispositive power with respect to 2,652,372 shares of
Common Stock. PAC is the investment adviser to PI's institutional clients,
in which capacity it has shared dispositive power with respect to 108,500
shares of Common Stock and shared voting power with respect to 31,100 shares
of Common Stock. PI and MMC disclaim beneficial ownership of all of the
shares listed as beneficially owned.
(5) The information presented herein is as reported in, and based in part upon,
a Schedule 13D filed with the SEC on December 22, 1999 by both Aventis
Pharmaceuticals, Inc., ("API"), formerly known as Hoechst Marion
Roussel, Inc., and HMR Pharma, Inc., ("HMR Pharma"), both Delaware
corporations. On December 15, 1999, API and HMR Pharma each became a wholly-
owned subsidiary of Aventis, S.A., a French corporation. HMR Pharma
beneficially owns 98.2% of the outstanding common stock of API. API reported
beneficial ownership of and sole voting and dispositive power with respect
to all of the shares listed as beneficially owned. HMR Pharma disclaims
beneficial ownership of all such shares within the meaning of Rule 13d-3
under the Exchange Act. These stockholders may be deemed to be a group for
purposes of Rule 13d-3 promulgated under the Exchange Act.
(6) Capital Research and Management Company, an investment adviser registered
under Section 203 of the Investment Advisers Act of 1940, is deemed to be
the beneficial owner of 1,250,000 shares of Common Stock as a result of
acting as investment adviser to various investment companies registered
under Section 8 of the Investment Company Act of 1940.
3
<PAGE>
(7) Consists of 68,333 shares of Common Stock issuable upon exercise of
outstanding stock options granted under the Company's 1993 Long-Term
Incentive Plan.
(8) Includes 46,143 shares of Common Stock issuable upon exercise of outstanding
stock options granted under the Company's 1993 Long-Term Incentive Plan.
(9) Includes 11,750 shares of Common Stock issuable upon exercise of outstanding
stock options granted under the Company's 1993 Director's Plan.
(10) Consists of 41,667 shares of Common Stock issuable upon exercise of
outstanding stock options granted under the Company's 1993 Long-Term
Incentive Plan.
(11) Includes 169,047 shares of Common Stock issuable upon exercise of
outstanding stock options granted under the Company's 1993 Long-Term
Incentive Plan.
(12) Includes 75,476 shares of Common Stock issuable upon exercise of
outstanding stock options granted under the Company's 1993 Long-Term
Incentive Plan.
(13) Includes 469,631 shares of Common Stock issuable upon exercise of
outstanding stock options granted under the Company's 1993 Long-Term
Incentive Plan and 1993 Director's Plan.
4
<PAGE>
ELECTION OF DIRECTORS
Directors are to be elected at the Annual Meeting. The Board of Directors
has fixed the number of directors at six for the coming year. The Company's
By-laws provide that the Directors of the Company will be elected at each Annual
Meeting of Stockholders of the Company to serve until the next Annual Meeting of
Stockholders or until their successors are duly elected and qualified.
The Board of Directors recommends that the nominees named below be elected
Directors of the Company. The persons named in the enclosed proxy (Richard F
Selden and James E. Thomas) will vote to elect the six nominees named below as
Directors of the Company unless authority to vote for the election of any or all
of the nominees is withheld by marking the proxy to that effect. Each nominee is
presently serving as a Director and has consented to being named in this Proxy
Statement and to serve if elected. If for any reason any nominee should become
unavailable for election prior to the Annual Meeting, the person acting under
the proxy may vote the proxy for the election of a substitute. It is not
presently expected that any of the nominees will be unavailable for election.
Set forth below are the name, age and length of service as a director for
each member of the Board of Directors and the positions and offices held by him,
his principal occupation and business experience during the past five years and
the names of other publicly-held companies of which he serves as a director.
Information with respect to the number of shares of Common Stock beneficially
owned by each director, as of February 20, 2000, appears under "Security
Ownership of Certain Beneficial Owners and Management."
Mr. Peter Wirth resigned as a Director of the Company on July 20, 1999.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
WALTER GILBERT, PH.D., age 68, has served as a Director since April 2000.
