<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
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 sec. 240.14a-11(c) or sec. 240.14a-12
Guilford Pharmaceuticals Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No Fee Required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(*)
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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(*) Set forth the amount on which the filing fee is calculated and state
how it was determined.
[ ] 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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(4) Date Filed:
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<PAGE> 2
GUILFORD PHARMACEUTICALS INC.
6611 TRIBUTARY STREET
BALTIMORE, MARYLAND 21224
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 21, 1997
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Stockholders (the
"Annual Meeting") of Guilford Pharmaceuticals Inc. ("Guilford" or the
"Corporation") will be held on Wednesday, May 21, 1997 at 10:00 a.m. (Eastern
time) at the Corporation's Headquarters located at 6611 Tributary Street,
Baltimore, Maryland, for the following purposes:
1. To elect a Board of Directors for the ensuing year;
2. To consider and act upon an amendment to the 1993 Employee Share
Option and Restricted Share Plan, as amended, as recommended by the
Board of Directors;
3. To ratify the selection of KPMG Peat Marwick LLP as independent
auditors for the year 1997; and
4. To transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN,
DATE AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED
STAMPED ENVELOPE. THIS WILL NOT LIMIT YOUR RIGHT TO ATTEND OR VOTE AT THE
MEETING.
By Order of the Board of Directors
/s/ THOMAS C. SEOH
THOMAS C. SEOH
Secretary
Baltimore, Maryland
April 28, 1997
<PAGE> 3
GUILFORD PHARMACEUTICALS INC.
6611 TRIBUTARY STREET
BALTIMORE, MARYLAND 21224
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 21, 1997
GENERAL
This Proxy Statement is being furnished on or about April 28, 1997, to the
stockholders of Guilford Pharmaceuticals Inc. (the "Corporation" or "Guilford"),
in connection with the solicitation of proxies by the Board of Directors of the
Corporation to be voted at the 1997 Annual Meeting of Stockholders of the
Corporation (the "Annual Meeting"). The Annual Meeting will be held on
Wednesday, May 21, 1997 at 10:00 a.m. (Eastern time) at the Corporation's
headquarters located at 6611 Tributary Street, Baltimore, Maryland.
The cost of soliciting proxies will be borne by the Corporation. The
Corporation may solicit proxies in person, by mail, telephone, telecopier or by
other means by officers and other employees of the Corporation, who will receive
no additional compensation for their services.
The Board of Directors has fixed the close of business on March 26, 1997 as
the record date for the determination of stockholders entitled to vote at the
meeting. At that date, there were 14,779,369 shares of Common Stock of the
Corporation outstanding and entitled to vote at the meeting. Each share will
have one vote.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors currently consists of six members. At the Annual
Meeting, six directors are to be elected. All of the nominees are currently
serving as directors. Unless otherwise instructed on the proxy, it is the
intention of the persons named in the proxy to vote the shares represented by
each properly executed proxy for the election as directors of the persons named
below as nominees. The Board of Directors believes that all nominees will stand
for election and will serve if elected. However, if any of the persons nominated
by the Board of Directors fails to stand for election or is unable to accept
election, proxies will be voted by the proxy holders for the election of such
other person or persons as the Board of Directors may recommend. Directors will
be elected by a plurality vote.
<PAGE> 4
INFORMATION AS TO NOMINEES
The following table presents information concerning persons nominated for
election as directors of the Corporation, including their current membership on
committees of the Board of Directors, principal occupations or affiliations
during the last five years and certain other directorships held.
<TABLE>
<S> <C>
Craig R. Smith, M.D................ Chairman of the Board of Directors, President and Chief
Age 51 Executive Officer.
Dr. Smith joined the Corporation as a Director at the
Corporation's inception in July 1993. Dr. Smith was
elected President and Chief Executive Officer in August
1993 and was elected Chairman of the Board in January
1994. Prior to joining the Corporation, Dr. Smith was
Senior Vice President for Business and Market
Development at Centocor, Inc., a biotechnology
corporation. Dr. Smith joined Centocor in 1988 as Vice
President of Clinical Research after serving on the
Faculty of the Department of Medicine at Johns Hopkins
Medical School for 13 years. Dr. Smith received his M.D.
from the State University of New York at Buffalo in 1972
and received training in Internal Medicine at Johns
Hopkins Hospital from 1972 to 1975.
Richard L. Casey................... Director and Chairman of the Audit Committee.
Age 50
Mr. Casey has been a Director of the Corporation since
its inception in July 1993 and served as its Chairman of
the Board from inception through December 1993. Mr.
Casey is Chairman of the Board, President and Chief
Executive Officer of Scios Inc. ("Scios"), a
biopharmaceutical company. He joined Scios in December
1987 as President and Chief Executive Officer and has
served as a director since that time. Mr. Casey was
elected Chairman of the Board of Scios in November 1992.
Mr. Casey has over 20 years experience in the
pharmaceutical industry and has served in various
positions with ALZA Corporation, Syntex Medical
Diagnostics and Eli Lilly and Company. Mr. Casey serves
on the boards of directors of Karo Bio AB, a Swedish
biotechnology corporation affiliated with Scios, and
VIVUS Inc., a medical devices corporation located in
Menlo Park, California.
Solomon H. Snyder, M.D............. Director, Chairman of Compensation Committee, and
Age 58 Chairman of the Scientific Advisory Board.
Dr. Snyder has been a Director of the Corporation and
Chairman of the Scientific Advisory Board ("SAB") since
the Corporation's inception in July 1993. Dr. Snyder
received his M.D. in 1962 from Georgetown Medical
School, trained as a Research Associate with Julius
Axelrod at the National Institute of Mental Health and
completed his Psychiatry Residency at Johns Hopkins
Hospital. He is presently Director of the Department of
Neuroscience at Johns Hopkins Medical School and
Distinguished Service Professor of Neuroscience,
Pharmacology and Molecular Sciences, and Psychiatry. Dr.
Snyder has received a number of awards including the
Albert Lasker Award in Basic Biomedical Research, the
Wolf Prize and the Bower Award. He is a member of the
United States National Academy of Sciences, the
Institute of Medicine and the American Academy of Arts
and Sciences. Dr. Snyder is a director of Scios.
</TABLE>
2
<PAGE> 5
<TABLE>
<S> <C>
W. Leigh Thompson, M.D., Ph.D...... Director and Member of Compensation Committee.
Age 58
Dr. Thompson has been a Director of the Corporation
since April 1995. Dr. Thompson joined Eli Lilly and
Company in 1982 and was appointed Executive Vice
President for Research in 1991 and Chief Scientific
Officer in 1993. Dr. Thompson retired from Eli Lilly and
Company in December 1994 and is President and Chief
Executive Officer of Profound Quality Resources, Ltd.,
an independent consulting firm advising clients in the
pharmaceutical industry. Dr. Thompson is a director of
Chrysalis Corporation, Corvas International, Inc., Ergo
Science Corp., La Jolla Pharmaceutical Co.,
GeneMedicine, Inc., and Orphan Medical, Inc.
Elizabeth M. Greetham.............. Director and Member of Compensation Committee.
Age 47
Ms. Greetham has been a Director of the Corporation
since November 1995. Since 1992, Ms. Greetham has been
portfolio manager of WPG Life Sciences Fund, L.P. and
WPG Institutional Life Sciences Fund, L.P., and since
1990 she has been involved in health care investments
for institutional, growth and individual high net worth
accounts at Weiss, Peck & Greer, L.L.C. She is President
of Libracorn Financial Consultants and a member of the
boards of directors of Medco Research, Inc., Chenex
Pharmaceuticals, Inc., Progenics Pharmaceuticals, Access
Pharmaceuticals Inc., Pathogenesis Corp., Sangstat
Medical Corp., Chirex Inc., and Repligen Corporation.
George L. Bunting, Jr.............. Director and Member of Audit Committee.
Age 56
Mr. Bunting has been a Director of the Corporation since
May 1996. Mr. Bunting is President and Chief Executive
Officer of Bunting Management Group, a position he has
held since July 1991. He formerly served as Chairman of
the Board and Chief Executive Officer of the Noxell
Corporation (a Procter & Gamble Company as of November
1989). Mr. Bunting joined Noxell Corporation in 1966 as
a Product Manager. In 1968, he was elected to the Board
of Directors of Noxell Corporation. In March 1970, he
was elected to the position of Executive Vice President
and served as President and Chief Executive Officer from
November 1973 until April 1986 when he became Chairman
and Chief Executive Officer. Mr. Bunting is a director
of Crown Central Petroleum Corporation, Mercantile
Bankshares Corporation, PHH Corporation, and USF&G
Corporation. He is currently Chairman of Johns Hopkins
Medicine, Health Systems, and Hospital, as well as a
Trustee of The Johns Hopkins University.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES FOR
DIRECTOR LISTED ABOVE.
BOARD COMMITTEES
The Board of Directors has a Compensation Committee and an Audit Committee.
The Compensation Committee of the Corporation's Board of Directors oversees the
compensation practices of the Corporation, and its responsibilities include
determining compensation policies and practices, changes in compensation and
benefits for management, determining employee benefits and all other matters
relating to employee
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<PAGE> 6
compensation. The Compensation Committee also administers the Corporation's 1993
Employee Share Option and Restricted Share Plan, as amended (the "1993 Employee
Plan"). This Committee met 4 times during 1996. The Audit Committee reviews the
internal accounting procedures of the Corporation, consults with the
Corporation's independent accountants and reviews the services provided by and
fees charged by such accountants. This Committee met 3 times during 1996.
