<PAGE>
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
[X] Definitive Proxy Statement the Commission only
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14A-ll(c) or Rule 14a-12
CADUS PHARMACEUTICAL CORPORATION
--------------------------------
(Name of Registrant as Specified In Its Charter)
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:
----------------------------------------------------------------------
(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-ll(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount Previously Paid: $______________
(2) Form, Schedule or Registration Statement No.: _________________
(3) Filing Party: _________________
(4) Date Filed: __________________
<PAGE>
CADUS PHARMACEUTICAL CORPORATION
767 Fifth Avenue
New York, New York 10153
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held on June 13, 2000
To the Stockholders of Cadus Pharmaceutical Corporation:
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of Cadus Pharmaceutical Corporation (the "Company") will be held on
Tuesday, June 13, 2000, at the Sheraton New York Hotel, 811 Seventh Avenue, New
York, New York 10019, at 2:00 p.m. local time.
The Meeting will be held for the following purposes:
1. To elect six directors of the Company to serve until the next annual
meeting of stockholders or until their successors are duly elected and
qualified.
2. To transact such other business as may properly come before the
Meeting or any and all adjournments thereof.
The Board of Directors of the Company fixed the close of business on May 4,
2000 as the record date for the determination of stockholders entitled to notice
of and to vote at the Meeting and at any and all adjournments thereof.
Consequently, only stockholders of record at the close of business on May 4,
2000 are entitled to notice of and to vote at the Meeting and at any and all
adjournments thereof.
Whether or not you plan to attend the Meeting, please complete, date and
sign the enclosed proxy card, and return it promptly in the enclosed envelope to
ensure your representation at the Meeting. You are cordially invited to attend
the Meeting and, if you do so, you may personally vote, regardless of whether
you have signed a proxy.
New York, New York
May 10, 2000
By Order of the Board of Directors
Russell D. Glass
President
<PAGE>
CADUS PHARMACEUTICAL CORPORATION
767 Fifth Avenue
New York, New York 10153
(212) 702-4315
--------------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
--------------------------------
This Proxy Statement and the accompanying proxy card are being furnished in
connection with the solicitation of proxies by and on behalf of the Board of
Directors (the "Board") of Cadus Pharmaceutical Corporation (the "Company), to
be used at the Annual Meeting of Stockholders of the Company (the "Meeting") to
be held on Tuesday, June 13, 2000, at 2:00 p.m. local time, at the Sheraton New
York Hotel, 811 Seventh Avenue, New York, New York 10019, and at any and all
adjournments thereof. This Proxy Statement and the accompanying proxy card are
first being mailed to the holders of record of the Company's common stock, $.01
par value per share (the "Common Stock"), on or about May 10, 2000.
Stockholders of the Company represented at the Meeting will consider and
vote upon (i) the election of six directors to serve until the next annual
meeting of stockholders or until their successors have been duly elected and
qualified; and (ii) such other business as may properly come before the Meeting
or any and all adjournments thereof. The Company is not aware of any other
business to be presented for consideration at the Meeting.
VOTING AND SOLICITATION OF PROXIES
Only holders of record of shares of Common Stock at the close of business
on May 4, 2000 (the "Record Date") are entitled to vote at the Meeting. As of
the Record Date, 13,144,040 shares of Common Stock were outstanding. Each
stockholder is entitled to one vote for each share of Common Stock held of
record on the Record Date for each proposal submitted for stockholder
consideration at the Meeting. The presence, in person or by proxy, of the
holders of a majority of the shares of Common Stock entitled to vote at the
Meeting is necessary to constitute a quorum for the conduct of business at the
Meeting. The election of each nominee for director requires a plurality of the
total votes cast. Abstentions will be considered shares present for purposes of
determining whether a quorum is present at the Meeting and, therefore, will have
the same legal effect as a vote against a motion presented at the Meeting.
Broker non-votes will be considered as shares not entitled to vote and will,
therefore, not be considered in the tabulation of votes.