Since 1987, he has been the Carl M. Loeb University Professor at Harvard
University in the Department of Molecular and Cellular Biology. Dr. Gilbert won
the Nobel Prize in Chemistry in 1980. Previously, he was a founder and Chief
Executive Officer of Biogen, Inc. Dr. Gilbert is also Vice Chairman of the Board
of Myriad Genetics, Inc.
WILLIAM R. MILLER, age 71, has served as a Director since September 1991. In
January 1991, he retired as Vice Chairman of the Board of Directors of
Bristol-Myers Squibb Company, which position he had held since 1985. Mr. Miller
is the Chairman of the Board of Directors of Vion Pharmaceuticals, Inc., a
Director of ImClone Systems, Inc., ISIS Pharmaceuticals, Inc., and Westvaco
Corporation, and serves as Chairman of the Board of Directors of Cold Spring
Harbor Laboratory.
RODMAN W. MOORHEAD, III, age 56, has served as Chairman of the Board of
Directors since May 1992. Since 1973, he has been with E.M. Warburg, Pincus &
Co. LLC, a specialized financial services firm, where he currently serves as a
Senior Managing Director. He is also a Director of Coventry Corporation,
ElderTrust, Phycor, Inc., and Scientific Learning Corporation.
RICHARD F SELDEN, M.D., PH.D., age 41, is the founder of the Company. He has
served as Chief Scientific Officer, Chairman of the Scientific Advisory Board
and a Director since the Company's inception in 1988 and as President and Chief
Executive Officer since June 1994. Prior to founding the Company, Dr. Selden was
an Instructor in Pediatrics at Harvard Medical School. He received an A.B. in
Biology from Harvard College, an A.M. in Biology from Harvard University
Graduate School of Arts and Sciences, a Ph.D., in Genetics from the Division of
Medical Sciences at Harvard Medical School and an M.D. from Harvard Medical
School.
5
<PAGE>
JAMES E. THOMAS, age 39, has served as a Director since May 1992. Since
1989, he has been with E.M. Warburg, Pincus & Co. LLC, a specialized financial
services firm, where he currently serves as Managing Director. Mr. Thomas is
also a Director of Celtrix Pharmaceuticals, Inc. and Scientific Learning
Corporation.
WAYNE P. YETTER, age 54, has served as a Director since November 1999.
Mr. Yetter has served as Chief Operating Officer at IMS Health, Inc., which
provides information services for the healthcare industry, since October 1999.
From 1997 to 1999, he served as President and Chief Executive Officer of
Novartis Pharmaceutical Corporation. From 1991 to 1997, Mr. Yetter served as
President and Chief Executive Officer of Astra Merck, Inc.
THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF
THE SIX NOMINEES DESCRIBED ABOVE.
BOARD AND COMMITTEE MEETINGS
The Company has a standing Audit Committee of the Board of Directors, which
reviews the results and scope of the audit and other services provided by the
Company's independent auditors. The Audit Committee met twice during fiscal 1999
to review the effectiveness of the Company's public auditors during the fiscal
1998 audit, to review the adequacy of the fiscal 1998 financial statement
disclosures, to review the 1999 audit plan, to discuss the Company's internal
control policies and procedures and to consider and recommend the selection of
the Company's independent public auditors. The members of the Audit Committee
are Messrs. Miller, Thomas, and Yetter.
The Company also has a standing Compensation Committee of the Board of
Directors, which makes recommendations concerning salaries of each Executive
Officer of the Company and which exercises the authority of the Board with
respect to all incentive or stock option plans or arrangements established by
the Company, including the grant of stock options and the issuance of restricted
shares to employees. The Compensation Committee is also responsible for
establishing and modifying the compensation of all executive officers of the
Company (including compensation pursuant to stock options and other employee
benefit plans and arrangements), the adoption and amendment of all stock option
and other employee benefit plans. The Compensation Committee also establishes
and negotiates the arrangements and the engagement of the terms of any
employment agreements and arrangements with, and termination of, all Executive
Officers of the Company. The Compensation Committee met once during fiscal 1999.
The members of the Compensation Committee are Messrs. Miller and Moorhead. See
"Report of the Compensation Committee."
The Company does not have a Nominating Committee or a committee serving a
similar function. Nominations are made by and through the full Board of
Directors.