Under its agreements with The Abell Foundation, Inc. ("Abell"), so long as
the total number of shares of Common Stock of the Corporation owned by Abell
exceeds 5% of the outstanding Common Stock, the Corporation has agreed to
nominate and recommend a person designated by Abell as a candidate for election
to the Corporation's Board of Directors. Prior to the 1996 annual meeting of
stockholders of the Corporation, Abell designated Mr. Bunting as its
representative on the Corporation's Board under this arrangement.
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
During 1996, the Board of Directors of the Corporation held ten meetings.
All Directors of the Corporation attended 75% or more of all meetings of the
Board and all meetings of committees of the Board of which they were members,
except for Dr. Thompson who attended 70% of the meetings of the Board.
DIRECTORS' COMPENSATION
In 1996, Directors received no compensation for their attendance at Board
meetings but received reimbursement for expenses related to attendance at
meetings. In February 1997, the Compensation Committee of the Board adopted a
policy, effective as of the date of the Annual Meeting, to pay non-employee
directors an annual retainer of $10,000, payable quarterly in advance, plus
$1,500 for each regular meeting of the Board attended either in person or by
telephone and $1,500 for each special meeting of the Board attended in person.
In 1994, the Corporation initiated a Directors' Stock Option Plan, as
amended (the "Director Plan"), to attract outside directors with an incentive to
make significant contributions to the long-term performance and growth of the
Corporation and to directly align their interests with those of the
Corporation's stockholders. Board members who are not officers or employees of
(i) the Corporation, (ii) any subsidiary of the Corporation, or (iii) any entity
which owns twenty percent or more of the capital stock of the Corporation are
eligible to receive options under the Director Plan.
The Corporation has reserved 300,000 shares of the Corporation's Common
Stock for issuance under the Director Plan and 97,500 options to purchase shares
have been granted to date. Options issued under the Director Plan are
non-qualified stock options for tax purposes. The exercise price of options
granted under the Director Plan are not less than the closing price of a share
of Common Stock on the date immediately prior to the date the option is granted.
Options are exercisable one year from the date of grant and remain exercisable
for a period of ten years from the date the option is granted. Options vest 50%
on the first anniversary of the date of grant and the remainder on the second
anniversary date. Each eligible director who begins serving on the Board of
Directors receives an option to purchase 30,000 shares of Common Stock on the
date such service commences and also is entitled to an option to purchase 7,500
shares of Common Stock immediately following each of the next four annual
elections of directors, provided such Director has served for at least one year
and continues to be a director at the time of such issuance.
Dr. Snyder, a Director of the Corporation, has provided consulting services
to the Corporation under consulting agreements since August 1993. Under the
terms thereof, Dr. Snyder receives no other compensation outside those provided
therein (other than reimbursement of expenses), and thus does not participate in
the Director Plan. For a description of the Corporation's current consulting
arrangement with Dr. Snyder, see "Compensation Committee Interlocks and Insider
Participation" below.
Mr. Casey, who has served on the Board of Directors since the inception of
the Corporation, did not receive any compensation from the Corporation for his
services prior to March 1996. In March 1996, the Compensation Committee granted
Mr. Casey a non-qualified stock option outside the Director Plan to purchase
75,000 shares of Common Stock of the Corporation at $13.54 per share. This
option became
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<PAGE> 7
exercisable as to 60% of the shares subject to the option on September 27, 1996
and an additional 20% on March 27, 1997. The remaining 20% will become
exercisable on March 27, 1998 so long as Mr. Casey remains a Director of the
Corporation. Mr. Casey does not currently participate in the Director Plan.
John H. Newman served on the Board of Directors from the Corporation's
inception until May 21, 1996. In March 1996, the Compensation Committee granted
Mr. Newman a non-qualified stock option outside the Director Plan to purchase
45,000 shares of Corporation Common Stock at $13.54 per share. This option
became fully exercisable on September 27, 1996.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Corporation's officers,
directors and certain beneficial holders of Common Stock to file reports about
their ownership of the Corporation's Common Stock. Based solely on its review of
the copies of such reports furnished to the Corporation by its directors and
officers during and with respect to the year 1996, the Corporation believes that
all reports required by Section 16(a) of the Exchange Act were timely filed,
except (a) that Forms 4 reporting the grant of certain stock options under the
1993 Employee Plan to Dr. Smith and Messrs. Brennan, Jordan and Laderman in
August 1995 were inadvertently not filed in a timely manner and (b) a Form 4
related to an open market purchase of shares of Common Stock of the Corporation
by certain funds over which Ms. Greetham may be deemed to have voting or
investment control was filed one month late.
OTHER INFORMATION
EXECUTIVE OFFICERS
CRAIG R. SMITH, M.D., age 51, joined the Corporation as a Director at the
Corporation's inception in July 1993. Dr. Smith was elected President and Chief
Executive Officer in August 1993 and was elected Chairman of the Board in
January 1994. Prior to joining the Corporation, Dr. Smith was Senior Vice
President for Business and Market Development at Centocor, Inc., a biotechnology
corporation. Dr. Smith joined Centocor in 1988 as Vice President of Clinical
Research after serving on the Faculty of the Department of Medicine at Johns
Hopkins Medical School for 13 years. Dr. Smith received his M.D. from the State
University of New York at Buffalo in 1972 and received training in Internal
Medicine at Johns Hopkins Hospital from 1972 to 1975.
JOHN P. BRENNAN, age 54, joined the Corporation as Vice President,
Operations in January 1994 and became Senior Vice President, Operations in
January 1997. From 1980 to 1993, he was Vice President, Technical Operations and
Manufacturing for G.D. Searle and Co., a pharmaceutical company, and was
responsible for the operation of manufacturing plants in North America, Latin
America and Europe and the worldwide pharmaceutical and process technology from
1980 to 1993. From 1977 to 1980, Mr. Brennan was General Manager of the E.R.
Squibb & Sons, Inc. manufacturing facility in Humacao, Puerto Rico. Mr. Brennan
held various technical positions at Smith Kline Corporation from 1960 to 1977.
Mr. Brennan has 36 years of experience in the pharmaceutical industry. Mr.
Brennan received his B.S. in Chemistry from the Philadelphia College of Pharmacy
and Science in 1968 and attended the Wharton Graduate Management Program in
1976.
ANDREW R. JORDAN, age 49, joined the Corporation as Vice President,
Secretary, Treasurer and Chief Financial Officer in September 1993 and became
Senior Vice President, Treasurer and Chief Financial Officer in January 1997.
Prior to joining the Corporation, Mr. Jordan held various positions with KPMG
Peat Marwick LLP, a public accounting firm, beginning in 1973, including partner
since 1983. Mr. Jordan's experience at KPMG Peat Marwick LLP included advising
early stage and emerging technology companies and initial and secondary public
equity and debt offerings. He received his B.A. from Rutgers College in 1969 and
his MBA from Rutgers Graduate School of Business in 1973 and is a Certified
Public Accountant.
DAVID R. SAVELLO, PH.D., age 51, joined the Corporation as Senior Vice
President, Drug Development in April 1997. Prior to joining the Corporation, Dr.
Savello was employed by Glaxo Wellcome, Inc. since 1985,
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<PAGE> 8
most recently as Vice President, North American Regulatory Affairs from 1995 to
1997. Prior to 1995, Dr. Savello served as Vice President, Drug Development and
later as Vice President, Regulatory Affairs and Compliance, at the affiliated
entity Glaxo Research Institute. Dr. Savello's duties at Glaxo have included
leading United States and Canadian regulatory operations and International
Research and Development, Quality Assurance, and Good Manufacturing Practices
for all bulk drug substance and clinical supplies manufacturing and packaging.
Dr. Savello received his Ph.D. and M.S. in pharmaceuticals from the University
of Maryland in 1972 and 1971, respectively, and his B.S. in pharmacy in 1968
from the Massachusetts College of Pharmacy.
EARL WEBB HENRY, M.D., age 49, joined the Corporation in January 1995 as
Vice President, Clinical Research. Prior to joining the Corporation, Dr. Henry
was the global head of clinical research for central nervous system products at
Sandoz Research Institute. He began at Sandoz as the Executive Director of
Clinical Research in 1992. From 1987 to 1992, he was an Associate Director, then
a Senior Associate Director, of Clinical Research at Pfizer Central Research.
From 1979 to 1986 he was an attending physician at the Children's Hospital in
Boston. Dr. Henry received his B.S. in Chemistry at the University of Illinois
and his M.D. at the University of Chicago.
ROSS S. LADERMAN, M.P.H., age 50, joined the Corporation as Vice President,
Regulatory Affairs in February 1994. Prior to joining Guilford, Mr. Laderman was
Deputy Director, Division of Scientific Investigations in the Office of
Compliance of the Center for Drug Evaluation and Research of the U.S. Food and
Drug Administration ("FDA"). Mr. Laderman's career at the FDA spanned 25 years
during which time he worked in investigations, compliance, public affairs and
executive management. He received the Commissioner's Special Citation and the
Award of Merit from the FDA. Mr. Laderman received his B.A. in Biology from
MacMurray College and an M.P.H. from Johns Hopkins University.
NICHOLAS LANDEKIC, age 38, joined the Corporation in March 1995 as Vice
President, Business Development. From January 1992 to February 1995, Mr.