2
<PAGE>
All shares represented by properly executed proxies will, unless such
proxies have previously been revoked, be voted at the Meeting in accordance with
the directions on the proxies. A proxy may be revoked at any time prior to final
tabulation of the votes at the Meeting. Stockholders may revoke proxies by
written notice to the Secretary of the Company, by delivery of a proxy bearing a
later date, or by personally appearing at the Meeting and casting a contrary
vote. If no direction is indicated, the shares represented by properly executed
proxies will be voted in favor of the Board's nominees for director. The persons
named in the proxies will have discretionary authority to vote all proxies with
respect to additional matters that are properly presented for action at the
Meeting.
The executive officers and directors of the Company as a group own or may
be deemed to control approximately 37.8% of the outstanding shares of Common
Stock of the Company. Each of the executive officers and directors has indicated
his or her intent to vote all shares of Common Stock owned or controlled by him
or her in favor of each item set forth herein.
The proxy solicitation is made by and on behalf of the Board. Solicitation
of proxies for use at the Meeting may be made in person or by mail, telephone or
telegram, by officers and regular employees of the Company. Such persons will
receive no additional compensation for any solicitation activities. Copies of
solicitation materials will be furnished to banks, brokerage houses, fiduciaries
and custodians holding in their names shares of Common Stock beneficially owned
by others to forward to such beneficial owners. The Company may reimburse
persons representing beneficial owners of Common Stock for their costs of
forwarding solicitation materials to such beneficial owners. The Company will
bear the entire cost of the solicitation of proxies, including the preparation,
assembly, printing and mailing of this Proxy Statement, the proxy card and any
additional information furnished to stockholders.
COMMON STOCK OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of May 4, 2000, 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 and nominees for director,
(iii) each Named Executive Officer (as defined below under "EXECUTIVE
COMPENSATION-Summary Compensation") and (iv) all directors and executive
officers as a group. All information is based upon ownership filings made by
such persons with the Securities and Exchange Commission (the "Commission") or
upon information provided by such persons to the Company.
3
<PAGE>
<TABLE>
<CAPTION>
Number of Shares Percentage of
Amount and Nature of Outstanding
Name and Address of Beneficial Owner(1) Beneficial Ownership Shares Owned(2)
- ------------------------------------ -------------------- ------------
<S> <C> <C>
Carl C. Icahn**.............................................. 3,370,216(3) 25.75%
767 Fifth Avenue
New York, New York 10153
Bristol-Myers Squibb......................................... 2,061,673 15.78%
P.O. Box 4000
Route 206 and Province Line Road
Princeton, New Jersey 08543-4000
Physica B.V. (4) ............................................ 1,599,942 12.24%
C.J. van Houtenlaan 36
1381 CP Weesp
The Netherlands
BVF Partners, L.P. .......................................... 725,770 5.55%
227 West Monroe Street, Suite 4800
Chicago, Illinois 60606
International Biotechnology Trust plc ....................... 850,000(5) 6.50%
c/o Rothschild Asset Management Limited
Five Arrows House, St. Swithins Lane
London EC4N 8NR, United Kingdom
SmithKline Beecham Corporation .............................. 660,962(6) 5.06%
One Franklin Plaza
Philadelphia, PA 19102
Charles Woler................................................ 395,000(7) *
Philip N. Sussman............................................ - *
David R. Webb, Ph.D.......................................... - *
James R. Broach**............................................ 110,667(8) *
Russell D. Glass**........................................... - *
Peter S. Liebert, M.D**...................................... 17,334(9) *
Siegfried G. Schaefer, Ph.D**................................ 1,599,942(10) 12.24%
Jack G. Wasserman**.......................................... 11,500(11) *
All executive officers and directors as a.................... 5,504,659(12) 40.24%
group (9 persons)
</TABLE>
- ----------
* Less than one percent
4
<PAGE>
** Nominee for election to the Board
(1) Except as otherwise indicated above, the address of each stockholder
identified above is c/o the Company, 767 Fifth Avenue, New York, NY 10153.