The Board of Directors held five meetings during fiscal 1999, two of which
were telephonic. Each director attended 100% of the meetings of the Board of
Directors and all committees of the Board on which he served during 1999 either
in person or telephonically.
DIRECTORS' COMPENSATION
In general, the Company compensates directors who are not employees of the
Company ("Non-Employee Directors") for service as directors in the amount of
$1,000 for attendance at each meeting of the Board, other than telephonic
meetings. Messrs. Moorhead and Thomas are not compensated for their respective
service as directors. For the fiscal year ended December 31, 1999,
6
<PAGE>
Mr. Miller received $3,000 in director fees. Dr. Gilbert and Mr. Yetter joined
the Board of Directors in, April 2000 and November 1999, respectively and
received no director fees in 1999.
Non-Employee Directors are entitled to participate in the Company's 1993
Non-Employee Directors' Stock Option Plan (the "1993 Directors' Plan") which is
administered by the Compensation Committee of the Board of Directors. The 1993
Directors' Plan provides for an automatic option grant on the first business day
immediately following each Annual Meeting of Stockholders to each director who
(i) is not an employee of the Company or of any subsidiary, affiliate or five or
more percent stockholder of the Company and (ii) does not own or hold any Common
Stock which was purchased prior to the approval of the 1993 Directors' Plan and
which remains, at the time the director is being considered for eligibility for
any specific grant under the 1993 Directors' Plan, subject to substantial risk
of forfeiture under an agreement entered into with the Company. Any director who
becomes such an employee shall cease to be eligible for any further option
grants under the 1993 Directors' Plan while such an employee, but shall not, by
reason of becoming such an employee, cease to be eligible to retain options
previously granted under the 1993 Directors' Plan. The annual option grant under
the 1993 Directors' Plan is to purchase 6,750 shares of Common Stock at an
exercise price per share equal to the fair market value on the date of grant.
As of January 31, 2000, 6,750 shares had been granted under the 1993
Directors' Plan. Currently, Dr. Gilbert and Messrs. Miller and Yetter are
eligible to receive option grants under the 1993 Directors' Plan.
CERTAIN TRANSACTIONS
In May 1991, Richard F Selden, the President and Chief Executive Officer of
the Company, borrowed $125,000 from the Company pursuant to a promissory note
("the Note"). As amended in June 1993, interest accrues on the outstanding
principal balance at a rate equal to one percent above the average yield for
one-year United States Treasury Bills (approximately 6.51% during the year ended
December 31, 1999) and is due and payable in arrears. The Board of Directors has
deferred the payment of outstanding principal and interest accrued thereon since
1992. At December 31, 1999 and March 31, 2000, the outstanding principal balance
and interest accrued thereon was $159,478 and $80,601, respectively. In
February 2000, the Board of Directors forgave $80,068 of the outstanding
principal and interest accrued thereon and paid Dr. Selden $71,003 for the
income tax liability related to such forgiveness. Dr. Selden has pledged 2,500
shares of the Company's Common Stock to the Company to secure his obligations
under the Note.
7
<PAGE>
The Company is a party to license agreements with API, whereby API was
granted exclusive rights to make, use and sell, worldwide, certain therapeutic
products produced under patent rights and technologies owned by the Company
("the License Agreements"). The License Agreements provide for fees and
milestone payments to be paid by API to the Company. During the fiscal year
ended December 31, 1999, API paid $2,500,000 to the Company under the License
Agreements.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The table below sets forth certain compensation
information for the Chief Executive Officer of the Company and the four other
most highly compensated Executive Officers of the Company whose salary and bonus
for the fiscal year ended December 31, 1999 exceeded $100,000 (collectively, the
"Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------------- -------------
OTHER ANNUAL SECURITIES ALL OTHER
COMPENSATION UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) ($)(2) OPTIONS(#)(3) ($)(4)
- --------------------------- -------- --------- ----------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Richard F Selden, M.D., Ph.D...... 1999 $290,000 $125,000 $47,571(5) 50,000 $5,170
President and Chief Executive 1998 275,000 100,000 48,093(5) 25,000 5,346
Officer 1997 240,000 135,000 -- 50,000 4,945
William H. Pursley................ 1999 172,398(6) 50,000 457,711(7) 170,000 213
Senior Vice President,
Commercial Operations
Douglas A. Treco, Ph.D............ 1999 231,000 60,000 -- 25,000 5,170
Senior Vice President, 1998 220,000 40,000 -- 15,000 5,346
Research and Development 1997 175,000 60,000 -- 40,000 3,810
Daniel E. Geffken................. 1999 200,000 75,000 -- 20,000 5,170
Vice President, Finance and 1998 190,000 25,000 -- 10,000 5,346
Chief Financial Officer 1997 146,244(8) 50,000 -- 120,000 3,274
Kurt C. Gunter, M.D............... 1999 173,000 30,000 -- 10,000 5,296
Vice President, Clinical and 1998 165,000 30,000 -- 10,000 4,746
Regulatory Affairs 1997 150,000 40,000 36,281(9) 20,000 4,533
</TABLE>
- ------------------------
(1) Bonuses indicated as earned in any fiscal year were generally paid in the
following fiscal year.
