Company Logo
TRIPOS, INC.
To Our Shareholders:
You are invited to attend the Annual Meeting of Shareholders of
Tripos, Inc. to be held at 1:00 p.m. local time on May 7, 1998 at
the World Trade Center St. Louis, 121 S. Meramec, 10th Floor,
Clayton, Missouri, 63105. At this meeting you are being asked to
vote on several matters recommended by the Board of Directors of
Tripos, Inc. We want to emphasize the importance of proposals 2 and
3, our two stock plan proposals, to our future success. We are
requesting your approval of these proposals to allow us to attract,
retain and motivate highly qualified employees, and thus enhance the
value of the Company. Proposal 3, when considered in conjunction
with the Board of Directors' commitment to reduce the number of
shares reserved under the Director Stock Plans (as described below),
will not result in an aggregate increase in the total number of
shares reserved under the Company's stock option plans.
An important focus in establishing employee compensation at
Tripos is the relationship between long-term compensation and stock
price, achieved through the judicious award of stock options and
participation by our employees in the Company's 1994 Employee Stock
Purchase Plan ("1994 ESP Plan"). We believe these two stock plans
are key ingredients to our prospects of success.
The Board and management continue to examine the benefits and
costs of Tripos' compensation philosophy. The Company periodically
engages compensation attorneys and consultants who advise the
Company on the most effective methods and levels of employee stock
compensation. This is admittedly a difficult process with many
factors that must be frequently revisited.
First, we must ensure we are able to continue to hire and
retain qualified individuals to support the needs of our rapidly
growing business. We are satisfied that our prior option granting
practices have been a critical factor in our ability to hire and
retain individuals whose collective contributions have greatly added
to Tripos' success. At this time, 67% of our technical and
professional employees hold unvested stock options. We recognize
these employees have portable skills and frequently have
opportunities to accept other employment, and we believe our broad
and inclusive policy of granting stock options is a strong factor in
our successful efforts to hire, retain and motivate employees. We
have been informed that our technical and professional employee
turnover rate is significantly lower than that of comparable high-
tech companies. Tripos has greatly benefited from being better able
to focus on the needs of our dynamic business instead of spending
extra dollars to recruit, relocate, assimilate and train even more
new employees.
Second, we must balance the costs of stock compensation against
other benefits. The Company has established a 401(k) plan, but has
not established an employee retirement pension program. We believe
equity awards are the most attractive and cost-effective means to
assist employees in planning for their long-term needs. Employee
participation in the Company's 1994 ESP Plan reaffirms this belief
and vividly demonstrates our employees' faith in Tripos and their
willingness to work hard for its success. At December 31, 1997, 60%
percent of eligible employees participated in the 1994 ESP Plan.
Due to the value of this plan to the employees, 106,553 shares had
been purchased from the reserve since the plan's inception leaving a
balance available for purchase of 43,447 shares. In the event that
this reserve is not replenished, the Company could only continue the
1994 ESP Plan through the purchase of shares on the open market
using current cash reserves. The Board of Directors believes that
these current cash reserves should be utilized for investment and
expansion of the Company to maximize shareholder value.
Let us assure you that the Board of Directors is very sensitive
to the dilutive nature of employee stock plans. With this in mind,
the Board has resolved that, upon approval of proposal 3, (i) the
Company's 1994 Director Stock Option Plan shall be amended to reduce
the number of shares reserved thereunder from 300,000 to 240,000
shares, and (ii) the Company's 1996 Director Compensation Plan shall
be amended to reduce the number of shares thereunder from 200,000 to
80,000 shares. The purpose of such reductions is to eliminate the
dilutive impact of proposal 3 so that, upon approval of the
proposal, the total number of shares subject to issuance pursuant to
the Company's stock option plans shall remain the same. The Board
believes that such "reallocation" of shares from the director stock
plans to the employee stock option plan is in the best interest of
the Company and its employees and is calculated to maximize
shareholder value.
We truly believe that approval of these proposals will continue
to enhance the value of Tripos' stock. As illustrated in the
Performance Graph on page 14 of the proxy statement, the Company's
stock price increased approximately 24% during fiscal 1997 and
approximately 207% over the last three complete fiscal years. The
Board and management strongly support approval of proposals 2 and 3
to help ensure we continue on this successful path.
Sincerely,
_____________________________
Ralph S. Lobdell
Chairman of the Board of
Directors
Company Logo
TRIPOS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 7, 1998
To Our Shareholders:
The Annual Meeting of Shareholders of Tripos, Inc. (the
"Company") will be held at the World Trade Center St. Louis, 121 S.
Meramec, 10th Floor, Clayton, Missouri, 63105 at 1:00 p.m. local
time on May 7, 1998 for the following purposes:
1. To elect directors to serve for the ensuing year or until their
successors are elected;
2. To amend the 1994 Employee Stock Purchase Plan to increase the
number of shares reserved thereunder from 150,000 to 350,000 shares;
3. To amend the 1994 Stock Option Plan to increase the number of
shares reserved thereunder from 1,100,000 to 1,280,000 shares;
4. To act upon such other business as may properly come before the
Annual Meeting or at any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on April
3, 1998 as the record date for determining those shareholders who
will be entitled to notice of and to vote at the Annual Meeting.
Representation of at least a majority of all outstanding shares
of Common Stock of the Company is required to constitute a quorum.
Accordingly, it is important that your shares be represented at the
meeting. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING,
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY FORM AND RETURN IT
IN THE ENCLOSED ENVELOPE. You may revoke your proxy at any time
prior to the time it is voted. If you attend the Annual Meeting and
vote by ballot, your proxy will be revoked automatically and only
your vote at the Annual Meeting will be counted.
Sincerely,
Colleen A. Martin
Corporate Secretary
St. Louis, Missouri
April 7, 1998
Shareholders Should Read the Entire Proxy Statement
Carefully Prior to Returning Their Proxy Forms
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS OF
TRIPOS, INC.
To Be Held May 7, 1998
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of Tripos, Inc. ("Tripos" or
the "Company") of proxies to be voted at the Annual Meeting of
Shareholders which will be held at 1:00 p.m. local time on May 7,
1998 at the World Trade Center St. Louis, 121 S. Meramec, 10th
Floor, Clayton, Missouri 63105, or at any adjournments or
postponements thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders. This Proxy
Statement and the accompanying proxy form are first being mailed to
shareholders on or about April 7, 1998.