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 May 4,
2000, 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) Includes 2,258,790 shares of Common Stock held by High River Limited
Partnership. Mr. Icahn is the sole shareholder of the sole general partner
of High River Limited Partnership. Also includes 9,000 shares of Common
Stock that Mr. Icahn currently has the right to acquire upon the exercise
of stock options.
(4) Physica B.V. is an affiliate of Solvay Pharmaceuticals.
(5) Consists of 850,000 shares of Common Stock held by the International
Biotechnology Trust plc ("IBT"). Rothschild Asset Management acts as the
investment manager to IBT and therefore may be deemed to share beneficial
ownership of these shares.
(6) Includes 330,481 shares of Common Stock held by SmithKline Beecham p.l.c.,
an affiliate of SmithKline Beecham Corporation.
(7) Consists of 395,000 shares of Common Stock which Dr. Woler currently has
the right to acquire upon the exercise of stock options. See "Management -
Incentive Plans."
(8) Consists of 110,667 shares of Common Stock which Dr. Broach currently has
the right to acquire upon the exercise of stock options.
(9) Includes 9,000 shares of Common Stock which Dr. Liebert currently has the
right to acquire upon the exercise of stock options.
(10) Consists of 1,599,942 shares of Common Stock held by Physica B.V., an
affiliate of Solvay Pharmaceuticals. Professor Schaefer is the head of
worldwide research at Solvay Pharmaceuticals. Professor Schaefer may be
deemed the beneficial owner of the 1,599,942 shares of Common Stock held by
Physica B.V., but disclaims such beneficial ownership.
(11) Consists of 11,500 shares of Common Stock which Mr. Wasserman currently has
the right to acquire upon the exercise of stock options.
(12) Includes (a) 535,167 shares of Common Stock issuable upon exercise of
options and (b) 1,599,942 shares of Common Stock held by Physica B.V. See
footnotes (3), (7), (8), (9), (10) and (11).
5
<PAGE>
ELECTION OF DIRECTORS
The directors to be elected at the Meeting will serve until the next Annual
Meeting of Stockholders or until their successors are duly elected and
qualified. Proxies not marked to the contrary will be voted "FOR" the election
to the Board of each nominee. Management has no reason to believe that any of
the nominees will not be a candidate or will be unable to serve. However, in the
event that any of the nominees should become unable or unwilling to serve as a
director, the proxy will be voted for the election of such person or persons as
shall be designated by the current directors. The nominees for the Board of the
Company are as follows:
James R. Broach Peter S. Liebert
Russell D. Glass Siegfried G. Schaefer
Carl C. Icahn Jack G. Wasserman
Information about the foregoing nominees is set forth under "MANAGEMENT"
below.
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION TO THE BOARD OF ALL
NOMINEES NAMED ABOVE.
Board Meetings and Committees
The Board held eight meetings in 1999. Each director attended at least
seventy-five percent (75%) of the aggregate of (i) the total number of meetings
of the Board, plus (ii) the total number of meetings held by all committees of
the Board on which the director served.
The Board has a Compensation Committee, consisting of Messrs. Liebert and
Wasserman, which makes recommendations regarding salaries and incentive
compensation for employees of and consultants to the Company and which
administers the 1993 Stock Option Plan and the 1996 Incentive Plan. It does not
have a Nominating Committee or an Audit Committee or any committees performing
similar functions. The Compensation Committee held four meetings in 1999.
The non-employee directors receive $1,000 for each meeting of the Board
attended and $500 for each meeting of a committee of the Board attended.