(2) In accordance with the rules of the SEC, Other Annual Compensation in the
form of perquisites and other personal benefits has been omitted in those
instances where the aggregate amount of such perquisites and other personal
benefits constituted less than the lesser of $50,000 or 10% of the total
amount of annual salary and bonus for the executive officer for the fiscal
year indicated.
(3) Option grants reflect elements of compensation earned during the fiscal year
indicated. However, in certain instances, such options were not granted
until the beginning of the next fiscal year.
8
<PAGE>
(4) All Other Compensation in 1999 includes the following: (a) the Company's
contributions under the Company's 401(k) Plan in the amount of $5,000 for
Drs. Selden and Treco, Mr. Geffken and Dr. Gunter; (b) the taxable portion
of group term life insurance premiums paid by the Company for Drs. Selden
and Treco and Mr. Geffken in the amount of $170, for Mr. Pursley in the
amount of $213, and for Dr. Gunter in the amount of $296.
(5) Other Annual Compensation for Dr. Selden includes $14,571 and $14,927 in
1999 and 1998, respectively, for the payment of certain travel related
expenses and also includes amounts for the payment of insurance premiums and
certain financial planning services and the reimbursement of the related tax
liability for such expenses.
(6) Mr. Pursley commenced employment with the Company in April 1999.
(7) Other Annual Compensation for Mr. Pursley consists of relocation expenses
and reimbursement for related tax liability for such relocation expenses.
(8) Mr. Geffken commenced employment with the Company in February 1997.
(9) Other Annual Compensation for Dr. Gunter consists of relocation expenses and
reimbursement for related tax liability for such relocation expenses.
OPTION GRANT TABLE. The following table sets forth certain information
regarding options granted during the fiscal year ended December 31, 1999 by the
Company to the Named Executive Officers:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------
PERCENT OF
NUMBER OF TOTAL POTENTIAL REALIZABLE VALUE AT
SECURITIES OPTIONS ASSUMED ANNUAL RATES OF STOCK
UNDERLYING GRANTED TO EXERCISE PRICE APPRECIATION FOR OPTION
OPTIONS EMPLOYEES OR BASE TERM(1)
GRANTED IN FISCAL PRICE EXPIRATION -----------------------------
NAME (#) YEAR(2) ($/SHARE) DATE 10%($) 5%($)
- ---- ---------- ---------- --------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard F Selden, M.D., Ph.D..... 25,000 2% $28.75 1/27/09 $ 452,108 $1,145,502
William H. Pursley............... 150,000 13% 23.50 2/19/09 2,216,854 5,617,942
Douglas A. Treco, Ph.D........... 15,000 1% 28.75 1/27/09 271,211 687,301
Daniel E. Geffken................ 10,000 1% 28.75 1/27/09 180,807 458,201
Kurt C. Gunter, M.D.............. 10,000 1% 28.75 1/27/09 180,807 458,201
</TABLE>
- ------------------------
(1) Potential realizable value is based on an assumption that the market price
of the stock will appreciate at the stated rate, compounded annually, from
the date of grant until the end of the 10-year term. These values are
calculated based on rules promulgated by the SEC and do not reflect the
Company's estimate or projection of future stock prices. Actual gains, if
any, on stock option exercises will be dependent upon the future performance
of the price of the Company's Common Stock, which will benefit all
stockholders proportionately.