VOTING RIGHTS AND SOLICITATION
The close of business on April 3, 1998 was the record date for
shareholders entitled to notice of and to vote at the Annual
Meeting. As of that date, Tripos had 3,178,959 shares of Common
Stock, $.01 par value per share (the "Common Stock"), issued and
outstanding. All of the shares of the Company's Common Stock
outstanding on the record date are entitled to vote at the Annual
Meeting, and shareholders of record entitled to vote at the meeting
will have one (1) vote for each share so held on the matters to be
voted upon.
Shares of the Company's Common Stock represented by proxies in
the accompanying form that are properly executed and returned to
Tripos will be voted at the Annual Meeting of Shareholders in
accordance with the shareholders' instructions contained therein.
In the absence of contrary instructions, shares represented by such
proxies will be voted FOR the election of each of the directors as
described herein under "Proposal 1 -- Election of Directors" and FOR
the amendment to the 1994 Employee Stock Purchase Plan as described
herein under "Proposal 2 -- Amendment to the 1994 Employee Stock
Purchase Plan" and FOR the amendment to the 1994 Stock Option Plan
as described herein under "Proposal 3 - Amendment to the 1994 Stock
Option Plan". Management does not know of any matters to be
presented in this Annual Meeting other than those set forth in this
Proxy Statement and in the Notice accompanying this Proxy Statement.
If other matters should properly come before the meeting, the proxy
holders will vote on such matters in accordance with their best
judgment. Any shareholder has the right to revoke his or her proxy
at any time before it is voted. A proxy may be revoked either by
written notice to the Secretary of the Company or by attending the
meeting and voting in person. A majority of the outstanding shares
of Common Stock, present in person or represented by proxy, will
constitute a quorum for the transaction of business at the Annual
Meeting. The affirmative vote of a plurality of the shares present,
in person or by proxy, at the Annual Meeting, is required to elect
directors. "Plurality" means that the nominees who receive the
largest number of votes cast are elected as directors up to the
maximum number of directors to be elected at the Annual Meeting.
Consequently, marking the proxy ballot to withhold a vote for one or
more nominees does not have the effect of a vote against said
nominee(s), but will have an effect on the number of votes cast in
the election and could effect the outcome. The affirmative vote of
a majority of the shares casting votes, which are present in person
or by proxy at the Annual Meeting, is required to approve Proposal 2
and Proposal 3 and to act on any other matters properly brought
before this meeting. Shares represented by proxies which are marked
"withhold authority" with respect to the election of any one or more
of the nominees for election of directors and proxies which are
marked "abstain" with respect to Proposals 2 and 3 will be counted
for the purpose of determining the number of shares represented by
proxy at the meeting and the presence or absence of a quorum. If no
specification is made on a duly executed proxy, the proxy will be
voted FOR election of the directors nominated by the Board of
Directors and FOR Proposal 2 and FOR Proposal 3. Abstentions and
broker non-votes are each included in the determination of the
number of shares present for quorum purposes. Abstentions are
counted in tabulations of the votes cast on proposals presented to
shareholders, whereas broker non-votes are not counted for purposes
of determining whether a proposal has been approved.
The entire cost of soliciting proxies will be borne by Tripos.
Proxies will be solicited principally through the use of the mails,
but, if deemed desirable, may be solicited personally or by
telephone, telefax or special letter by officers and regular Tripos
employees for no additional compensation. The Board of Directors of
the Company has engaged ChaseMellon Shareholder Services to provide
routine advice and services. Arrangements have been made with
brokerage houses and other custodians, nominees and fiduciaries to
send proxies and proxy materials to the beneficial owners of the
Company's Common Stock, and such persons shall be reimbursed for
their reasonable expenses.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be considered at the 1999
Annual Meeting of Shareholders must be received by Tripos no later
than December 11, 1998. The proposal must be mailed to the
Company's principal executive offices, 1699 South Hanley Road, St.
Louis, Missouri 63144, Attention: Corporate Secretary. Such
proposals may be included in next year's proxy statement if they
comply with certain rules and regulations promulgated by the
Securities and Exchange Commission.
MATTERS TO BE CONSIDERED AT ANNUAL MEETING
PROPOSAL 1:
ELECTION OF DIRECTORS
The nominees for the Board of Directors are set forth below.
The proxy holders intend to vote all proxies received by them in the
accompanying form for the nominees for directors listed below. In
the event any nominee is unable or declines to serve as a director
at the time of the Annual Meeting, either the size of the Board will
be reduced or the proxies will be voted for any nominee who shall be
designated by the present Board of Directors to fill the vacancy.
In the event that additional persons are nominated for election as
directors, the proxy holders intend to vote all proxies received by
them for the nominees listed below. As of the date of this Proxy
Statement, the Board of Directors is not aware of any nominee who is
unable or will decline to serve as a director. The directors will
serve for a one year term, or until their respective successors are
duly elected and qualified. Directors are elected by a plurality of
the votes present in person or represented by proxy and entitled to
vote at the meeting.
Nominees to Board of Directors
Name Director Age Name Director Age
Since Since
Ralph S. Lobdell 1994 54 Alfred Alberts 1997 66
Stewart Carrell 1994 64 John P. McAlister,III 1994 49
Gary Meredith 1996 63 Ferid Murad 1996 61
Ralph S. Lobdell has served as Chairman of the Board of
Directors of the Company since June 1994. Mr. Lobdell received his
Bachelor of Science degree from the U.S. Naval Academy in 1965 and
his Master of Business Administration from Stanford University in
1972. Mr. Lobdell worked for First Chicago Corporation from 1972
through 1977, initially on the parent company staff and then its
venture capital subsidiaries. In 1977, Mr. Lobdell joined Abbott
Laboratories in Chicago in Corporate Planning and Development. Mr.
Lobdell worked for the Harbour Group, a St. Louis based investment
company, from 1979 to 1991 and was appointed President in 1987. He
served on the Board of Directors of virtually all of Harbour's
portfolio companies acquired during his tenure.
Alfred Alberts was named a Director of the Company in February
1997. Mr. Alberts is currently serving on the Board of Directors of
Inflazyme Pharmaceuticals, Ltd., Vancouver, and is a scientific
consultant to several major pharmaceutical companies. He served as
the Vice President of Biochemistry and Natural Product Discovery at
Merck Research Laboratories prior to his retirement in 1995. Prior
to joining Merck, Mr. Alberts was a member of the faculty of the
Department of Biochemistry at Washington University, St. Louis. Mr.