Landekic was Senior Director of Business Development at Cephalon, Inc. and was
responsible for licensing and other corporate collaborations. From 1989 to 1992,
he was a Senior Manager of Product Planning at BristolMyers Squibb Company and
was responsible for worldwide commercial development and strategic planning for
currently marketed and new central nervous system products. From 1985 to 1989,
Mr. Landekic worked for Johnson & Johnson Corporation in a variety of positions
in business development and finance. Mr. Landekic received his M.B.A. in
Finance/Marketing from the State University of New York at Albany, M.A. in
Biology from Indiana University and a B.S. in Biology from Marist College.
THOMAS C. SEOH, age 39, joined the Corporation in April 1995 as Vice
President, General Counsel and Secretary. From 1992 to 1995, Mr. Seoh was
affiliated with the ICN Pharmaceuticals, Inc. ("ICN") group, as Vice President
and Associate General Counsel of ICN from 1994 to 1995, Vice President, General
Counsel and Secretary of Viratek, Inc. from 1993 to 1994 and Deputy General
Counsel of SPI Pharmaceuticals, Inc. from 1992 to 1994, providing legal function
support for pharmaceutical operations, research and development and corporate
development. From 1990 to 1992, Mr. Seoh was General Counsel and Secretary of
Consolidated Press U.S., Inc., the North American holding corporation of the
Sydney, Australia-based Consolidated Press group. Prior thereto, Mr. Seoh was
associated with the New York and London law offices of Lord, Day & Lord, Barrett
Smith. Mr. Seoh received his J.D. and A.B. from Harvard University.
PETER D. SUZDAK, PH.D., age 38, joined the Corporation in March 1995 as
Vice President, Research. Prior thereto, Dr. Suzdak was Director of Neurobiology
at Novo Nordisk A/S and was responsible for all neurobiology research from 1993
to 1995, and Department Head for Receptor Neurochemistry from 1988 to 1992 as
well as a member of the drug discovery management group from 1989 to 1995. Prior
thereto, Dr. Suzdak was a Pharmacology Research Associate in the Clinical
Neuroscience Branch of the National Institute of Mental Health in Bethesda,
Maryland from 1985 to 1988. Dr. Suzdak received his Ph.D. in Neuroscience from
the University of Connecticut and a B.S. in Pharmacy from St. Johns University.
6
<PAGE> 9
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of April 22, 1997, of each person known by the
Corporation to be the beneficial owner of more than five percent of the
outstanding Common Stock, the Corporation's Chief Executive Officer and the four
other most highly compensated executive officers of the Corporation for the
fiscal year ended December 31, 1996, each of the Directors of the Corporation,
and all officers and Directors of the Corporation as a group. At April 22, 1997,
the Corporation had outstanding approximately 18,526,869 shares of Common Stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF SHARES BENEFICIALLY
BENEFICIAL OWNERS OWNED(1) PERCENTAGE OWNERSHIP
- --------------------------------------------------------- ------------------- --------------------
<S> <C> <C>
Scios Inc................................................ 1,450,000 7.8%
2450 Bayshore Parkway
Mountain View, CA 94043
The Abell Foundation, Inc................................ 937,500 5.1
111 South Calvert Street
Baltimore, MD 21202
Craig R. Smith (2)....................................... 460,897 2.5
Andrew R. Jordan (3)..................................... 187,259 1.0
John P. Brennan (4)...................................... 120,234 *
Nicholas Landekic (5).................................... 33,603 *
Earl W. Henry (6)........................................ 45,170 *
Solomon H. Snyder, M.D. (7).............................. 605,217 3.3
Richard L. Casey (8)..................................... 1,519,900 8.2
c/o Scios Inc.
2450 Bayshore Parkway
Mountain View, CA 94043
George L. Bunting, Jr. (9)............................... 15,000 *
Elizabeth M. Greetham (10)............................... 225,950 1.2
W. Leigh Thompson, M.D., Ph.D. (9)....................... 33,750 *
All directors and officers as a group (14 persons)....... 3,382,628 17.9%
</TABLE>
- ---------------
* Less than one percent.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of the Corporation's
Common Stock subject to options or warrants currently exercisable or
exercisable within 60 days of April 22, 1997 are deemed outstanding for
purposes of computing the percentage ownership of the person holding such
option or warrant but are not deemed outstanding for purposes of computing
the percentage ownership of any other person. Except where indicated
otherwise, and subject to community property laws where applicable, the
persons named in the table above have sole voting and investment power with
respect to all shares of the Corporation's Common Stock shown as
beneficially owned by them.
(2) Includes options to acquire 40,034 shares of Common Stock exercisable
within 60 days of April 22, 1997, and 1,578 shares of Common Stock and
options to acquire 3,583 shares of Common Stock excisable within 60 days of
April 22, 1997 held by Dr. Smith's spouse, an employee of the Corporation.
Dr. Smith disclaims beneficial ownership the securities held by his spouse.
(3) Includes 150 shares owned by a child sharing Mr. Jordan's household and
32,609 shares held by Mr. Jordan's spouse, as to all of which shares Mr.
Jordan disclaims beneficial ownership, and options to acquire 35,095 shares
of Common Stock exercisable within 60 days of April 22, 1997. Does not
include 750 shares owned by another child of Mr. Jordan who does not share
Mr. Jordan's household, as to which shares Mr. Jordan disclaims beneficial
ownership.
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<PAGE> 10
(4) Includes options to acquire 39,783 shares of Common Stock exercisable
within 60 days of April 22, 1997.
(5) Includes options to acquire 24,688 shares of Common Stock exercisable
within 60 days of April 22, 1997.
(6) Includes options to acquire 3,750 shares of Common Stock exercisable within
60 days of April 22, 1997, and 9,375 shares of Common Stock and options to
acquire 719 shares of Common Stock exercisable within 60 days of April 22,
1997 held by Dr. Henry's wife, an employee of the Corporation. Dr. Henry
disclaims beneficial ownership of the securities held by his spouse.
(7) Includes options to acquire 30,000 shares of Common Stock exercisable
within 60 days of April 22, 1997. Does not include 1,450,000 shares owned
by Scios. Dr. Snyder is a member of the Board of Directors of Scios and may
be deemed to have shared voting and investment power over these shares. Dr.
Snyder disclaims beneficial ownership of the shares owned by Scios.
(8) Mr. Casey is an executive officer and Chairman of the Board of Directors of
Scios. He may be deemed to have voting and investment power over the shares
held by Scios. Mr. Casey disclaims beneficial ownership of these shares.
Mr. Casey has direct ownership over an additional 9,900 shares and options
to acquire 60,000 shares exercisable within 60 days of April 22, 1997.
(9) Consists entirely of options exercisable within 60 days of April 22, 1997.
(10) Represents shares held by WPG Life Sciences Fund, L.P. (the "Fund") and WPG
Institutional Life Sciences Fund, L.P. (the "Institutional Fund"). Ms.
Greetham serves as Portfolio Manager of both the Fund and the Institutional
Fund. Ms. Greetham is a controlling person of Libracorn Financial
Consultants ("Libracorn"), a limited partner of the Fund which, through its
interest in the Fund, has a 1.55% interest in the shares held by the Fund.
Ms. Greetham disclaims beneficial ownership of the shares held by the Fund
and the Institutional Fund except to the extent of her beneficial interest
through Libracorn. Also includes options to acquire 15,000 shares of Common
Stock currently exercisable or within 60 days of April 22, 1997.
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EXECUTIVE COMPENSATION
The following table sets forth the annual and long-term compensation for
services in all capacities awarded to, earned by or paid to the Corporation's
Chief Executive Officer and the Corporation's four other most highly compensated
executive officers (the "Named Executive Officers") whose total annual salary
and bonus exceeded $100,000 during the fiscal year ended December 31, 1996:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES
NAME AND --------------------------------- OTHER ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION* YEAR SALARY($) BONUS($) COMPENSATION($) AWARDS(1) OPTIONS(#) COMPENSATIONS($)
- -------------------------- ---- --------- -------- --------------- ---------- ---------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Craig R. Smith, M.D....... 1996 $ 260,417 $150,000(2) -- -- 100,000 $ 61,890(3)
President and 1995 248,334 75,000 -- -- 150,000 11,306
Chief Executive Officer 1994 213,333 50,000 -- -- -- 42,920(3)
Andrew R. Jordan.......... 1996 170,981 40,000(2) -- -- 40,000 --
Senior Vice President, 1995 164,583 35,000 -- -- 71,250 --
Chief Financial Officer
and Treasurer 1994 153,125 30,000 -- -- -- 89,324(4)
John P. Brennan........... 1996 169,223 45,000(2) -- -- 40,000 --
Senior Vice President, 1995 160,000 37,000 -- -- 82,500 31,421
Operations 1994 135,273(5) 42,250(6) -- -- 39,131 50,780(4)
Earl W. Henry............. 1996 205,833 35,000(2) 48,647(7) -- 25,000 --
Vice President, 1995 197,693(5) 40,000 -- 18,750 52,500 136,967(4)
Clinical Research
Nicholas Landekic......... 1996 150,037 50,000(2) 47,422(7) -- 45,000 --
Vice President, 1995 114,327(5) 61,000 -- 15,000 61,250 --
Business Development
</TABLE>
- ---------------
* On April 1, 1997, David R. Savello, Ph.D., joined the Corporation as Senior
Vice President, Drug Development. Dr. Savello's current annual base salary
is $240,000. Had Dr. Savello been employed by the Corporation at this base
salary for fiscal 1996, he would have qualified as a Named Executive Officer
and information regarding his compensation would have been included in the
above table.