(2) Calculated based on an aggregate of 1,156,300 options granted under the
Company's 1993 Long-Term Incentive Plan to employees during the fiscal year
ended December 31, 1999.
9
<PAGE>
OPTION EXERCISES AND YEAR-END VALUES. The following table sets forth
certain information concerning option exercises by Named Executive Officers
during the fiscal year ended December 31, 1999 and exercisable and unexercisable
stock options held by the Named Executive Officers as of December 31, 1999:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
SHARES NUMBER OF SECURITIES
ACQUIRED UNDERLYING VALUE OF UNEXERCISED
ON VALUE UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
EXERCISE REALIZED AT FISCAL YEAR-END(#) AT FISCAL YEAR-END($)(2)
NAME (#) ($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- -------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Richard F Selden, M.D., Ph.D.... -- -- 122,618/80,953 $2,893,219/$2,637,014
William H. Pursley.............. -- -- 12,000/138,000 180,000/2,070,000
Douglas A. Treco, Ph.D.......... -- -- 57,857/22,857 813,645/592,395
Daniel E. Geffken............... 10,000 $145,375 43,333/66,667 577,497/1,295,003
Kurt C. Gunter, M.D............. 7,000 199,696 39,476/38,810 788,877/1,302,259
</TABLE>
- ------------------------
(1) Value Realized represents the difference between the aggregate exercise
price of the option and the aggregate fair market value of the underlying
Common Stock on the date of exercise.
(2) Value of Unexercised In-the-Money Options represents the difference between
the last reported sales price of the Company's Common Stock as reported by
the Nasdaq National Market on December 31, 1999 ($38.50) and the exercise
price of the option, multiplied by the number of shares subject to the
option.
EMPLOYMENT AGREEMENTS
The Company is a party to employment agreements with each of the Named
Executive Officers. Each employment agreement contains provisions for
establishing the annual base salary and bonus for each such executive officer.
Pursuant to the terms of the employment agreements, the 2000 annual base salary
for each of Dr. Selden, Mr. Pursley, Dr. Treco, Mr. Geffken, and Dr. Gunter has
been established at $350,000, $255,000, $250,000, $225,000 and $185,000,
respectively. In addition, each of the Named Executive Officers is eligible to
receive an annual bonus based upon the achievement of individual and Company
goals. The employment agreements may be terminated by the executive or by the
Company. Under the terms of each such employment agreement, if the Company
terminates the executive's employment without cause (as defined therein), or, in
some cases, if the executive terminates his employment for certain reasons, the
Company is required to pay to such executive severance payments at the
executive's base salary rate for 12 months (18 months in the case of
Dr. Selden) (the "Severance Period"), to be reduced by an amount equal to the
amount of any other compensation earned by such individual during such Severance
Period. Certain of the employment agreements also provide for payments to be
made to the executive in the event of cessation of employment as a result of a
disability. Under each of the employment agreements, the executive shall be
bound by certain non-compete obligations for two years after termination of
employment (one year if the Company terminates such executive's employment other
than for cause).
10
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Company's Board of Directors is
responsible for establishing compensation policies with respect to the Company's
executive officers. The objectives of the Company's executive compensation
program are to establish compensation levels designed to enable the Company to
attract, retain and reward executive officers who contribute to the long-term
success of the Company so as to enhance stockholder value. The Compensation
Committee makes decisions each year regarding executive compensation, including
annual base salaries, bonus awards, stock option grants and restricted stock
awards. Stock option grants and restricted stock awards are key components of
the executive compensation program and are intended to provide executives with
an equity interest in the Company so as to link a meaningful portion of the
compensation of the Company's executives with the performance of the Company's
Common Stock. This report is submitted by the Compensation Committee and
addresses the compensation policies for fiscal 1999 as they affected
Dr. Selden, in his capacity as President and Chief Executive Officer of the
Company, and the Named Executive Officers.