Alberts has co-authored six patents and received several prestigious
awards including the Thomas Alva Edison Award, the Inventor of the
Year Award as well as an Honorary Doctor of Science degree from the
University of Maryland.
Stewart Carrell has been a Director of the Company since May
1994. He also serves as Chairman of the Board of Directors of Evans
& Sutherland Computer Corporation and of Seattle Silicon
Corporation. Between 1984 and 1994, Mr. Carrell was Chairman and
Chief Executive Officer of several companies through his association
with the investment banking and venture capital firm of Hambrecht &
Quist. Prior to 1984, Mr. Carrell was employed for 25 years by
Texas Instruments in various capacities, the most recent of which
was Executive Vice President. Mr. Carrell holds an undergraduate
degree from Southern Methodist University and a Masters degree from
Stanford University.
Dr. John P. McAlister, III has served as Chief Executive
Officer and Director since May 1994. Dr. McAlister obtained his
B.S. in Chemistry from Tarleton State College in 1971 and his Ph.D.
in Biochemistry and X-Ray Crystallography from the University of
Wisconsin, Madison, in 1978. After a two-year post-doctoral
appointment, Dr. McAlister joined the staff of the Computer Systems
Laboratory at Washington University, St. Louis, in 1980, where he
served first as Associate Director of the MMS-X National
Collaborative Research Program and then as Research Associate in
Computer Science. Dr. McAlister began working for Tripos in 1982
under contract to supervise software development for molecular
graphics applications. In 1984, he joined Tripos as Director of
Software Research and Development. In 1987, Dr. McAlister was named
Vice President, Research and Development, and in 1988 was promoted
to President.
Gary Meredith was named a Director of the Company in January
1996. He currently serves as Senior Vice President and Secretary of
Evans & Sutherland Computer Corporation ("E&S"). Mr. Meredith has
been with E&S for twenty years where he has held several positions
including Assistant to the President, VP-Administration, President-
Interactive Systems Division, VP-Development, and Chief Financial
Officer. Prior to joining E&S, he was President of Interwest
General Corporation and Windsor Industries. Mr. Meredith also was
Chairman and President of Reid-Meredith, Inc., a company he founded
in 1962. Mr. Meredith received his B.S. degree from Brigham Young
University. In addition to his position on the Board of Directors
of Tripos, Mr. Meredith is a Director of Blue Cross/Blue Shield of
Utah.
Dr. Ferid Murad was named a Director of the Company in
November 1996. Dr. Murad received his M.D. and Ph.D. from Western
Reserve University. Dr. Murad is the former Vice President of
Pharmaceutical Research and Development at Abbott Laboratories, and
formerly, the President and CEO of Molecular Geriatrics Corporation,
a bio-pharmaceutical company. Dr. Murad has held a number of
notable positions during his career including Chairman of the
Department of Medicine at Stanford University, Chief of Medicine at
Palo Alto Veterans Administration Hospital, and Director of Clinical
Research at the University of Virginia School of Medicine. Dr.
Murad was the 1996 recipient of the prestigious Albert Lasker
Medical Research award and is a member of the National Academy of
Science. He is currently Professor and Chairman of the Department
of Integrative Biology and Pharmacology at the University of Texas
Medical School.
There are no family relationships among executive officers or
directors of the Company. No related party transactions occurred
between the Company and any of the directors or their affiliates.
Board Meetings and Committees
During the fiscal year ended December 31, 1997, the Board of
Directors of the Company held a total of ten (10) meetings. During
this period, a quorum of directors attended or participated in all
of (i) the meetings of the Board that were held and (ii) the
meetings held by all committees of the Board of which they were
members.
The Company has an Audit Committee, a Compensation Committee,
an Executive Committee, and a Technical Review Committee of the
Board of Directors. There is no nominating committee or committee
performing the functions of such committee.
The Audit Committee meets with the Company's financial
management and its independent accountants at various times during
each year and reviews internal control conditions, audit plans and
results, and financial reporting procedures. This Committee,
consisting of Stewart Carrell, Ralph Lobdell, Alfred Alberts, Gary
Meredith and Ferid Murad, held two (2) meetings during fiscal 1997.
The Compensation Committee reviews and approves the Company's
compensation arrangements for management. This Committee,
consisting of Ralph Lobdell, Alfred Alberts, Stewart Carrell, Gary
Meredith and Ferid Murad, held two (2) meetings during fiscal 1997.
The Executive Committee receives investment proposals from
within and without the Company and decides whether they merit
consideration. This Committee, consisting of Ralph Lobdell, Alfred
Alberts, Stewart Carrell, Gary Meredith and Ferid Murad, held four
(4) meetings during fiscal 1997.
The Technical Review Committee reviews and approves the
mechanisms by which scientific and software development decisions
are made by the Company. This Committee, consisting of John
McAlister, Alfred Alberts, Ferid Murad and several key employees,
did not meet during fiscal 1997.
Director Remuneration
Non-employee members of the Board, except for Mr. Lobdell, are
each paid an annual retainer of $10,000, and are reimbursed for all
out-of-pocket costs incurred in connection with their attendance at
all Board meetings and applicable committee meetings. The annual
retainer is paid quarterly in the form of 50% cash and 50% stock
valued at the then market rate. Employee members of the Board
receive no additional compensation for their service on the Board.
Under the Tripos, Inc. 1994 Director Option Plan, an individual
who first becomes a non-employee member of the Board will receive an
automatic option grant for 10,000 shares of the Company's Common
Stock upon commencement of Board service, and each individual with
six or more months of Board service will receive an automatic option
grant for an additional 2,500 shares on January 1 of each year.
Options issued under the Tripos, Inc. 1994 Director Option Plan
become exercisable at a rate of twenty-five percent (25%) of the
shares under such option on each anniversary of the grant of the
option. There are currently 300,000 shares reserved for issuance of
options under the 1994 Director Option Plan, as amended. The
exercise price for the options granted under the 1994 Director
Option Plan is equal to the fair market value of the Common Stock as
of the last trading day immediately prior to the date the option is
granted. The options have a term of ten years. However, each
option automatically terminates 90 days after the optionee ceases to
be a director of the Company except by reason of the optionee's
death, disability, or employment by the Company or a subsidiary, and
terminates within twelve (12) months after the occurrence of one of
these stated events.
Dr. Ferid Murad, receives a $1,000 fee for his role as Chairman
of the Technical Review Committee for every meeting he attends, and
is reimbursed for all out-of pocket costs incurred with his
attendance at such meetings.