6
<PAGE>
MANAGEMENT
Information with respect to the executive officers, directors and nominees
for director of the Company as of May 4, 2000 is set forth below:
Name Age Position
- ---- --- --------
James R. Broach, Ph.D.** 52 Director
Russell D. Glass** 37 President, Chief Executive Officer
and Director
Carl C. Icahn** 64 Director
Peter S. Liebert, M.D.**(1) 64 Director
Professor Siegfried G. Schaefer** 51 Director
Jack G. Wasserman (1)** 63 Director
- ----------
** Nominee for Election to the Board.
(1) Member of the Compensation Committee.
James R. Broach, Ph.D., a scientific founder of the Company and inventor of
the Company's yeast-based drug discovery technology, has been Director of
Research of the Company since its inception. He is and has been since 1984 a
Professor at Princeton University in the Department of Molecular Biology. In
1984, Dr. Broach and his collaborators were the first ones to demonstrate that
human genes could be successfully implanted into yeast cells. He received his
Ph.D. in Biochemistry from University of California at Berkeley and his B.S.
from Yale University.
Carl C. Icahn became a director of the Company in July 1993. He was a
Co-Chairman of the Board of Directors from May 1995 to May 1996. Mr. Icahn has
been Chairman of the Board and Chief Executive Officer of ACF Industries,
Incorporated, a privately-held railcar leasing and manufacturing company, since
1984, ACF Industries Holding Corp., a privately-held holding company for ACF
Industries, Incorporated since August 1993, and, since 1968, Icahn & Co., Inc.,
a registered broker-dealer and until 1995 a member firm of the New York Stock
Exchange, Inc. Since November 1990, Mr. Icahn has been Chief Executive Officer
and Chairman of the Board of American Property Investors, Inc., the general
partner of American Real Estate Partners, L.P., a public limited partnership
that invests in real estate. From October 1998, Mr. Icahn has been the Chairman
and Chief Executive Officer of Stratosphere Corporation which operates a hotel
and casino. Mr. Icahn received his B.A. from Princeton University.
7
<PAGE>
Russell D. Glass, President and Chief Executive Officer, became a director
of the Company in June 1998 and its President and Chief Executive Officer in
April 2000. Since April 1998 Mr. Glass has been President and Chief Investment
Officer of Icahn Associates Corp., a diversified investment firm. Since August
1998 he has also served as Vice-Chairman and Director of Lowestfare.com, Inc., a
leading internet travel reservations company. Previously, Mr. Glass had been a
partner in Relational Investors LLC, from 1996 to 1998, and in Premier Partners
Inc., from 1988 to 1996, firms engaged in investment research and management.
From 1984 to 1986 he served as an investment banker with Kidder, Peabody & Co.
Mr. Glass serves as a Director of Automated Travel Systems, Inc., a software
development firm; Delicious Brands Inc., a branded food products company;
National Energy Group, Inc., an oil & gas exploration and production company;
and the A.G. Spanos Corporation, a national real estate developer and owner of
the NFL San Diego Chargers Football Club. Mr. Glass earned a B.A. in economics
from Princeton University and an M.B.A. from the Stanford University Graduate
School of Business.
Peter S. Liebert, M.D., became a director of the Company in April 1995. Dr.
Liebert has been a pediatric surgeon in private practice since 1968 and is
affiliated with Babies Hospital of Columbia Presbyterian. He is Clinical
Associate Professor of Surgery, College of Physicians and Surgeons, Columbia
University. He is also Chairman of the Board of Rx Vitamins, Inc. Dr. Liebert
holds an M.D. from Harvard University Medical School and a B.A. from Princeton
University.
Professor Siegfried G. Schaefer became a director of the Company in January
1998. Dr. Schaefer has been head of worldwide research at Solvay Pharmaceuticals
since July 1997 and the head of research at a Dutch division of Solvay
Pharmaceuticals from May 1996 to July 1997. From September 1992 to July 1997 Dr.
Schaefer was a department head for project management at an affiliate of Solvay
Pharmaceuticals. Dr. Schaefer has a Ph.D. in Biology from the University of
Bochum and a Doctorate in Pharmacology and Toxicology from the University of
Munich. Dr. Shaefer is currently a Professor at the University of Hamburg in the
Department of Pharmacology and Toxicology.