COMPENSATION PHILOSOPHY
The Company's executive compensation philosophy is based on the belief that
competitive compensation is essential to attract, motivate, and retain highly
qualified and industrious employees. The Company's policy is to provide total
compensation that is competitive for comparable work and comparable corporate
performance. The compensation program includes both motivational and
retention-related compensation components. Bonuses are included to encourage
effective performance relative to current plans and objectives. Stock options
are included to help retain productive people and to more closely align their
interests with those of stockholders.
In executing its compensation policy, the Company seeks to relate
compensation with the Company's financial performance and business objectives,
reward high levels of individual performance and tie a significant portion of
total executive compensation to both the annual and long-term performance of the
Company. In making decisions regarding executive compensation, the Compensation
Committee considered the input of the Company's other directors and the results
of an informal study conducted by members of management and presented to the
Compensation Committee relating to comparable biotechnology firms, with a
particular focus on those located in the eastern United States. In order to
attract, retain and motivate the talented personnel it needs, the Company has
structured its executive compensation program to provide its employees with cash
compensation competitive, generally, with the fiftieth percentile for total
annual compensation paid by comparable companies. Bonuses are primarily based on
corporate performance, with actual awards varying according to the Company's
overall performance and the individual's impact on that performance. While
informal compensation survey data are useful guides for comparative purposes,
the Company believes that a successful compensation program also requires the
application of judgment and subjective determinations of individual performance
and, to that extent, the Compensation Committee applies judgment in reconciling
the program's objectives with the realities of retaining valued employees.
EXECUTIVE COMPENSATION PROGRAM
Annual compensation for the Company's executives consists of three principal
elements: base salary, cash bonus and stock options, and restricted stock
awards.
11
<PAGE>
BASE SALARY AND CASH BONUS
In setting the annual base salaries for the Company's executives, the
Compensation Committee reviews the aggregate salary and bonus compensation for
individuals in comparable positions with other companies, including competitors
of the Company, and adjusts such amounts to reflect individual performance. Many
of these companies are biotechnology and pharmaceutical companies, some of which
are engaged in the research, development, manufacture and sale of therapeutic
proteins. The Company also regularly compares the salary levels of its executive
officers with other leading companies through reviews of survey and proxy
statement data and strives to provide its Executive Officers with cash
compensation, competitive, generally, with the fiftieth percentile for total
annual compensation paid by comparable companies.
Increases in annual base salary are based on a review and evaluation of the
performance of the department or activity for which the executive has
responsibility, the impact of that department or activity on the Company and the
skills and experience required for the job, coupled with a comparison of these
elements with similar elements for other executives both inside and outside the
Company.
Cash bonuses are tied directly to the Company's achievement of its goals and
objectives and the contribution of the executive to such achievements.
EQUITY OWNERSHIP
Executive officer compensation also includes long-term incentives afforded
by options to purchase shares of Common Stock and restricted stock awards. The
purposes of the Company's stock ownership program are (i) to highlight and
reinforce the mutuality of long-term interests between employees and the
stockholders and (ii) to assist in the attraction and retention of critically
important key executives, managers and individual contributors who are essential
to the Company's growth and development.
The Company's stock programs include long vesting periods to optimize the
retention value of these options and to orient the Company's Executive Officers
to longer term success. Generally, stock options vest in equal annual
installments over six years commencing on the first anniversary of the date of
grant, and, if employees leave the Company before these vesting periods, they
forfeit the unvested portions of these awards.
The number of shares of Common Stock subject to stock option grants is
generally intended to reflect the significance of the executive's current and
anticipated contributions to the Company. Since November 1996, the exercise
price of options granted by the Company has been determined at the discretion of
the Compensation Committee, although it has generally been set at 100% of the
fair market value per share on the date of grant. The value realizable from
exercisable options is dependent upon the extent to which the Company's
performance is reflected in the price of the Company's Common Stock at any
particular point in time. However, the decision as to whether such value will be
realized through the exercise of an option in any particular year is primarily
determined by each individual within the limits of the vesting schedule and not
by the Compensation Committee.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Compensation Committee has set Dr. Selden's total annual compensation,
including compensation derived from the Company's cash bonus and stock option
programs, at a level it believes to be competitive with the chief executive
officers of similarly capitalized biotechnology and
12
<PAGE>
pharmaceutical companies. Dr. Selden, in his capacity as President and Chief
Executive Officer, is eligible to participate in the same executive compensation
program available to the Company's other senior executives.