Mr. Ralph Lobdell receives an annual retainer of $25,000 as
Chairman of the Board for the Company, in lieu of the $10,000 annual
retainer received by other non-employee Board members, and is
reimbursed for all out-of-pocket expenses related to attendance at
meetings of the Board of Directors. Mr. Lobdell's annual retainer
is paid quarterly in the form of 50% cash and 50% stock valued at
the then market rate.
No other compensation is paid to the non-employee members of
the Board with respect to service on the Board.
Recommendation of the Board of Directors
The Board of Directors recommends that the shareholders vote
FOR the election of each of the above nominees.
PROPOSAL 2:
AMENDMENT TO THE 1994 EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors of the Company adopted an amendment to
the 1994 Employee Stock Purchase Plan (the "1994 ESP Plan") on March
17, 1998, and directed that the amendment be submitted to the
shareholders of the Company for their approval. At the Annual
Meeting, the shareholders are being asked to approve an amendment to
the Company's existing 1994 ESP Plan to increase the maximum
aggregate number of shares which may be purchased by employees under
the Plan from one hundred fifty thousand (150,000) to three hundred
fifty thousand (350,000).
The 1994 ESP Plan is intended to provide for the sale of Common
Shares of the Company to its employees. The Board of Directors
believes that it is in the best interests of the Company and its
shareholders to provide a means for the employees of the Company to
align their interests with those of the shareholders they serve.
General. The 1994 ESP Plan was adopted on May 9, 1994 and became
effective upon such date. The 1994 ESP Plan provides for the grant
of options to purchase Common Stock to employees of the Company.
Administration. The 1994 ESP Plan is designed to work as an
incentive performance plan. Eligible employees may elect to have
funds withheld from their pay to be set aside for the semi-annual
purchase of Common Shares of the Company.
Eligibility. Only employees of the Company are eligible under the
1994 ESP Plan. Currently, ninety two (92) employees (60% of the
eligible employees) participate in the 1994 ESP Plan.
Terms of Options. The exercise price of options granted to
participating employees is equal to 85% of the lower of the fair
market value of Tripos Common Stock on the beginning date or the
ending date of the semi-annual offering period (ending each June 30
and December 31). Employees may enroll in the Plan semi-annually on
January 1 or July 1. Options granted to each employee consist of
overlapping twenty-four month offering periods within which the
employee may continue to purchase shares at their enrollment price
as long as it remains lower than the fair market value at the end of
each succeeding offering period. Employees may designate up to 10%
of their pay to be withheld and deposited into a Plan account to be
used toward the semi-annual purchase of Common Shares in the
Company.
Adjustment Upon Changes in Capitalization. In the event any change
is made in the Company's capitalization, such as a stock split or
stock dividend, which results in a greater or lesser number of
shares of Tripos Common Stock, appropriate adjustment shall be made
in the option price and in the number of shares remaining in reserve
subject to the options. In the event of the proposed dissolution or
liquidation of the Company, to the extent that an option or right
has not been previously exercised, it will terminate immediately
prior to the consummation of such proposed action. In the event of
the merger or sale of substantially all of the assets of the
Company, all outstanding options shall be assumed or substituted by
the successor corporation, or if they are not assumed or
substituted, the Board may shorten the offering period and all
outstanding options will be automatically exercised on the exercise
date set by the Board of Directors unless the employee withdraws
prior to that date.
Amendment and Termination. The Board of Directors may amend or
terminate the 1994 ESP Plan at any time. However, no such action by
the Board of Directors may unilaterally alter or impair any option
previously granted under the 1994 ESP Plan without the consent of
the optionee. To the extent necessary to comply with Rule 16b-3 or
under Section 423 of the Internal Revenue Code, the Company shall
obtain shareholder approval in such a manner and to such a degree as
required. In any event, the 1994 ESP Plan will terminate in May
2004.
Federal Income Tax Implications. No Federal income tax is due upon
the receipt of the grant by the employee of a grant of options under
the 1994 ESP Plan or upon exercise of an option to purchase Common
Stock. Upon disposition of the underlying shares at a profit, the
employee will have ordinary income with respect to the 15% discount
and capital gain or ordinary income from any additional profit. The
Company is not entitled to a deduction with respect to grants under
the 1994 ESP Plan.
Reserve - Number of Shares Available. One hundred fifty thousand
shares of Common Stock are currently reserved for issuance pursuant
to the 1994 ESP Plan. As of December 31, 1997, 106,553 shares of
Common Stock had been purchased and issued under the Plan. Without
taking into account this proposed amendment to increase the maximum
aggregate number of shares, 43,447 shares remained available for
future purchase as of December 31, 1997. The amendment to the 1994
ESP Plan will increase the number of shares of Common Stock
available for issuance pursuant to the 1994 ESP Plan from 150,000 to
350,000.
Recommendation of the Board of Directors
The Board of Directors recommends that the shareholders vote FOR the
amendment to the 1994 Employee Stock Purchase Plan.
PROPOSAL 3:
AMENDMENT TO THE 1994 STOCK OPTION PLAN
The Board of Directors of the Company adopted an amendment to
the 1994 Stock Option Plan (the "1994 Plan") on March 17, 1998, and
directed that the amendment be submitted to the shareholders of the
Company for their approval. At the Annual Meeting, the shareholders
are being asked to approve an amendment to the Company's existing
1994 Plan to increase the maximum aggregate number of shares which
may be optioned and sold under the Plan from one million one hundred
thousand (1,100,000) to one million two hundred eighty thousand
(1,280,000).
The 1994 Plan is intended to provide additional compensation
and incentive to key employees whose present and potential
contributions are important to the continued success of the Company,
to afford such employees an opportunity to acquire a proprietary
interest in the Company and to enable the Company to continue to
attract and retain the best available talent.
General. The 1994 Plan was adopted on May 9, 1994 and became
effective upon such date. The 1994 Plan provides for the grant of
nonstatutory and incentive stock options to employees of the Company
pursuant to a discretionary grant mechanism.
Administration. The 1994 Plan is designed to work as an incentive
performance plan. Options are granted by the President, with the
approval of the Compensation Committee of the Board of Directors,
typically annually or upon promotions of key individuals.
Eligibility. Only employees or consultants to the Company are
eligible under the 1994 Plan. Currently, eighty five (85) employees
participate in the 1994 Plan.