(1) Pursuant to Stock Purchase Agreements with the Corporation, Dr. Smith and
Messrs. Jordan and Brennan purchased 254,348 shares, 39,129 shares and
39,129 shares of Common Stock, respectively, for purchase prices equal to
$.15, $.77 and $1.53 per share, the fair value of the Common Stock on the
dates of the purchases as determined by the Board of Directors. The shares
purchased by each of these individuals, until vested as described below (the
"Unvested Shares"), are subject to the Corporation's right to repurchase for
90 days at the original price per share plus interest at the applicable
federal rate following termination of each individual's employment with the
Corporation, except in the case of Dr. Smith where such repurchase right is
triggered (a) in the event that Dr. Smith's employment is terminated for
cause, (b) Dr. Smith leaves the Corporation other than for "Good Reason" (as
defined in his stock purchase agreement), or (c) as a result of Dr. Smith's
death or disability. The Unvested Shares are released from such repurchase
options and become vested (the "Vested Shares") at a rate of 1/48 per month
on the last calendar day of each month beginning on the last calendar day of
each month following August 20, 1993 in the case of Dr. Smith, October 31,
1993 in the case of Mr. Jordan and February 28, 1994 with respect to Mr.
Brennan. As of December 31, 1996, the aggregate value of the Vested Shares
and Unvested Shares held by Dr. Smith and Messrs. Jordan and Brennan were
$4,927,983 and $985,597; $739,171 and $170,578; and $663,359 and $246,390,
respectively, based on the closing price for the Corporation's Common Stock
of $23.25 per share as reported on the NASDAQ National Market on December
31, 1996. Dr. Henry and Mr. Landekic were granted 18,750 shares and 15,000
shares of restricted Common Stock, respectively, upon employment with the
Corporation which under the original terms of the grants were to be released
from the Corporation's repurchase option annually as to 25% of the shares
over a four year period beginning in January and March 1995, respectively.
At December 31, 1996 the aggregate value of the Vested Shares and Unvested
Shares held by Dr. Henry and Mr. Landekic was $108,984 and $326,953; and
$87,188 and $261,563, respectively. In January 1997, the Compensation
9
<PAGE> 12
Committee of the Board voted to accelerate the vesting of all of the
remaining Unvested Shares issued to Dr. Henry and Mr. Landekic effective as
of January 15, 1997.
(2) Cash bonuses in the amounts set forth above relating to performance for 1996
were paid in January 1997.
(3) 1994 payments consist of certain expenses related to Dr. Smith's relocation
to Baltimore amounting to $31,095 and $11,825 related to forgiveness of
debt; the 1996 payment consist of forgiveness of debt and amounts paid to
cover anticipated tax liabilities related to a portion of the debt forgiven.
(4) Consists of relocation costs.
(5) Mr. Brennan began his employment with the Corporation in February 1994. Dr.
Henry and Mr. Landekic began employment with the Corporation in January and
March 1995, respectively.
(6) Of the total bonus amounts paid to Mr. Brennan in fiscal 1994, $23,750
represents the aggregate fair market value as of the date of grant of shares
of the Corporation's Common Stock issued to Mr. Brennan as a bonus under the
Corporation's 1993 Employee Plan.
(7) Consists of non-cash compensation related to the vesting in 1996 of a
portion of the restricted share awards granted to Dr. Henry and Mr. Landekic
upon employment with the Corporation.
OPTION GRANTS
The following table sets forth certain information concerning the grant of
stock options under the 1993 Employee Plan to the Named Executive Officers for
the fiscal year ended December 31, 1996:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES
PERCENTAGE OF OF STOCK PRICE
NUMBER OF TOTAL OPTIONS APPRECIATION FOR
SECURITIES GRANTED TO EXERCISE OR OPTION TERM(1)
UNDERLYING EMPLOYEES IN BASE PRICE EXPIRATION ------------------------
NAME AND POSITION OPTIONS GRANTED(#) FISCAL YEAR 1996(%) ($/SHARE) DATE 5%($) 10%($)
- ------------------------- ------------------ ------------------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Craig R. Smith, M.D...... 100,000 15.1% $ 17.625 12/06 $1,108,427 $2,808,971
President and Chief 75,000(2) $ 14.917 02/06 703,577 1,783,003
Executive Officer
Andrew R. Jordan......... 40,000 7.0% $ 17.625 12/06 443,371 1,123,588
Senior Vice President, 41,250(2) $ 14.917 02/06 386,968 980,652
Chief Financial Officer
and Treasurer
John P. Brennan.......... 40,000 7.3% $ 17.625 12/06 443,371 1,123,588
Senior Vice President, 45,000(2) $ 14.917 02/96 422,146 1,069,802
Operations
Earl W. Henry............ 25,000 3.4% $ 17.625 12/06 277,107 702,243
Vice President, Clinical 15,000(2) $ 14.917 02/06 140,715 356,601
Research
Nicholas Landekic........ 45,000 5.9% $ 17.625 12/06 498,792 1,264,037
Vice President, Business 23,750(2) $ 14.917 02/06 222,795 564,606
Development
</TABLE>
- ---------------
(1) Amounts represent hypothetical gains that could be achieved for the
respective options at the end of the ten year option term. The assumed 5%
and 10% rates of stock appreciation are mandated by the rules of the
Securities and Exchange Commission and may not accurately reflect the
appreciation of the price of the Common Stock from the date of grant until
the end of the option term. These assumptions are not intended to forecast
future price appreciation of the Common Stock.
(2) Represents options granted in February 1996 to the Named Executive Officers
in respect of fiscal year 1995.
OPTION EXERCISES AND HOLDINGS
Options with respect to 58,363 shares were exercised during the fiscal year
ended December 31, 1996. The following table sets forth information with respect
to the Named Executive Officers concerning the
10
<PAGE> 13
exercise of options during the fiscal year ended December 31, 1996 and
unexercised options held as of the end of that fiscal year:
AGGREGATED OPTION EXERCISES IN FISCAL YEAR ENDED DECEMBER 31, 1996
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
HELD AT DECEMBER 31, 1996(#) AT DECEMBER 31, 1996($)(1)
--------------------------------- ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------ ----------- ---------------- ----------- -------------
<S> <C> <C> <C> <C>
Craig R. Smith, M.D................. -- 250,000 $ -- $ 2,468,745
Andrew R. Jordan.................... 9,783 121,033 219,954 1,301,202
John P. Brennan..................... -- 142,066 -- 1,665,529
Earl W. Henry....................... -- 77,500 -- 995,513
Nicholas Landekic................... -- 106,250 -- 1,181,439
</TABLE>
- ---------------
(1) Total value of unexercised in-the-money options is based on the closing
price of the Common Stock of $23.25 per share on December 31, 1996 minus the
exercise price of the options.
EMPLOYMENT AGREEMENTS
Prior to 1997, the Corporation entered into employment agreements with Dr.
Smith, Mr. Jordan, Mr. Brennan, Mr. Laderman, Dr. Henry, Dr. Suzdak, Mr.
Landekic, and Mr. Seoh shortly before each of these individuals joined the
Corporation. Under the original terms of these agreements in the event one or
more of these individuals were required to leave the Corporation's employment at
the Corporation's request, other than for cause, the Corporation would be
required to continue paying a salary to such individual(s) until the earlier of
commencement of other suitable employment or three months (six months in the
case of Messrs. Landekic and Seoh), if terminated within the first twelve months
of employment, or six months (nine months in the case of Messrs. Landekic and
Seoh), if terminated thereafter. In 1996, these agreements were amended to
provide for such severance payments for 12 months following termination of
employment except in the case of Dr. Smith where the severance payment period
was set at 36 months following employment termination. Prior to his joining the
Corporation in April 1997, the Corporation entered into an employment agreement
with Dr. Savello providing for similar severance payments for six months in the
event his employment with the Corporation is terminated within the first 12
months of employment, for 12 months if employment termination occurs thereafter,
and for 24 months in the event of a change of control of the Corporation and Dr.
Savello is not offered a similar or better management position.
401(k) PROFIT SHARING PLAN
The Corporation adopted a defined contribution plan (the "401(k) Plan")
effective January 1, 1994 which is intended to satisfy the tax qualification
requirements of Sections 401(a), 401(k) and 401(m) of the Internal Revenue Code
of 1986, as amended (the "Code"). All employees of the Corporation, including
the Named Executive Officers, hired on or before the effective date of the
401(k) Plan are eligible to participate as of January 1, 1994. Employees,
including the Named Executive Officers, hired after January 1, 1994 are eligible
to participate as of the first day of the calendar quarter following completion
of three months of service and attainment of age 21. The 401(k) Plan permits
participants to contribute up to 15% of compensation, excluding fringe benefits,
not to exceed the limits of Section 402g(1) of the Code (i.e., $9,500 in 1996).
All amounts deferred under the 401(k) Plan's salary reduction feature by a
participant vest immediately in the participant's account while contributions
made by the Corporation vest over a four year period in the participant's
account based on the participant's term of service with the Corporation.
Effective January 1, 1997, the Corporation has elected to make "matching
contributions" in newly issued shares of Common Stock equal in value to fifty
percent (50%) of the first six percent (6%) of an employee's salary contributed
to such
11
<PAGE> 14
employee's 401(k) Plan account. In addition, discretionary payments of
approximately $6,000, $9,000 and $11,000 were made in 1994, 1995 and 1996,
respectively.