During fiscal 1999, Dr. Selden's annual base salary was increased $15,000,
from $275,000 to $290,000. For fiscal 2000, Dr. Selden's base salary has been
set at $350,000. For fiscal 1999, Dr. Selden was also awarded a bonus of
$125,000 and, in February 2000, was granted an option to purchase 50,000 shares
of Common Stock at the then fair market value of $33.375 per share, which
compensation was based, in part, upon advances in the Company's Gene
Activated-TM- protein, Niche Protein-TM- products and Gene Therapy platforms.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), generally disallows a tax deduction to public companies for
compensation over $1 million paid to its chief executive officer and its four
other most highly compensated executive officers. However, qualifying
performance-based compensation will not be subject to the deduction limit if
certain requirements are met. The Company currently intends to structure its
stock option grants in a manner that complies prospectively with these
performance-based requirements.
COMPENSATION COMMITTEE
William R. Miller
Rodman W. Moorhead, III
13
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on its review of copies of reports filed by individuals
required to make filings ("Reporting Persons") pursuant to Section 16(a) of the
Exchange Act or written representations from certain Reporting Persons that no
Form 5 filing was required for such persons, the Company believes that, during
fiscal 1999 all filings required to be made by its Reporting Persons were timely
made in accordance with the requirements of the Exchange Act.
STOCK PERFORMANCE GRAPH
The following graph compares cumulative total stockholder return on the
Company's Common Stock since October 17, 1996, the date of the Company's initial
public offering, with the cumulative total return for the Nasdaq Composite Index
and the Nasdaq Pharmaceutical Index. This graph assumes the investment of $100
on October 17, 1996 in the Company's Common Stock, the Nasdaq Composite Index
and the Nasdaq Pharmaceutical Index and assumes dividends are reinvested.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
10/17/96 12/31/96 12/31/97 12/31/98 12/31/99
<S> <C> <C> <C> <C> <C>
Transkaryotic Therapies, Inc. $100 $123 $234 $169 $257
Nasdaq Composite -- U.S. $100 $104 $127 $179 $323
Nasdaq Pharmaceutical $100 $100 $103 $132 $247
10/17/96 12/31/96 12/31/97 12/31/98 12/31/99
TRANSKARYOTIC THERAPIES, INC. $100 $123 $234 $169 $257
NASDAQ COMPOSITE -- U.S. $100 $104 $127 $179 $323
NASDAQ PHARMACEUTICAL $100 $100 $103 $132 $247
</TABLE>
14
<PAGE>
APPROVAL OF AMENDMENT INCREASING AUTHORIZED COMMON STOCK
In February 2000, the Board of Directors of the Company unanimously voted to
recommend to the stockholders that the Company's Amended and Restated
Certificate of Incorporation be amended to increase the number of authorizes
shares of Common Stock from 30,000,000 shares to 100,000,000 shares. Of the
30,000,000 shares of Common Stock authorized, 22,592,000 shares were outstanding
as of December 31, 1999, and 2,214,000 shares were issuable pursuant to stock
options outstanding as of December 31, 1999 under the Company's stock option
plans.
The Board believes that the authorization of additional shares of Common
Stock is necessary to provide shares for issuance in connection with the
exercise of stock options expected to be granted under the Company's stock
option plans, possible future stock dividends, financings, joint ventures,
acquisitions and other general corporate purposes. There are no existing plans,
understandings or agreements for the issuance of any shares of Common Stock. If
the amendment is adopted by the stockholders, the Board of Directors will have
authority to issue shares of Common Stock without the necessity of further
stockholder action. Holders of the Common Stock have no preemptive rights with
respect to any shares which may be issued in the future.
Under Delaware law, stockholders are not entitled to dissenter's rights with
respect to the proposed amendment to the Company's Amended and Restated
Certificate of Incorporation.
THE BOARD OF DIRECTORS RECOMMENDS THE APPROVAL OF THE COMPANY'S CHARTER
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK.