Terms of Options. The exercise price of options granted to
employees must be 100% of the fair market value of the Tripos Common
Stock on the date of the grant unless the employee owns Common Stock
representing more than 10% of the voting power of all classes of
stock in the Company, any parent or subsidiary, in which case the
exercise price may be no less than 110% of the fair market value of
the Common Stock on the date of the grant. The consideration for
exercising options granted to employees may only consist of cash,
check, previously owned shares of Tripos Common Stock or cashless
exercise. Options granted to the employees have a ten year term
unless the optionee owns stock representing more than 10% of the
voting power of all classes of stock in the Company, any parent or
subsidiary, in which case the term may not exceed five years.
Options granted to the employees vest at the rate of 25% on the
first anniversary of the grant and 1/48th per month for the next 36
months. Outstanding options will expire on the earlier of ten years
from the date of grant or 90 days after the employee receiving the
grant ceases to be employed by the Company.
Adjustment Upon Changes in Capitalization. In the event any change
is made in the Company's capitalization, such as a stock split or
stock dividend, which results in a greater or lesser number of
shares of Tripos Common Stock, appropriate adjustment shall be made
in the option price and in the number of shares subject to the
options. In the event of the proposed dissolution or liquidation of
the Company, to the extent that an option or right has not been
previously exercised, it will terminate immediately prior to the
consummation of such proposed action. In the event of the merger or
sale of substantially all of the assets of the Company, all
outstanding options shall be assumed or substituted by the successor
corporation, or if they are not assumed or substituted, they shall
become fully vested unless the Board of Directors determines
otherwise.
Amendment and Termination. The Board of Directors may amend the
1994 Plan at any time or may terminate it without approval of the
shareholders. However, no such action by the Board of Directors may
unilaterally alter or impair any option previously granted under the
1994 Plan without the consent of the optionee. In any event, the
1994 Plan will terminate in May 2004.
Federal Income Tax Implications. All options granted under the 1994
Plan are granted at the market price on the date of the grant. As a
result, no Federal income tax is due upon the receipt of the grant
by the employee. Federal taxes will apply at the time the employee
recognizes a gain from the exercise and sale of the underlying
shares. The Company may be entitled to a deduction equal to the
amount of taxable gain recognized by the optionee.
Reserve - Number of Shares Available. One million one hundred
thousand shares of Common Stock are currently reserved for issuance
pursuant to the 1994 Plan. As of December 31, 1997, options to
purchase 895,207 shares of Common Stock had been granted, of which,
options for 199,126 shares had been exercised. Without taking into
account this proposed amendment to increase the maximum aggregate
number of shares, 204,793 shares remained available for future
grants as of December 31, 1997. The amendment to the 1994 Plan will
increase the number of shares of Common Stock available for issuance
pursuant to the 1994 Plan from 1,100,000 to 1,280,000.
Recommendation of the Board of Directors
The Board of Directors recommends that the shareholders vote FOR the
amendment to the 1994 Stock Option Plan. As detailed in Chairman
Ralph Lobdell's introductory letter to shareholders, the Board of
Directors has resolved that, upon approval of this proposal, they
will reduce the number of shares reserved under the 1994 Director
Stock Option Plan and the 1996 Director Compensation Plan to offset
this increase in the 1994 Stock Option Plan reserve.
OWNERSHIP OF SECURITIES
The following table sets forth, as of the Record Date, the name
of each person who owns of record or is known by the Company to own
beneficially more than 5% of the outstanding shares of Common Stock,
the number of shares owned by all directors, the executive officers
named in the Summary Compensation Table (the "Named Executive
Officers") and all directors and executive officers as a group, and
the percentage of the outstanding shares represented thereby. The
Company believes that each of the directors and executive officers
has sole voting and investment power over such shares of Common
Stock.
Holders of More than 5%
Amount and
Nature of (1)
Name and Address of Beneficial Percent of
Beneficial Owner Ownership Class
J.P. Morgan & Co., Inc. 305,300 (2) 9.6%
60 Wall Street 360,502 (3)
New York, New York 10260
State of Wisconsin Investment 278,334 (2) 8.8%
Board 278,334 (3)
P.O. Box 7842
Madison, Wisconsin 53707
Vanguard/PRIMECAP Fund, Inc. 100,000(2) 3.1%
P.O. Box 2600 100,000(3)
Valley Forge, Pennsylvania
19482
FMR Corporation 76,600 (2) 2.4%
82 Devonshire 120,700 (3)
Boston, Massachusetts 02109
Directors and Named Executive Officers:
Amount and
Nature of (1)
Name of Beneficial Owner Beneficial Percent of
Ownership Class
Ralph S. Lobdell 48,775 1.5%
Alfred Alberts 2,770 *
Stewart Carrell 24,426 *
Gary Meredith 16,301 *
John P. McAlister III 126,029 4.0%
Ferid Murad 3,486 *
Martin Bohl 8,230 *
Richard D. Cramer III 46,662 1.5%
W. Ward Davidson III 28,498 *
Martin Stuart 13,570 *
All directors and named
executive officers as
a group (10 persons) 318,747 10.0%
)
* Less than one percent of the outstanding Common Stock.
(1) Percentage of beneficial ownership is calculated assuming
3,178,959 shares of Common Stock were outstanding on April 3, 1998.
This percentage also includes Common Stock of which such individual
or entity has the right to acquire beneficial ownership within sixty
days of April 3, 1998, including but not limited to the exercise of
an option; however, such Common Stock shall not be deemed
outstanding for the purpose of computing the percentage owned by any
other individual or entity. Such calculation is required by Rule
13d-3(d)(1)(i) under the Securities Exchange Act of 1934.
(2) This information is based on Schedules 13G filed with the
Securities and Exchange Commission (the "SEC"). The reporting
entity attests that they have sole voting and investment power over
their reported shares of Common Stock.
(3) This information is based on Schedules 13G filed with the SEC.
The reporting entity attests that they have sole dispositive power
over their reported shares of Common Stock.
MANAGEMENT
Set forth below is certain information with respect to additional
executive officers and key employees of the Company not listed in
"Election of Directors":
Name Age Title
Martin Bohl 55 Vice President, European Software Operations
Anthony L. Cooper 54 Managing Director, Tripos Receptor Research Ltd.