1993 EMPLOYEE SHARE OPTION AND RESTRICTED SHARE PLAN
All full-time employees of the Corporation or any subsidiary, including the
Named Executive Officers, or other individuals whose participation the Board of
Directors determines is in the best interests of the Corporation, are eligible
to receive options or restricted shares of Common Stock under the 1993 Employee
Plan. For a more complete description of the terms of the 1993 Employee Plan and
related matters, see Proposal 2 below.
KEY PERSON LIFE INSURANCE
The Corporation is the owner and beneficiary of term life insurance
policies in the amount of $1,000,000 covering Drs. Smith and Snyder and Messrs.
Jordan and Brennan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Until May 1995, Messrs. Casey and Newman comprised the Compensation
Committee of the Board of Directors. In May 1995, Dr. Thompson replaced Mr.
Casey as a member of the Compensation Committee. Effective May 21, 1996, Mr.
Newman resigned from the Compensation Committee. Mr. Casey is the Chairman,
President and Chief Executive Officer of Scios, a principal stockholder of the
Corporation. Mr. Newman is Vice President of Legal Affairs, General Counsel and
Secretary of Scios. In January 1995, Scios exercised a warrant issued to it to
acquire 108,696 shares of Common Stock for an aggregate exercise price of
$166,667.
On March 27, 1996, the Corporation granted to Messrs. Casey and Newman
non-qualified stock options to purchase 75,000 and 45,000 shares of Common
Stock, respectively. For a description of the terms of these option grants, see
"Director Compensation" above.
In fiscal years 1994, 1995 and 1996, the Corporation paid approximately
$173,000, $233,000 and $295,000, respectively, for services and equipment
purchases from, and lease payments to, Scios.
In March 1994, the Corporation entered into an agreement with Scios to
license certain technologies related to the Corporation's lead product,
GLIADEL(R) Wafer ("GLIADEL"). The terms of this agreement require the
Corporation to pay to Scios a royalty on all net sales of licensed products
covered by the agreement as well as a percentage of royalties received by the
Corporation from sublicensees in each country until the later of (i) the last to
expire of the relevant patents in each country or (ii) 15 years after market
introduction of GLIADEL. The agreement also contains provisions requiring
payment of minimum annual royalties following commercial sale of GLIADEL. Scios
assigned this agreement to the Massachusetts Institute of Technology in 1994.
In September 1995, the Corporation entered into a consulting agreement with
Dr. Snyder (the "Consulting Agreement"), pursuant to which Dr. Snyder provides
certain consulting services to the Corporation, including, but not limited to,
serving as Chairman of the SAB, recommending candidates for SAB membership,
assisting the Corporation in preparing its business plan and in the recruitment
of scientific staff, advising the Corporation with respect to the purchase of
laboratory equipment and acquisition of new technologies and participating in
such business meetings as the President of the Corporation may reasonably
request. Dr. Snyder has agreed to make himself available to render such services
for a minimum of 24 and a maximum of 38 days per year. Under certain very
limited circumstances, the Corporation has rights to inventions that may be
developed by Dr. Snyder. As consideration for these services, the Corporation is
obligated to pay Dr. Snyder annual fees during each of the 12 month periods
beginning on September 1, 1995, 1996 and 1997 of $150,000, $160,000 and
$170,000, respectively, payable in equal monthly installments. Dr. Snyder (i) is
also entitled to a one-time bonus of $25,000 upon identification of a lead
compound in the Corporation's nitric oxide synthase research program and (ii)
received non-qualified stock options to purchase 90,000 shares of Common Stock
at an exercise price of $5.917 per share which vest at a rate of one-third each
12
<PAGE> 15
year beginning on the first anniversary of the date of the Consulting Agreement.
Dr. Snyder became chairman of the Compensation Committee of the Board of
Directors in 1996 and is a member of the board of directors of Scios.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
LOANS TO OFFICERS AND DIRECTORS
Under the terms of its employment agreement with Dr. Smith, the Corporation
granted an interest free bridge loan in the principal amount of $175,000 to Dr.
Smith (the "Bridge Loan") shortly after he began his employment with the
Corporation in July 1993 to assist Dr. Smith in relocating to the Baltimore
area. Dr. Smith repaid the Bridge Loan in October 1994. In August 1994, the
Corporation granted to Mr. Jordan an interest free bridge loan of $110,000 for
use in connection with the purchase of a residence in Maryland. Mr. Jordan
repaid this loan in full in September 1994. In October 1994, Dr. Smith was
granted an interest free loan related to the sale of his former residence in the
amount of $47,733. In 1996, the Corporation forgave the balance of this loan and
paid to Dr. Smith $23,370 to cover the anticipated income taxes due related to
the loan forgiveness. A note from Dr. Snyder in the amount of $39,000, related
to his purchase of founders stock in August 1993, was paid in full during 1994.
In connection with the sale of 34,129 shares and 19,565 shares of Common
Stock to Messrs. Brennan and Laderman, respectively, in February 1994,
full-recourse notes bearing interest of 5.32% annually in the amounts of $60,000
and $30,000, respectively, were delivered to the Corporation by these
individuals. These notes are due in February 1999. In addition, in connection
with his subscription to purchase of 32,609 shares of the Common Stock in
December 1993, Mr. Jordan delivered to the Corporation a full-recourse note in
the amount of $50,000, bearing interest at the rate of 5.32% annually. Mr.
Jordan paid this note in full in March 1994.
EXERCISE OF WARRANTS
In December 1994, Drs. Smith and Snyder and Mr. Jordan exercised certain
warrants to purchase 30,000 shares, 65,217 shares and 32,609 shares,
respectively of the Corporation's Common Stock. The unexercised portions of
these warrants expired on December 31, 1994.
TAX INDEMNITY AGREEMENTS
In March 1994, the Corporation entered into tax indemnity agreements (the
"Tax Agreements") with Drs. Snyder and Smith and Messrs. Jordan, Brennan and
Laderman (the "Indemnitees") with respect to their purchases of Common Stock,
warrants and/or grants of stock options in August, November and December 1993
and January and February 1994, respectively. Under the terms of these
agreements, the Corporation has agreed to indemnify the Indemnities against any
tax deficiency (including any interest, additions to tax or penalties
attributable thereto) they may incur as the result of a challenge by the
Internal Revenue Service, or any state or local authority, to the valuation of
the Common Stock purchased by the Indemnitees or the amount of the exercise
price of the options granted to the Indemnitees.
GELL PHARMACEUTICALS INC.
In February 1995, the Corporation and Abell formed Gell Pharmaceuticals,
Inc. ("Gell"), a new company dedicated to the development of compounds to treat
cocaine and other addictions. Abell purchased an 80% interest in Gell for $2.5
million, and the Corporation owned the remaining 20%. In March, 1997, Abell
exercised its rights to exchange its interest in Gell for 750,000 shares of
Common Stock of the Corporation and Gell became a wholly-owned subsidiary of the
Corporation. Prior to the exchange, the Corporation conducted all of Gell's
research and development under a services agreement.
13
<PAGE> 16
CERTAIN TRANSACTIONS WITH SCIOS, DR. SNYDER AND MESSRS. CASEY AND NEWMAN
For a description of certain transactions with Scios, Dr. Snyder and
Messrs. Casey and Newman, see "Compensation Committee Interlocks and Insider
Participation" above.
EMPLOYMENT OF CERTAIN SPOUSES OF EXECUTIVE OFFICERS
The spouses of Drs. Smith and Henry are employees of the Corporation.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") has
furnished the following report on its policies with respect to the compensation
of executive officers. This report and the performance graph that follows it are
not deemed to be "soliciting materials" or to be "filed" with the Securities and
Exchange Commission (the "SEC") or subject to the SEC's proxy rules or to the
liabilities of Section 18 of the Exchange Act, and the report and the
performance graph shall not be deemed to be incorporated by reference into any
prior or subsequent filing by the Corporation under the Securities Act of 1933,
as amended, or the Exchange Act.
The Committee is comprised of Drs. Snyder and Thompson and Ms. Greetham,
none of whom are officers or employees of the Corporation. Dr. Snyder is a party
to a consulting agreement with the Corporation. For a description of the
Corporation's current consulting arrangement with Dr. Snyder, see "Compensation
Committee Interlocks and Insider Participation" above. The Committee is
responsible for overseeing the Corporation's compensation programs for all
employees, including executives. For executive officers, the Committee evaluates
performance and determines compensation policies and levels.
COMPENSATION PHILOSOPHY
The goals of the compensation program are to align compensation with
business objectives and performance, and to enable the Corporation to attract,
retain and motivate executive officers and other employees who contribute to the
long-term success of the Corporation and to motivate them to enhance long-term
stockholder value. Key elements of this philosophy are:
- The Corporation establishes base salaries competitive with those of
biopharmaceutical companies with which the Corporation competes for
talent. To ensure that such salaries are competitive, the Corporation
regularly compares its salary practices with such companies and sets its
salary parameters based on this review.
- The Corporation maintains annual incentive opportunities in order to
provide motivation to achieve specific short term operating goals.
- The Corporation provides significant equity-based incentives for
executives and other employees to ensure that they are motivated over the
long-term to respond to the Corporation's business challenges and
opportunities as owners and not just as employees.