Jack G. Wasserman became a director of the Company in May 1996. For the
past five years, Mr. Wasserman has been a senior partner in Wasserman,
Schneider, Babb & Reeds, a New York law firm that concentrates its practice in
legal matters relating to international trade. Mr. Wasserman is a director of
American Property Investors, Inc., the general partner of American Real Estate
Partners, L.P., a public limited partnership that invests in real estate. Mr.
Wasserman is also a director of National Energy Group, Inc., a public company
engaged in oil exploration. Mr. Wasserman received a B.A. from Adelphi
University, a J.D. from Georgetown University and a Graduate Diploma from the
Johns Hopkins University School of Advanced International Studies.
8
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation
The following table sets forth certain information concerning the
compensation paid or accrued by the Company for services rendered to the Company
in all capacities for the fiscal years ended December 31, 1999, 1998 and 1997,
by its former Chief Executive Officer who resigned in April 2000 and each of the
Company's other executive officers whose total salary and bonus exceeded
$100,000 during 1999 (collectively, the "Named Executive Officers"):
Summary Compensation Table
--------------------------
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards
Annual Compensation Securities
Underlying All Other
Name and Principal Position Year Salary ($) Bonus ($) Options (#) Compensation
--------------------------- ---- ---------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Charles Woler (1)........................ 1999 307,500 -- 129,855 --
President and Chief Executive 1998 125,000 -- 295,145 53,225(2)
Officer
Philip N. Sussman (3).................... 1999 154,327 -- -- --
Senior Vice President of Finance 1998 191,000 -- 255,000 --
and Corporate Development and 1997 160,000 20,000 75,000 --
Chief Financial Officer
David R. Webb (4)........................ 1999 121,734 -- -- --
Vice President of Research and 1998 183,750 20,000 20,000 --
Chief Scientific Officer 1997 175,000 20,000 45,000 --
</TABLE>
- -----------
(1) Dr. Woler ceased being employed by the Company in April 2000. Dr. Woler
joined the Company in October 1998 and received a salary at the rate of
$300,000 per annum for 1998.
(2) All other compensation consists of relocation expenses paid by the Company
on behalf of Dr. Woler.
(3) Mr. Sussman ceased to be employed by the Company in September 1999.
(4) Dr. Webb ceased to be employed by the Company in July 1999.
9
<PAGE>
Employment Contracts and Termination of Employment and Change-In-Control
Agreements
Dr. Charles Woler
Dr. Woler was employed as President and Chief Executive Officer under a
three year employment agreement with the Company, which was extendable to four
years at the Company's option, entered into effective as of October 1, 1998.
Pursuant to his agreement, Dr. Woler received an annual base salary at the rate
of $300,000 for his first year of employment and $330,000 for his second year of
employment and would have received an annual base salary at the rate of $360,000
for his third year of employment. Dr. Woler also received a $24,000 housing
allowance for the first six months of his employment with the Company and was
eligible to receive bonuses from time to time at the discretion of the
Compensation Committee. If the Company terminated Dr. Woler's employment without
"cause," as defined in his employment agreement, if Dr. Woler terminated his
employment with the Company within 18 months after a "change of control," as
defined in his employment agreement, and prior to October 1, 2001 and after Dr.
Woler's position or responsibilities were changed, or if Dr. Woler terminated
his employment with the Company within three months of a material change in his
position or principal place of work the Company would have been obligated to pay
to Dr. Woler a lump sum severance payment equal to the base salary he would have
earned for the balance of his agreement, but not more than two years' base
salary, and all unvested stock options issued to him would have immediately
vested as of the date of termination. In November 1999, the Company and Dr.