Richard D. Cramer, III 56 Vice President, Scientific Activities
W. Ward Davidson, III 57 Vice President, Sales
Robert C. Glen 44 Vice President, ADS Research US and Asia
Peter Hecht 35 Vice President, ADS Research Europe
Scott G. Hutton 37 Vice President and General Manager,
Discovery Software
Colleen A. Martin 37 Vice President, Chief Financial Officer,
and Secretary
James H. Munn 45 European Controller
David E. Patterson 46 Senior Fellow
Gregory B. Smith 38 Fellow
Martin Stuart 41 Vice President and General Manager, ADS
Products
Paul L. Weber 39 Vice President, Software Consulting and
Web Technology
Mary P. Woodward 52 Vice President, Strategic Development
John D. Yingling 41 U. S. Controller and Corporate Treasurer
Dr. Martin Bohl obtained his training at the Friedrich Shiller
University of Jena in Germany, receiving the Diplom-Chemiker degree
in 1974 and a Ph.D. in theoretical chemistry in 1979. After three
years of research and management at the Jenaer Glaswerk Schott &
Gen., Dr. Bohl joined the Academy of Sciences, Central Institute of
Microbiology and Experimental Therapy in Jena. During an eight-year
period, Dr. Bohl's major interests included structure-activity
relationships of steroids. Dr. Bohl joined Tripos in 1989 as an
Application and Sales Support Scientist. Other positions he has
held include: Manager of the Munich Sales Office, European Technical
Manager, and General Manager for Central and Southern Europe. Dr.
Bohl was promoted to Vice President of European Software Operations
in October 1996.
Dr. Anthony L. Cooper received his B.S. degree in chemistry
from Imperial College, London. His Ph.D. project involved studies
of growth regulation in micro-organisms and was carried out in the
Biochemistry Department of Imperial College. At Glaxo Research Ltd,
he managed part of the Natural Products Discovery group focused on
the identification of new antibiotics. At Maybridge Chemical
Company Ltd. he set up and managed a biochemical research screening
group and also worked in synthetic chemistry programs. In 1990, Dr.
Cooper led a buy-out of this biochemical section and founded
Receptor Research Ltd., of which he was Managing Director. Initial
activities of this company involved receptor binding studies. Later
research led to solid phase synthesis and other novel techniques for
the production of drug-like compounds. Receptor Research was
acquired by Tripos in November 1997 and renamed Tripos Receptor
Research Ltd. Dr. Cooper continues to direct the company and its
research programs.
Dr. Richard D. Cramer, III received his A.B. degree from
Harvard University in Chemistry and Physics in 1963, and his Ph.D.
in Physical Organic Chemistry from the Massachusetts Institute of
Technology in 1967. Dr. Cramer worked for Polaroid Corporation from
1967 through 1969. This was followed by a two year fellowship as a
senior member of the computer synthesis group at Harvard University
under direction of Dr. E. J. Corey. Dr. Cramer joined Smith Kline &
French Laboratories in 1971. He was awarded a succession of titles
culminating in Associate Director and Fellow, Medicinal Chemistry.
Dr. Cramer joined Tripos in 1983 as Vice President of New Products
where he formulated the techniques of Comparative Molecular
Field Analysis (CoMFA), a patented software technology, at Tripos.
Dr. Cramer was named Vice President of Scientific Activities in
1988. Dr. Cramer also founded and currently serves on the Board of
Directors of STATS, Inc.
Mr. W. Ward Davidson, III obtained his B.S. in Psychology from
the University of Maryland in 1966, and is a graduate of the
Management Development Program at Northeastern University. Mr.
Davidson was a Systems Analyst and a Marketing Representative for
IBM from 1966 through 1972. In 1972, he joined Digital Equipment
Corporation, where he spent 12 years in Senior Sales Management and
Operations Management. From 1984 until 1992 Mr. Davidson was Vice
President, Sales for Culler Scientific, a mini-super computer
manufacturer and Vice President, Sales for Wavefront Technologies, a
3-D animation software company. Mr. Davidson joined Tripos in
January 1992, as Vice President of Sales.
Dr. Robert C. Glen received his B.S. in Chemistry from the
University of Paisley, Scotland in 1978 and his Ph.D. in Chemistry
and X-ray Crystallography from the University of Stirling in 1982.
Dr. Glen was a Senior Physical Chemist with responsibility for
computer-aided molecular design (CAMD) at the Wellcome Research
Laboratories, in London, from 1982 to 1987. After a short period at
ICI Pharmaceuticals, Dr. Glen returned to Wellcome as a Senior
Research Scientist responsible for CAMD, Protein Crystallography,
measured physico-chemical properties and Quantitative Structure
Activity Relationships. Dr. Glen has published over 70 scientific
papers in drug discovery and holds a number of patents on drugs in
the clinic, including Zomig (Zolmitriptan) for the treatment of
migraine. Dr. Glen joined Tripos in June 1995 as Senior Director of
Science. In February 1996, Dr. Glen was promoted to Senior Director
of Collaborative Discovery Services and to Vice President
Collaborative Discovery Services in August 1996. He was named Vice
President, ADS Research US and Asia in November 1997.
Dr. Peter Hecht received a degree in pharmacy from Vienna
University, Austria in 1987. From 1987 to 1990 he worked at the
Sandoz Research Institute in Vienna on the design of anti-fungal
compounds as part of his Ph.D. thesis, which he completed in 1990.
From 1990 to 1992 he served as a post-doctoral researcher at Tripos
St. Louis, funded initially by Sandoz then by the Erwin Schrodinger
scholarship. From 1992 to 1995 he worked at the Sandoz Research
Institute in Vienna as head of the local computational chemistry
group. In 1995, he joined Tripos in Munich and has been
establishing the drug discovery efforts of Tripos as well as the
consultancy service business in Europe. Dr. Hecht was promoted to
Vice President, ADS Research Europe, which includes management of
Tripos Receptor Research, in November 1997.
Mr. Scott G. Hutton received his Bachelor of Science degree in
Chemistry from the University of Missouri, Columbia, in 1984. Mr.
Hutton worked as a Chemist at Monsanto Corporation from 1985 to 1988
and subsequently as a Technical Sales and Service Representative at
the Waters Division of Millipore from 1988 to 1990. He joined
Tripos as an Account Executive in 1990 and was promoted to Regional
Sales Manager in 1992. In 1994, Mr. Hutton was named U.S. Sales
Manager and promoted to Vice President of Marketing in August 1996.
In August 1997, he was promoted to Vice President and General
Manager, Discovery Software.