The Committee in general seeks to set the components of compensation and
the total compensation (i.e., base salary, annual incentives and long-term
equity-based incentives) to be competitive with the market when compared to a
group of biopharmaceutical companies deemed comparable to the Corporation in
terms of size, stage of development, potential, target peer group and other
factors, and which compete in the job market for individuals with skills desired
by the Corporation (the "comparison group"). The companies chosen for the
comparison group used for compensation purposes include several of the companies
which comprise the published industry indices in the Performance Graph included
in this proxy statement. Because the Committee believes that the Corporation's
most direct competitors for executive and other talent are not necessarily all
of the companies in the broad industry index, many smaller or earlier stage
companies included in the index are not included in the comparison group.
14
<PAGE> 17
BASE SALARY. The Committee annually reviews each executive officer's base
salary, including those of the Named Executive Officers, against the base
salaries paid for similar positions by companies within the comparison group. A
range of salary levels is established by this comparison for comparable
positions. Within this range, the Committee subjectively considers individual
factors, including individual performance, level of responsibility, prior
experience, breadth of knowledge and competitive pay practices, as well as the
extent to which the Corporation achieved its corporate objectives and other
significant accomplishments during the period under review. From year to year,
the relative weighting of the individual components and the corporate
performance component may differ from officer to officer, and can be expected to
change over time in response to the Corporation's stage of development and the
evolution of the industry. Based on a review of the foregoing factors, the
Committee approved a pool in the aggregate amount of $109,153, or 9.5% aggregate
increase over 1996 levels, to be available for base salary increases of
executive officers (excluding the Chief Executive Officer), and $465,000, or
6.3% aggregate increase over 1996 levels, to be available for all employees
(excluding the Chief Executive Officer).
ANNUAL INCENTIVE. In addition to base salary, the Corporation offers
discretionary cash bonuses to employees, including executive officers, as annual
incentives to achieve short-term operating objectives. The actual incentive
award earned depends on the extent to which corporate and individual performance
objectives were achieved. The Committee and the full Board of Directors review
and approve the annual performance objectives for the Corporation at the start
of each year, and review quarterly performance objectives of individual
officers. The Corporation's objectives consist of operating, strategic and
financial goals that are considered to be critical to the Corporation's
fundamental long-term goal of building stockholder value.
Near or after the end of the year, the Committee evaluates the degree to
which the Corporation has met its goals and, at the discretion of the Committee,
establishes a total pool available for annual incentive awards. Individual
awards are determined based on the Corporation's overall performance and by
evaluating each participant's performance against objectives and allocating a
portion of the award pool based on the participant's contributions during the
year. Awards are paid in cash and distributions are made in January following
the performance year.
For fiscal 1996, the Committee determined that the Corporation achieved
substantially all of the year's corporate goals. The New Drug Application for
GLIADEL was filed in February 1996, and GLIADEL was cleared by the FDA in
September 1996 for the treatment of recurrent forms of glioblastoma multiforme
following surgical tumor removal. The last patient was enrolled in Corporation
sponsored Phase IIb clinical trials in North America for DOPASCAN(R) Injection.
The Corporation identified several lead neuroimmunophilin ligand compounds,
including GPI-1046, during 1996 and continued its preclinical work in this area.
The Corporation received $27.5 million in rights payments from its corporate
partner, Rhone-Poulenc Rorer Pharmaceuticals Inc. ("RPR") in 1996 related to the
Corporation's sales, marketing and distribution rights agreement with RPR
respecting GLIADEL. As a result of the Corporation's March 1996 public offering
of 2.3 million shares of its Common Stock and private placement of shares to the
parent of RPR in June 1996, the Corporation raised over $50 million in
additional equity capital in 1996.
Based on the Corporation's performance, the Committee determined that the
total incentive pool for executive officers (excluding the Chief Executive
Officer) would be $288,000, or 25.0% of base salaries, and $835,000, or 11.3% of
base salaries, for all eligible employees (excluding the Chief Executive
Officer) under the annual incentive plan.
LONG-TERM INCENTIVES. The Corporation's long-term incentive program is
effected through the 1993 Employee Plan. The program utilizes vesting periods
(generally four years) to encourage executives and other full-time salaried
employees to continue in the employ of the Corporation. Through option grants
and restricted share awards, executives receive significant equity incentives to
build long-term stockholder value. Grants are made at fair market value of the
Corporation's Common Stock on the trading date immediately preceding the grant.
Recipients realize value from these grants only if the Corporation's Common
Stock appreciates over the long-term. The size of option grants is determined
based on competitive practices at companies in the comparison group, the
Corporation's philosophy of significantly linking executive compensa-
15
<PAGE> 18
tion with stockholder interests, the Corporation's performance relative to its
objectives and the Corporation's other accomplishments during the year.
Based on the foregoing, the Committee decided that a total of 485,138 stock
options would be awarded to all eligible employees (excluding the Chief
Executive Officer) with respect to performance in fiscal 1996 (250,000 stock
options of which were for executive officers of the Corporation, excluding its
Chief Executive Officer).
RESTRICTED SHARE AWARDS. In order to align the interests of its executive
officers with those of the Corporation's stockholders over the long-term, the
Committee has also made, and may in the future make, restricted stock awards to
executive officers at or above the vice president level under the Plan. These
restricted shares are subject to the Corporation's right to repurchase for 90
days following termination of employment, at the original purchase price (plus
any interest accrued if the restricted shares were issued in exchange for a
note). These shares are released from this repurchase option, assuming continued
employment, 25% per year over a four year period following the issuance of such
shares. In 1997, the Corporation waived these repurchase rights with respect to
restricted shares issued to restricted shares issued to four vice presidents of
the Corporation hired in 1995 to provide some relief from escalating tax
withholding liabilities.
The Omnibus Budget Reconciliation Act of 1993 places a limit on the amount
of certain types of compensation for each of the Corporation's executive
officers that is tax deductible by the Corporation. The Corporation plans to
design and administer its compensation plans in a manner that will generally not
result in a limitation on the Corporation's compensation deduction.
CHIEF EXECUTIVE OFFICER COMPENSATION
In July 1993, Dr. Smith was recruited as the Corporation's first employee
and given the mandate to
organize the Corporation's operations, secure additional financing and recruit
its initial staff. At that time, his salary was set at $200,000 based on a
review of the base salaries paid to other experienced executives being recruited
to early-stage biopharmaceutical companies.
Based on Dr. Smith's leadership of the Corporation, the Committee has voted
to increase Dr. Smith's base annual salary every year since the inception of the
Corporation, and in light of his strong performance in 1996, the Committee
increased his base annual salary, effective January 1, 1997, to $300,000, an
increase of $37,800 over his base annual salary of $262,500 set for 1996. The
Committee also awarded him a cash bonus of $150,000 for his performance in
fiscal 1996, and granted him 100,000 stock options (of which 34,783 options are
subject to stockholder approval of Proposal 2 to amend the 1993 Employee Plan)
with an exercise price of $17.625 (the fair market price of the stock on the day
preceding the grant), vesting 25% annually.
CONCLUSION
In summary, the Committee believes that, through the arrangements described
above, a significant portion of the Corporation's compensation program and Dr.
Smith's compensation are contingent on Corporation performance, and that
realization of benefits is closely linked to increases in long-term stockholder
value. The Corporation remains committed to this philosophy of pay for
performance, recognizing that the competitive market for talented executives and
the volatility of the Corporation's business may result in highly variable
compensation for a particular time period. We will continue to monitor closely
the effectiveness and appropriateness of each of the components of compensation
to reflect changes in the Corporation's business environment.
COMPENSATION COMMITTEE
Solomon H. Snyder, M.D., Chairman
Elizabeth M. Greetham
W. Leigh Thompson, M.D., Ph.D.
16
<PAGE> 19
STOCK PERFORMANCE CHART
The following graph sets forth the Corporation's Relative Stock Price
Performance compared to the NASDAQ Stock Market Composite Index and the
BioCentury 100 Index for the period beginning June 17, 1994 (the date on which
the Corporation's Common Stock began to trade publicly) and ending December 31,
1996. Total stockholder return assumed $100.00 invested at the beginning of the
period in the Common Stock of the Corporation and in each of the aforementioned
indices, respectively; historical price performance should not be relied upon as
indicative of future stock performance.
GUILFORD PHARMACEUTICALS INC.
STOCK PERFORMANCE CHART
<TABLE>
<CAPTION>
NASDAQ STOCK GUILFORD
MEASUREMENT PERIOD MARKET COMPOSITE BIOCENTURY 100 PHARMACEUTICALS
(FISCAL YEAR COVERED) INDEX INDEX INC.
<S> <C> <C> <C>
6/17/94 100.00 100.00 100.00
12/30/94 103.10 74.78 63.64
12/29/95 144.26 134.78 192.42
12/31/96 177.01 127.55 422.71
</TABLE>
PROPOSAL 2
PROPOSAL TO AMEND THE CORPORATION'S 1993 EMPLOYEE SHARE OPTION
AND RESTRICTED SHARE PLAN
The Corporation's success will depend to a large extent on its ability to
attract, retain and motivate its officers, employees and consultants. In order
to provide increased incentives, the Board believes that the compensation of its
officers, employees and consultants should be significantly related to the
Corporation's growth and long-term stock value and should provide these
individuals with a proprietary interest in the Corporation. In that regard, the
Board and stockholders of the Corporation adopted the 1993 Employee Share Option
and Restricted Share Plan, as amended (the "1993 Employee Plan"), which
currently permits the Board (or a committee thereof) to issue stock options
("Options") or restricted shares of Common Stock ("Restricted Shares") for an
aggregate of 2,700,000 shares of the Corporation's Common Stock, of which up to
300,000 shares may be awarded as Restricted Shares to eligible participants
(Options and Restricted Shares collectively referred to as "Incentive Awards").