Woler entered into a term sheet to amend his employment agreement to provide
that if the Company fails to make at least a $20 million investment in
biotechnology prior to April 15, 2000 and if Dr. Woler resigns during the 90 day
period beginning on April 15, 2000, the Company will pay to Dr. Woler a lump sum
severance payment equal to the base salary he would have earned for the balance
of his agreement. If the Company made such an investment prior to April 15,
2000, Dr. Woler would have been entitled to receive additional compensation. The
Company did not make such an investment prior to April 15, 2000 and Dr. Woler
resigned on April 18, 2000. Accordingly, the Company paid Dr. Woler a lump sum
severance payment equal to the base salary he would have earned for the balance
of his agreement.
Option Grants
The following table sets forth certain information regarding options
granted during the fiscal year ended December 31, 1999 by the Company to the
Named Executive Officers:
10
<PAGE>
Option Grants in Last Fiscal Year
Individual Grants
---------------------------------
<TABLE>
<CAPTION>
Potential Realizable Value
Percent of At Assumed Annual Rates
Total of Stock Price
Securities Options Appreciation for Option
Underlying Granted to Exercise Terms ($)
Options Employees in Price Expiration -----------------------
Granted (#) Fiscal Year ($/share) Date 5% 10%
----------- ----------- --------- ------ -- ---
Name
----
<S> <C> <C> <C> <C> <C> <C>
Charles Woler.............. 129,855 100 1.875 1/3/09 396,600 631,520
Philip N. Sussman.......... -- -- -- -- -- --
David R. Webb.............. -- -- -- -- -- --
</TABLE>
Option Exercises and Holdings
The following table sets forth certain information concerning each exercise
of stock options, during the fiscal year ended December 31, 1999 by the Named
Executive Officers and unexercised stock options held by the Named Executive
Officers as of the end of such fiscal year.
Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of
Securities Underlying Value of Unexercised
Unexercised Options at In-The-Money Options at
Shares Aggregate December 31, 1999(#) December 31, 1999($)(1)
Acquired on Value ----------------------------- ----------------------------
Name Exercise Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ---------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Charles Woler............ - - 165,279 259,721 - -
Philip N. Sussman........ - - - - - -
David R. Webb............ - - - - - -
</TABLE>
- -----------
(1) Based on the difference between the closing price of the underlying shares
of Common Stock on December 31, 1999 as reported by the over-the-counter
bulletin board ($0.31) and the option exercise price.
11
<PAGE>
Compensation Committee Interlocks and Insider Participation
The Company's Compensation Committee is composed of Peter Liebert and Jack
G. Wasserman. Neither Mr. Liebert nor Mr. Wasserman is or was an officer or
employee of the Company.
Board Compensation Committee Report on Executive Compensation
Introduction
The Compensation Committee of the Board is responsible for determining and
administering the Company's compensation policies for the remuneration of the
Company's officers. The Compensation Committee annually evaluates individual and
corporate performance from both a short-term and long-term perspective.
Philosophy
The Company's executive compensation program seeks to encourage the
achievement of business objectives and superior corporate performance by the
Company's executives. The program enables the Company to reward and retain
highly qualified executives and to foster a performance-oriented environment
wherein management's long-term focus is on maximizing stockholder value through
equity-based incentives. The program calls for consideration of the nature of
each executive's work and responsibilities, unusual accomplishments or
achievements on the Company's behalf, years of service, the executive's total
compensation and the Company's financial condition generally.
Components of Executive Compensation
Historically, the Company's executive employees have received cash-based
and equity-based compensation.
Cash-Based Compensation. Base salary represents the primary cash component
of an executive employee's compensation, and is determined by evaluating the
responsibilities associated with an employee's position at the Company and the
employee's overall level of experience. In addition, the Committee, in its
discretion, may award bonuses. The Compensation Committee and the Board believe
that the Company's management and employees are best motivated through stock
option awards and cash incentives.