Ms. Colleen A. Martin received her Bachelor of Science degree
in Accounting from the University of Missouri, St. Louis, in 1982
and has attended Northwestern University's J.L. Kellogg Graduate
School of Management Executive Programs. Ms. Martin, a Certified
Public Accountant, worked on the audit staff for KPMG Peat Marwick
LLP from 1982 through 1984 and worked for Continental Cablevision as
District Controller from 1984 through 1989. Ms. Martin joined
Tripos in June 1989 as Controller and was promoted to Vice President
and Chief Financial Officer in April 1995.
Mr. James H. Munn received both a B.A. in Biology in 1974 and a
M.S. in Accounting in 1978 from California State University at
Northridge. Mr. Munn, a Certified Public Accountant, worked on the
audit staff of Price Waterhouse from 1979 through 1980. In 1980 he
joined Tiger International as a Senior Financial Analyst and from
1983 through 1985 he was employed at Loral EOS as Supervisor of
Accounting Operations. From 1985 to 1995, Mr. Munn held various
financial management positions at Radio Free Europe/Radio Liberty,
Inc., Munich, Germany. Mr. Munn joined Tripos in July 1995 as
European Controller.
Mr. David E. Patterson received his B.S. in Applied
Mathematics and Computer Science in 1974 and an M.S. in Systems
Science in 1980 from Washington University in St. Louis. Mr.
Patterson worked as a Senior Research Scientist with the Center for
Air Pollution Impact and Trend Analysis from 1976 until joining
Tripos in 1986. His positions have included Product Manager for
QSAR and Senior Director of New Products prior to being promoted to
Senior Fellow in March 1996.
Mr. Gregory B. Smith received his B.S. and M.S. degrees in
Computer Science from Washington University in 1983. As part of his
graduate thesis, he worked on the team which developed the first
SYBYL/VAX prototype under contract to Tripos. Mr. Smith joined
Tripos in 1986 as a member of the technical staff where he was
responsible for all graphics, systems, and quality control related
activities. Mr. Smith was named Director of New Technology in 1990
and in 1994 was named Vice President of Technology and Quality
Standards. In 1996 he became a Fellow, with responsibility for the
corporate databases.
Dr. Martin Stuart received his Bachelor of Science in Physics
and Mathematics from the Council for National Academic Awards in
London in 1982. He was awarded a Ph.D. in the Physics of Thin Films
from the University College of North Wales in 1986. Dr. Stuart is a
member of the Institute of Physics and is a Chartered Physicist.
Dr. Stuart joined 3M Company in 1974 and held several scientific
positions, and ultimately, Senior Research Scientist. His work
ranged from optimization of photographic development systems to the
design of highly efficient drug delivery systems. Dr. Stuart joined
Tripos in 1987 to support its products in the United Kingdom and
Scandinavia. He was promoted to Manager of Asia Pacific Sales in
1993. Dr. Stuart was promoted to Vice President of the Americas and
Asia Pacific Sales in February 1996. In November 1997, he was
promoted to Vice President and General Manager, ADS Products.
Dr. Paul L. Weber obtained his Bachelor of Science degrees in
Chemistry and Honors Biology from the University of Illinois, Urbana
in 1981. He was awarded his Ph.D. in Biochemistry from the
University of Washington, Seattle in 1985. Prior to joining Tripos,
Dr. Weber was employed as Director of Scientific Applications at
Hare Research, Inc. where he was involved with business development,
customer support, sales and program documentation, development and
debugging. Dr. Weber joined Tripos in January 1991 as the NMR
Project Manager. In January 1995, Dr. Weber was promoted to Senior
Director, Product Development and in November 1995 to Vice
President, Product Development. In 1997, Dr. Weber initiated the
Software Consulting Services effort and was named Vice President,
Software Consulting Services & Web Technology.
Ms. Mary P. Woodward obtained her B.A. in English from
Creighton University in 1967, her M.A. in English from the
University of Kansas in 1969, and has taken courses in high
technology, international marketing and strategic alliance offered
in the Berkeley, Stanford, and Northwestern J.L. Kellogg Graduate
School of Management Executive Programs. Since joining Tripos in
1983, Ms. Woodward has held a series of sales, legal, and marketing
administration positions, and is currently Vice President, Strategic
Development.
Mr. John D. Yingling received his Bachelor of Science degree
in Accounting from the University of Missouri, St. Louis, in 1979
and holds certificates as a Certified Public Accountant and a
Certified Cash Manager. Mr. Yingling worked for Storz Instrument
Company, a micro-surgical instrument manufacturer, in a series of
accounting positions from 1979 to 1983 and for Clayton Brokerage
Company from 1983 to 1985. This was followed by several accounting,
tax and treasury positions at Venture Stores, Inc. from 1985 to
1995. Mr. Yingling joined Tripos in May 1995 as U.S. Controller and
assumed the Corporate Treasurer responsibilities in March 1997.
EXECUTIVE COMPENSATION AND RELATED INFORMATION
Summary of Cash and Certain Other Compensation
The following table sets forth the compensation earned by the
Named Executive Officers for services rendered in all capacities to
the Company and its subsidiaries for the fiscal years ended December
31, 1997, December 31, 1996, and December 31, 1995.
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation
Compensation Awards
Securities All Other
LTIP Underlying Compensation
Name & Principal Year Salary Bonus Payouts Options
Position ($) (1) ($) (2) $ (3) # (4) ($) (5)
John P. McAlister III 1997 170,833 100,000 - 12,000 10,902
President and 1996 150,000 - 17,949 15,000 4,500
Chief Executive 1995 150,000 20,000 - 15,000 3,465
Officer
W. Ward Davidson III 1997 120,000 101,580 - 5,000 30,757
Vice President, 1996 120,000 76,881 - - 8,750
Sales 1995 124,932 70,068 - 2,500 7,723
Richard D. Cramer III 1997 115,000 38,669 - 5,000 2,588
Vice President, 1996 115,000 - 4,711 5,000 -
Scientific 1995 106,800 8,000 - 5,000 2,772
Activities
Martin Stuart 1997# 89,167 85,222 - 22,500 15,027
Vice President
& General Manager,
ADS Products
Martin Bohl 1997# 100,000 67,465 - 5,000 15,972
Vice President,
European Software
Operations
Mark W. Schwartz 1997+ 79,827 76,847 - - 10,203
Vice President, 1996 115,000 27,511 - 2,500 4,275
Accelerated 1995 106,169 12,000 - 22,500 2,279
Discovery Services
(1) Includes salary deferred under the Company's 401(k) Plan.