At April 22, 1997, the Corporation had outstanding approximately 18,526,869
shares of Common Stock.
The Corporation has grown rapidly since its inception; at year-end 1993,
1994, 1995 and 1996, full-time employees numbered 4, 34, 78 and 140,
respectively. As of April 1, 1997, the Corporation had 167 full-time employees.
As of April 1, 1997, under the 1993 Employee Plan, the Corporation had issued
options to purchase 1,948,553 shares of Common Stock (of which 34,783 shares are
subject to stockholder approval of this Proposal 2) and 183,186 Restricted
Shares. In order to continue to be able to issue Incentive Awards to the
Corporation's officers, employees and consultants, the Board, subject to
stockholder approval, has amended the 1993 Employee Plan to increase (a) the
number of shares of Common Stock which can be
17
<PAGE> 20
granted as Incentive Awards to an aggregate of 3,435,000 shares of which up to
300,000 shares may be awarded as Restricted Shares and (b) the maximum number of
shares subject to Options that can be granted under the 1993 Employee Plan to
any executive officer or other employee of the Corporation from 215,217 shares
to no more than one-third of the total number of shares of Common Stock that can
be granted as Incentive Awards. The proposed 735,000 share increase in the
number of shares of Common Stock that can be granted as Incentive Awards
represents less than 5% of the number of shares outstanding on the record date.
All full-time employees of the Corporation or any subsidiary, or other
individuals whose participation the Board determines is in the best interest of
the Corporation, are eligible to receive Options or Restricted Shares under the
1993 Employee Plan. As of April 1, 1997, 151 employees of the Corporation and 5
consultants have been issued Options under the 1993 Employee Plan. The Chief
Executive Officer and the following Named Executive Officers have been granted
Options to purchase the number of shares indicated -- Dr. Smith, 250,000 (which
does not include Options to purchase 23,789 shares issued to Dr. Smith's wife,
an employee of the Corporation; of which amount Options to purchase 34,783
shares are subject to approval of this Proposal 2; and of which amount Options
to purchase 16,216 shares have been exercised to date); Mr. Jordan, 150,381 (of
which amount Options to purchase 19,565 shares have been exercised to date); Mr.
Brennan, 161,631 (of which amount Options to purchase 19,565 shares have been
exercised to date); Dr. Henry, 77,500 (of which amount Options to purchase
18,750 shares have been exercised to date and does not include Options to
purchase 25,226 shares granted to Dr. Henry's wife, an employee of the
Corporation); and Mr. Landekic, 106,250. Dr. Savello was granted Options to
purchase 100,000 shares upon his employment with the Corporation in April 1997.
All current executive officers as a group hold Options to purchase a total of
1,051,807 shares. The 1993 Employee Plan is currently administered by the
Compensation Committee of the Board and is intended to qualify for the exemption
provided by Rule 16b-3 under the Exchange Act. The Compensation Committee
selects recipients of Incentive Awards and determines the nature of the
Incentive Award granted, the number of shares granted or subject to each
Incentive Award, and the vesting schedule and other terms and conditions of each
Incentive Award. The Board may modify, amend, suspend or terminate the 1993
Employee Plan, provided that such action may not affect outstanding Incentive
Awards, and stockholder approval is required to amend the 1993 Employee Plan if
such amendment will cause the 1993 Employee Plan not to comply with the Internal
Revenue Code of 1986, as amended (the "Code").
If the proposed amendment to the 1993 Employee Plan is approved by the
stockholders of the Corporation, the number of shares that may be issued
pursuant to Incentive Awards under the 1993 Employee Plan shall not exceed in
the aggregate 3,435,000 shares of Common Stock, of which number 300,000 shares
may be awarded as Restricted Shares, and the maximum number of shares subject to
Options that can be granted under the 1993 Employee Plan to any executive
officer or other employee of the Corporation will increase from 215,217 shares
to no more than one-third of the total number of shares of Common Stock that can
be granted as Incentive Awards (1,145,000 shares, assuming approval of this
Proposal), both of which the Board believes will be crucial if the Corporation
to be able to attract and retain highly qualified executive officers and other
key employees. All Options granted pursuant to the 1993 Employee Plan are
exercisable in accordance with a vesting schedule which is set at the time of
the issuance of the Option and, except as indicated below, may not be exercised
more than ten years from the date of grant. Options granted under the 1993
Employee Plan may be incentive stock options intended to qualify under Section
422 of the Code (an "Incentive Option") or options not intended to so qualify (a
"Nonqualified Option"). The 1993 Employee Plan generally requires the exercise
price of Incentive Options to be at least equal to the closing price of a share
of the Corporation's Common Stock on the date immediately prior to the date of
the grant. In the case of Nonqualified Options, the exercise price is set by the
Compensation Committee of the Board of Directors which has set such prices at
levels not less than the closing price of the Corporation's Common Stock on the
date immediately prior to the date of the grant. In the case of Incentive
Options granted to a stockholder, either directly or indirectly, holding in
excess of 10% of the Corporation's outstanding Common Stock, the option exercise
price must be at least equal to 110% of the fair market value of the
Corporation's Common Stock on the date of grant and such option may not be
exercised more than five years from the date of grant. Payment of the exercise
price for Options granted under the 1993 Employee Plan may be made in cash,
shares of the Corporation's Common Stock or a combination of both.
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<PAGE> 21
Generally, unexercised Options terminate three months following the date an
optionee ceases to be employed by the Corporation or any affiliate or subsidiary
of the Corporation other than by reason of disability or death (but not later
than the expiration date) whether or not such termination is voluntary.
Generally, any Option held by an employee who dies or who ceases to be employed
because of disability must be exercised by the employee or his representative
within one year after the employee dies or ceases to be an employee (but not
later than the expiration date). The Board may, however, provide that an option
may be exercised over a longer period of time following termination of
employment (but not later than the option expiration date). Options and
Restricted Shares generally are not transferable, except in the event of death
to the decedent's estate, provided that Restricted Shares may be transferred or
assigned after the applicable restriction on the shares has terminated. In
addition, Nonqualified Options may be transferred during the lifetime of an
optionee to (i) the spouse, children or grandchildren of the optionee
("Immediate Family Members"), (ii) a trust or trusts for the exclusive benefit
of such Immediate Family Members, or (iii) a partnership in which such Immediate
Family members are the only partners, provided that there may be no
consideration for any such transfer. The 1993 Employee Plan has no termination
date, provided however that no Incentive Option may be granted on or after the
tenth anniversary of the effective date of the 1993 Employee Plan (i.e.,
September 2003).
The grant of an Option is not a taxable event for the optionee or the
Corporation. The tax consequences of exercising an Option or disposing of the
Corporation's Common Stock purchased upon exercise thereof depends upon whether
the Option is an Incentive Option or a Nonqualified Option.
With respect to Incentive Options, an optionee will not recognize taxable
income upon exercise of the Option, and any gain realized upon a disposition of
shares of Common Stock received pursuant to the exercise of the Option will be
taxed as long-term capital gain if the optionee holds the shares for at least
two years after the date of grant and for one year after the date of exercise.
However, the excess of the fair market value of Common Stock subject to an
Incentive Option on the exercise date over the option exercise price generally
will be included in the optionee's alternative minimum taxable income in the
year of exercise for purposes of the alternative minimum tax. The Corporation
will not be entitled to any deduction with respect to the grant or exercise of
an Incentive Option, except as discussed below.
For the exercise of an Incentive Option to qualify for the foregoing tax
treatment, the optionee generally must be an employee of the Corporation or a
subsidiary from the date the Option is granted through a date within three
months before the date of exercise. In the case of an optionee who is disabled,
the three-month period for exercise following termination of employment is
extended to one year. In the case of an employee who dies, the time for
exercising Incentive Options after termination of employment and the holding
period for stock received pursuant to the exercise of the Options are waived. If
all of the requirements for Incentive Option treatment are met except for the
special holding period rules set forth above, the optionee will recognize
ordinary income upon the disposition of the Corporation's Common Stock in an
amount equal to the excess of the fair market value of the Common Stock at the
time the option was exercised over the option exercise price (but not in excess
of the gain realized on the sale). The balance of the realized gain, if any,
will be long or short-term capital gain, depending upon whether or not the stock
was sold more than one year after the option was exercised. The Corporation will
be allowed a deduction to the extent the optionee recognizes ordinary income.
If an optionee exercises an Incentive Option by tendering shares of Common
Stock with a fair market value equal to part or all of the option exercise
price, the exchange of shares generally will be treated as a nontaxable exchange
(except that this treatment would not apply if the optionee had acquired the
shares being transferred pursuant to the exercise of an Incentive Option and had
not satisfied the special holding period requirements summarized above).
Upon exercising a Nonqualified Option, an optionee generally will recognize
ordinary income in an amount equal to the difference between the exercise price
and the fair market value of the Common Stock on the date of exercise. The
Corporation will be entitled to a deduction in the same amount that the optionee
recognizes as ordinary income. Upon a subsequent sale of the shares, the
optionee will have taxable gain or loss, measured by the difference between the
amount realized on the disposition and the tax basis of the shares
19
<PAGE> 22
(generally, the amount paid for the shares plus the amount treated as ordinary
income at the time the option was exercised).