Equity-Based Compensation. Equity-based compensation principally has been
in the form of stock options. The Compensation Committee and the Board believe
that stock options represent an important component of a well-balanced
compensation program. Because stock option awards provide value only in the
event of share price appreciation, stock options enhance management's
12
<PAGE>
focus on maximizing long-term stockholder value and thus provide a direct
relationship between an executive's compensation and the stockholders'
interests. No specific formula is used to determine stock option awards for an
employee. Rather, individual award levels are based upon the subjective
evaluation of each employee's overall past and expected future contributions to
the success of the Company.
Compensation of the Chief Executive Officer
The philosophy, factors and criteria of the Compensation Committee
generally applicable to the Company's officers are also applicable to the Chief
Executive Officer and are reflected in the employment agreement between the
Chief Executive Officer and the Company. The Chief Executive Officer's salary
for 1999 was based on his existing employment agreement with the Company. The
Chief Executive Officer did not receive a cash bonus for 1999 because of the
financial condition of the Company. The stock options to purchase an aggregate
of 129,855 shares of Common Stock granted to the Chief Executive Officer on
January 4, 1999 vest over time and were granted pursuant to his existing
employment agreement with the Company. In November 1999, the Company and the
Chief Executive Officer amended his employment agreement to provide the Chief
Executive Officer with a substantial incentive to identify and consummate a
significant investment in biotechnology.
Peter Liebert
Jack G. Wasserman
13
<PAGE>
Comparative Stock Performance Graph
The following graph provides a comparison of the cumulative total return*
for the Nasdaq Composite Index, the Nasdaq Biotechnology Index and the Company
since the Company's initial public offering on July 17, 1996.
Comparison of Cumulative Total Return
among Cadus Pharmaceutical Corporation, the Nasdaq Composite Index and the
Nasdaq Biotechnology Index
[LINE CHART OMITTED]
* $100 invested July 17, 1996 in the Company's Common Stock or in the index
indicated, including reinvestment of dividends.
Corresponding index values and the Company's Common Stock price values are
given below:
7/17/96 12/31/96 12/31/97 12/31/98 12/31/99
--------- -------- -------- -------- --------
Cadus $100.000 125.000 91.071 27.686 4.429
Nasdaq Composite Index 100.000 118.808 144.513 201.784 374.482
Nasdaq Biotechnology Index 100.000 112.562 112.484 162.291 327.240
Cadus Closing Stock Price 7.000 8.750 6.375 1.938 0.31
14
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For the year ended December 31, 1999, the Company received $1,298,513 in
cash for research funding from Bristol-Myers Squibb, which constituted 22% of
the Company's gross revenues in 1999.
For the year ended December 31, 1999, the Company received $1,565,831 in
cash for research funding from Solvay Pharmaceuticals, an affiliate of Physica
B.V., which constituted 26% of the Company's gross revenues in 1999. Siegfried
G. Schaefer, a director of the Company, is the head of worldwide research at
Solvay Pharmaceuticals.
For the year ended December 31, 1999, the Company received $2,163,200 in
cash for research funding and $1.0 million in cash as a milestone payment from
SmithKline Beecham which constituted 52% of the Company's gross revenues in
1999.
During 1998, the Company loaned $15,000 to Dr. Charles Woler, the former
Chief Executive Officer of the Company. The loan bears interest at 5.5% per
annum. Principal and interest are repayable in monthly installments of $453 over
3 years. At December 31, 1999, the outstanding balance of the loan was $8,636.
In May 2000, Dr. Woler prepaid the loan in its entirety.
In August 1999, the Company's guarantee of a $286,000 loan made to Dr.
James Broach by a third party was called by such third party, which also
foreclosed on $286,000 of cash collateral securing the Company's guarantee. Dr.
Broach executed and delivered to the Company a $286,000 interest-bearing
promissory note payable to the order of the Company on August 31, 2000 to
evidence his debt to the Company arising from the Company's guarantee of such
loan. In March 2000, Dr. Broach prepaid the promissory note in its entirety.