OTHER INFORMATION
ACCOUNTING MATTERS
The Board of Directors has selected the independent accounting firm of
Ernst & Young LLP to audit the accounts of the Company for the year ended
December 31, 2000.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting. They will have the opportunity to make a statement if they
desire to do so and will also be available to respond to appropriate questions
from stockholders.
OTHER MATTERS
Management does not know of any other matters which may come before the
meeting. However, if any other matters are properly presented to the meeting, it
is the intention of persons named in the accompanying proxy to vote, or
otherwise act, in accordance with their judgment on such matters.
All costs of solicitations of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors, officers and regular
employees, without additional remuneration, may solicit proxies by telephone,
telegraph and personal interviews. Brokers, custodians and fiduciaries will be
requested to forward proxy soliciting material to the owners of stock held in
their names, and the Company will reimburse them for their out-of-pocket
expenses in this connection.
15
<PAGE>
DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING
Proposals of stockholders intended to be presented at the 2001 Annual
Meeting of Stockholders must be received by the Company at its principal office
in Cambridge, Massachusetts not later than January 15, 2000 for inclusion in the
proxy statement for that meeting.
If a stockholder of the Company wishes to present a proposal before the 2001
Annual Meeting, but does not wish to have the proposal considered for inclusion
in the Company's proxy statement and proxy card, such stockholder must also give
written notice to Corporate Communications at its principal office in Cambridge,
Massachusetts. The Company must receive such notice no later than March 30,
2001. If a stockholder fails to provide timely notice of a proposal to be
presented at the 2001 Annual Meeting, the proxies designated by the Board of
Directors of the Company will have discretionary authority to vote on any such
proposal.
By Order of the Board of Directors,
Daniel E. Geffken, SECRETARY
May 15, 2000
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING. WHETHER
OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. PROMPT RESPONSE WILL GREATLY
FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION WILL BE
APPRECIATED.
16
<PAGE>
TRANSKARYOTIC THERAPIES, INC.
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 15, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
THE UNDERSIGNED, REVOKING ALL PRIOR PROXIES, HEREBY APPOINTS RICHARD F SELDEN
AND JAMES E. THOMAS, AND EACH OF THEM, WITH FULL POWER OF SUBSTITUTION, AS
PROXIES TO REPRESENT AND VOTE AS DESIGNATED HEREON ALL SHARES OF STOCK OF
TRANSKARYOTIC THERAPIES, INC. ("THE COMPANY") WHICH THE UNDERSIGNED WOULD BE
ENTITLED TO VOTE IF PERSONALLY PRESENT AT THE ANNUAL MEETING OF STOCKHOLDERS OF
THE COMPANY TO BE HELD ON THURSDAY, JUNE 15, 2000, AT 10:00 A.M., EASTERN
STANDARD TIME, AT THE OFFICES OF HALE AND DORR LLP, 60 STATE STREET, BOSTON,
MASSACHUSETTS AND AT ANY ADJOURNMENT THEREOF, WITH RESPECT TO THE MATTERS SET
FORTH ON THE REVERSE SIDE HEREOF.
PLEASE FILL IN, DATE, SIGN AND MAIL THIS PROXY IN THE ENCLOSED
RETURN ENVELOPE.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
DETACH HERE
X Please mark votes as in this example.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL
DIRECTOR NOMINEES.
1. To elect the following six directors for the ensuing year:
NOMINEES: Walter Gilbert, William R. Miller, Rodman W. Moorhead, III, Richard F
Selden, James E. Thomas and Wayne P. Yetter.
____For ____Withheld
- --------------------------------------
For all nominees except as noted above
2. To approve the amendment of the Company's Amended and Restated Certificate
of Incorporation increasing the number of authorized shares of the
Company's Common Stock from 30,000,000 shares to 100,000,000 shares.
____For ____Withheld _____Abstain
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT _____
MARK HERE IF YOU PLAN TO ATTEND THE MEETING _____
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
Please sign exactly as name appears hereon. If the stock is registered in the
names of two or more persons, each should sign. When signing as an executor,
administrator, trustee, guardian, or attorney, please give full corporate name
by an authorized officer. If a partnership, please sign in full partnership name
by an authorized person.
Signature:_______________________ Date:___________________________
Signature:_______________________ Date:___________________________