If the optionee surrenders shares of Common Stock in payment of part or all
of the exercise price for Nonqualified Options, no gain or loss will be
recognized with respect to the shares surrendered (regardless of whether the
shares were acquired pursuant to the exercise of an Incentive Option) and the
optionee will be treated as receiving an equivalent number of shares pursuant to
the exercise of the option in a nontaxable exchange. The difference between the
aggregate option exercise price and the aggregate fair market value of the
shares received pursuant to the exercise of the option will be taxed as ordinary
income.
Shares acquired pursuant to a Restricted Stock award generally will be
treated as being subject to a substantial risk of forfeiture for federal income
tax purposes. As a consequence, unless the recipient makes a special tax
election within 30 days after receiving the Restricted Stock, the recipient will
recognize ordinary income, at the time the Corporation's repurchase right
lapses, generally in an amount equal to the difference between the fair market
value of the Common Stock at that time and the amount the recipient paid for the
Common Stock. The Corporation will be entitled to a deduction in the same
amount. If the recipient makes the special tax election (under Section 83(b) of
the Code), the recipient will recognize ordinary income at the time he or she
receives the Restricted Stock in an amount equal to the difference (if any)
between the fair market value of the Common Stock at that time (determined
without regard to the existence of the Corporation's repurchase right) and the
amount paid for the Common Stock, if any. The Corporation will be entitled to a
deduction in the same amount. In that case, the recipient will not recognize
additional ordinary income at the time the Corporation's repurchase right lapses
and any gain recognized upon the sale or other disposition of the Common Stock
will generally constitute capital gain. If the Corporation exercises its
repurchase right in the case of Common Stock purchased by a recipient who has
made the special tax election (upon termination of the recipient's employment
before the repurchase right lapses or failure to satisfy other conditions
established in connection with the award of Restricted Shares), the recipient
will not be entitled to any deduction or other tax benefit in respect of the
amount included in income (or taxes paid) as a result of the filing of the
election.
The affirmative vote of a majority of the outstanding shares of the
Corporation's Common Stock present and entitled to vote at the Annual Meeting is
required to approve the proposed amendment to the Corporation's 1993 Employee
Share Option and Restricted Share Plan to increase (a) the number of shares of
Common Stock which can be granted as Incentive Awards to an aggregate of
3,435,000 shares and (b) the maximum number of shares subject to Options that
can be granted under the 1993 Employee Plan to any executive officer or other
employee of the Corporation from 215,217 shares to no more than one-third of the
total number of shares of Common Stock that can be granted as Incentive Awards.
Any stockholder may obtain a copy, at no charge, of the 1993 Employee Plan
by writing to Guilford Pharmaceuticals Inc., 6611 Tributary Street, Baltimore,
Maryland 21224, Attention: Thomas C. Seoh, Vice President, General Counsel and
Secretary.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2 AMENDING THE
CORPORATION'S 1993 EMPLOYEE SHARE OPTION AND RESTRICTED SHARE PLAN.
PROPOSAL 3
RATIFICATION OF INDEPENDENT PUBLIC AUDITORS
The independent public accounting firm of KPMG Peat Marwick LLP has acted
as the Corporation's independent auditors for the year ended December 31, 1996
and has been selected by the Board of Directors to act as such for the
examination of the Corporation's 1997 financial statements, subject to
ratification by the stockholders. Representatives of KPMG Peat Marwick LLP are
expected to be present at the Annual Meeting and will have an opportunity to
make a statement if they desire and to respond to appropriate questions.
In the event the appointment of KPMG Peat Marwick LLP as independent public
auditors for 1997 is not approved by the stockholders, the adverse vote will be
considered as a direction to the Board of Directors
20
<PAGE> 23
to consider the selection of other auditors for the following year. However,
because of the difficulty in making any substitution of auditors so long after
the beginning of the current year, it is contemplated that the appointment for
the year 1997 will be permitted to stand unless the Board finds other good
reason for making a change.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 3 RATIFYING THE
CORPORATION'S SELECTION OF KPMG PEAT MARWICK LLP AS THE CORPORATION'S
INDEPENDENT PUBLIC AUDITORS FOR THE 1997 FISCAL YEAR.
DATE OF SUBMISSION OF STOCKHOLDER PROPOSALS
TO BE INCLUDED IN PROXY MATERIALS
Any proposal or proposal intended to be presented by any stockholder at the
1998 Annual Meeting of Stockholders must be received by the Corporation by
December 28, 1997 to be considered for inclusion in the Corporation's proxy
statement and form of proxy relating to that meeting.
REVOCABILITY OF PROXY AND VOTING PROCEDURES
Shares can be voted only if the stockholder is present in person or by
proxy. Whether or not you plan to attend in person, you are encouraged to sign
and return the enclosed proxy card. Any proxy given pursuant to this
solicitation may be revoked by the person giving it at any time before its use
by delivering to the Secretary of the Corporation at the above address a written
notice of revocation or a duly executed proxy bearing a later date, or by
attending the meeting and voting in person. The representation in person or by
proxy of at least a majority of the outstanding shares entitled to vote is
necessary to provide a quorum at the meeting. Directors are elected by a
plurality of the affirmative votes cast. A majority of the votes cast
represented at the meeting is required for approval of each other proposal.
Abstentions and "non-votes" are counted as present in determining whether
the quorum requirement is satisfied. With respect to the election of Directors,
because Directors are elected by a plurality and abstentions and "non-votes" are
not treated as votes against, abstentions and non-votes will not affect the
outcome of the election. Abstentions and "non-votes" are treated as votes
against proposals presented to stockholders other than elections of Directors. 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 the nominee does not
have discretionary voting power and has not received instructions from the
beneficial owner.
OTHER BUSINESS TO BE TRANSACTED
As of the date of this proxy statement, the Board of Directors knows of no
other business which may come before the Annual Meeting. If any other business
is properly brought before the Annual Meeting, it is the intention of the proxy
holders to vote or act in accordance with their best judgment with respect to
such matters.
By Order of the Board of Directors
/s/ THOMAS C. SEOH
THOMAS C. SEOH
Vice President, General Counsel
and Secretary
Baltimore, Maryland
April 28, 1997
21
<PAGE> 24
GUILFORD PHARMACEUTICALS INC.
REVOCABLE PROXY
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 21, 1997
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of GUILFORD PHARMACEUTICALS INC. (the
"Corporation") hereby appoints Craig R. Smith, M.D., Andrew R. Jordan and
Thomas C. Seoh, or any of them, as attorneys and proxies of the undersigned,
with full power of substitution and with authority in each of them to act in
the absence of the other to vote and act for the undersigned at the Annual
Meeting of Stockholders of the Corporation to be held on Wednesday, May 21,
1997 at 10:00 a.m. (Eastern time) at the Corporation's headquarters located at
6611 Tributary Street, Baltimore, Maryland, and at any adjournments thereof, in
respect of all shares of the Common Stock of the Corporation which the
undersigned may be entitled to vote, on the following matters:
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN BY THE
UNDERSIGNED STOCKHOLDER. HOWEVER, IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR THE NOMINEES IN PROPOSAL 1.
The undersigned hereby acknowledges prior receipt of a copy of the Notice of
Annual Meeting of Stockholders and proxy statement dated April 28, 1997 and the
1996 Annual Report to Shareholders, and hereby revokes any proxy or proxies
heretofore given. This Proxy may be revoked at any time before it is voted by
delivering to the Secretary of the Corporation either a written revocation of
proxy or a duly executed proxy bearing a later date, or by appearing at the
Annual Meeting and voting in person.
(TO BE SIGNED ON REVERSE SIDE)
- --------------------------------------------------------------------------------
A [X] Please mark your
votes as in this
example
<TABLE>
<S> <C>
FOR WITHHOLD AUTHORITY
all nominees to vote for the following
listed at right nominee(s):
1. Election of [ ] [ ] NOMINEES: Craig R. Smith, M.D.
directors to Richard L. Casey
the Board of Solomon H. Snyder, M.D.
Directors W. Leigh Thompson, M.D., Ph.D.
Elizabeth M. Greetham
For, except vote withheld from the following nominee(s): George L. Bunting, Jr.
- --------------------------------------------------------
</TABLE>
FOR AGAINST ABSTAIN
2. Approval of an amendment to the [ ] [ ] [ ]
1993 Employee Share Option and
Restricted Share Plan
3. Ratification of KPMG Peat Marwick LLP as [ ] [ ] [ ]
independent auditors for 1997.
4. In their discretion, on any other matters that may properly come before the
meeting, or any adjournment thereof, in accordance with the recommendations
of a majority of the Board of Directors.
If you receive more than one proxy card, please sign and return all cards in
the accompanying envelope.
PLEASE MARK, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY TO ENSURE A QUORUM
AT THE MEETING. IT IS IMPORTANT WHETHER YOU OWN FEW OR MANY SHARES. DELAY IN
RETURNING YOUR PROXY MAY SUBJECT THE CORPORATION TO ADDITIONAL EXPENSE.
DATED:
- -------------------------------------------------------- -----------
SIGNATURE OF STOCKHOLDER OR AUTHORIZED REPRESENTATIVE
DATED:
- -------------------------------------------------------- -----------
SIGNATURE IF HELD JOINTLY
Note: Please date and sign exactly as name appears hereon. Each executor,
administrator, trustee, guardian, attorney-in-fact and other fiduciary
should sign and indicate his or her full name. In the case of stock
ownership in the name of two or more persons both persons should sign.