INDEPENDENT AUDITORS
The Board selected KPMG Peat Marwick LLP as the Company's independent
auditors for its fiscal year ending December 31, 2000. Representatives of KPMG
Peat Marwick LLP will be present at the Meeting, will be afforded an opportunity
to make a statement, and will be available to respond to appropriate inquiries
from stockholders.
COMPLIANCE WITH 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers, and persons who own more than ten
percent of the Common Stock to file with the Securities and Exchange Commission
initial reports of beneficial ownership on Form 3 and reports of changes in
beneficial ownership on Form 4 or Form 5. Reporting persons are required to
furnish the Company with copies of all such forms that they file. To the
Company's
15
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knowledge, based solely on a review of copies of such filed reports furnished to
the Company, all of the Company's directors, officers and greater than ten
percent beneficial owners made all required filings during fiscal year 1999 in a
timely manner.
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Stockholders who wish to present proposals at the 2001 annual meeting of
stockholders and who wish to have their proposals presented in the proxy
statement distributed by the Board in connection with such annual meeting must
submit their proposals in writing, to the attention of the President of the
Company, on or before January 11, 2001.
ADDITIONAL INFORMATION
The Company's Annual Report, including certain financial statements, is
being mailed concurrently with this Proxy Statement to all persons who were
stockholders of record at the close of business on May 4, 2000, which is the
record date for voting purposes. The Annual Report does not constitute a part of
the proxy soliciting material.
Upon the written request of any stockholder, the Company will provide,
without charge, a copy of the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1999. Written requests for such report should be
directed to the Investor Relations Department of the Company, 767 Fifth Avenue,
New York, New York 10153.
GENERAL
The Board knows of no other matters which are likely to be brought before
the Meeting. If, however, any other matters are properly brought before the
Meeting, the persons named in the enclosed proxy or their substitutes shall vote
thereon in accordance with their judgment pursuant to the discretionary
authority conferred by the form of proxy.
By Order of the Board of Directors
Russell D. Glass
President
New York, New York
May 10, 2000
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PROXY
CADUS PHARMACEUTICAL CORPORATION
767 Fifth Avenue, New York, New York 10153
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
The undersigned hereby appoints Russell D. Glass and/or Jack G. Wasserman
as Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all the shares of the Common
Stock of Cadus Pharmaceutical Corporation held of record by the undersigned on
May 4, 2000, at the Annual Meeting of Stockholders to be held on June 13, 2000
or at any adjournment thereof.
1. Election of James R. Broach, Carl C. Icahn, Russell D. Glass, Peter S.
Liebert, Siegfried G. Schaefer and Jack G. Wasserman as directors.
|_| FOR all six nominees listed (except as marked to the contrary
above)
|_| WITHHOLD AUTHORITY
(INSTRUCTION: To withhold authority to vote for any of the nominees,
strike a line through the nominee's name in the list above.)
- --------------------------------------------------------------------------------
THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
2. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting. This proxy,
when properly executed, will be voted in the manner directed herein by
the undersigned stockholder. If no direction is given, this proxy will
be voted FOR the foregoing proposal.
Receipt of Notice of Annual Meeting and Proxy Statement dated May 10,
2000 is hereby acknowledged.
Dated: _____________________________________, 2000
Signature:
----------------------------------------
Signature if held jointly:
------------------------
Please sign exactly as name appears hereon. When
shares are held by joint tenants, both should
sign. When signing as attorney, executor,
administrator, trustee or guardian, please give
full title as such. If a corporation, please sign
in full corporate name by President or other
authorized officer. If a partnership, please sign
in partnership name by authorized person.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
PRE-PAID ENVELOPE OR DELIVER TO: American Stock Transfer & Trust Company, 40
Wall Street, New York, New York 10005. Facsimile copies of the Proxy, properly
completed and duly executed, will be accepted at (718) 236-4588. If you have any
questions, please call American Stock Transfer & Trust Company at (212)
936-5100.