(2) Bonuses earned were based on an allocation of a discretionary
bonus pool. There were no bonuses earned through the discretionary
bonus pool in 1995. Discretionary bonuses were accrued in fiscal
1994 and paid out in 1995. Bonuses for fiscal years 1994, 1995 and
1996 for Mr. Davidson were earned based on commissions payable upon
the Company's achievement of targeted revenue levels. Bonuses for
1996 and 1997 for Mr. Schwartz were earned based on commissions
payable upon the Company's achievement of targeted revenue levels.
The 1997 bonus paid to Mr. Cramer included a commission related to
achieving targeted revenue goals in 1996.
(3) LTIP Payouts represent the gain on the sale of stock options
exercised under the Evans & Sutherland Computer Corporation 1985
Stock Option Plan for Key Employees granted and vested prior to the
distribution of the Company's stock by Evans & Sutherland Computer
Corporation ("E&S") to its shareholders on June 1, 1994, the
("Distribution").
(4) The number of shares underlying option grants include options
granted to Tripos employees under the 1994 Stock Option Plan.
(5) "All Other Compensation" includes a matching contribution to the
Company's 401(k) Plan. It also includes a car allowance for Mr.
Davidson, Mr. Stuart and Mr. Bohl.
+ Mr. Schwartz's 1997 compensation reflects the period up until his
resignation from the Company on August 20, 1997.
# Mr. Stuart and Mr. Bohl became named executive officers of the
Company during 1997.
Stock Options
The following table contains information concerning the grant of
stock options made to the Named Executive Officers in 1997.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
% of
Total Potential
Number Options/ Realizable
of SARs Value at Assumed
Securities Granted to Annual Rates of
Underlying Employees Exercise Stock Price
Options/ in Price Appreciation for
SARs Fiscal Per Expiration Option Term
Name Granted Year Share(2) Date 5% (3) 10% (3)
John P.
McAlister III 12,000(1) 6.8% $12.50 7/29/07 $94,334 $239,061
Richard D.
Cramer III 5,000(1) 2.8% $12.50 7/29/07 $39,306 $99,609
W. Ward
Davidson III 5,000(1) 2.8% $12.50 7/29/07 $39,306 $99,609
Martin Bohl 5,000(1) 2.8% $12.50 7/29/07 $39,306 $99,609
Martin Stuart 10,000(1) 5.7% $12.50 7/29/07 $78,612 $199,218
12,500(1) 7.1% $13.69 12/22/07 $107,600 $272,679
(1) The options granted under the 1994 Stock Option Plan become
exercisable as to 25% of the option shares on the first anniversary
of the grant date and 1/48th per month for three years thereafter.
The options have a 10-year term, subject to earlier termination in
the event of the optionee's cessation of service with the Company.
(2) The exercise price of each option may be paid in cash, in
shares of Common Stock valued at fair market value on the exercise
date or through a cashless exercise procedure involving a same-day
sale of the purchased shares.
(3) The five percent (5%) and ten percent (10%) assumed annual
rates of compounded stock price appreciation are mandated by the
rules of the Securities and Exchange Commission. There is no
assurance provided to any executive officer or any other holder of
the Company's securities that the actual stock price appreciation
over the 10-year option term will be at the assumed 5% or 10% levels
or at any other defined level.
Option Exercises and Holdings
The following table provides information with respect to the
Named Executive Officers concerning unexercised options held as of
the end of the 1997 fiscal year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Shares Number of Securities
Acquired Underlying Value of Unexercised
on Value Unexercised Options at in-the-Money Options
Name Exercise Realized Year-End 1997 at Fiscal Year-End
Un- Un-
# $ Exercisable exercisable Exercisable exercisable
John P.
McAlister III 0 $0 104,376 37,624 $1,003,916 (1) $261,585
Richard D.
Cramer III 9,900 $108,900 37,642 16,458 $348,749 (1) $108,839
W. Ward
Davidson III 26,161 $119,030 6,667 10,572 $63,232 (1) $62,264
Martin Bohl 0 $0 6,417 13,583 $38,829 (1) $40,421
Martin Stuart 0 $0 7,355 30,145 $56,360 (1) $83,984
Mark W. 24,899 $102,811 0 0 $0 (1) $0
Schwartz
(1) Based on the fair market value of Tripos Common shares on
December 31, 1997 ($14.625 per share).
REPORT OF THE COMPENSATION COMMITTEE
The following is the Report of the Compensation Committee of
the Board of Directors ("the Committee"), describing the
compensation policies and rationale applicable to the Company's
executive officers with respect to the compensation paid to such
executive officers for the year ended December 31, 1997. The
Compensation Committee of the Board of Directors is responsible for
setting the general compensation policies of the Company, which
include specific compensation levels for executive officers, bonus
pools, and the 1994 Tripos Stock Option Plan. These programs and
the Committee's compensation philosophy are designed to attract and
retain key executives by providing appropriate incentives linked to
Company performance. The Committee is composed of all non-employee
Directors.
Compensation Philosophy
The Compensation Committee evaluates the performance of the
Chief Executive Officer and other officers of Tripos annually based
upon financial and non-financial performance goals which contribute
to the profitability of the Company. The Compensation Committee has
approved compensation policies that seek to enhance the linkage of
compensation to Company objectives and overall company performance.
The executive officers' compensation package is comprised of (i)
base salary, (ii) annual incentive opportunity tied to achievement
of Operating Income and other goals, and (iii) long-term incentives
established to align management with shareholders, in the form of
stock options. The Chief Executive Officer recommends annual
increases for other executives for review and approval by the Board.
Base Salaries -- Individual salary increases are
likely to be based on a variety of factors including, but
not limited to: competitive salary levels, individual job
responsibilities, results versus target objectives, and
Company financial performance.
Annual Incentives -- Effective for fiscal 1995 and
later years, the Company's officers were eligible to
participate in an annual incentive compensation plan.
Annual incentive targets are set as a percent of salary
for each officer based on attainment of financial goals
including Operating Income and individual performance
goals. Weighting of goals varies by participant. Over
120% of the Operating Income goal was achieved in fiscal
1996, therefore a payout related to financial goals was
made in early 1997. No payout was made in 1996 for fiscal
1995 nor in 1998 for fiscal 1997.
Long-term Incentives -- The Company has adopted the
1994 Tripos Stock Option Plan to attract and retain the
best available personnel for positions of substantial
responsibility, to provide additional incentive to
employees, and to promote the success of the Company's
business. Awards under the 1994 Tripos Stock Option Plan
are designed to give the recipient a significant equity
stake in the Company and thereby closely align their
interests with those of the Company's shareholders. In
fiscal year 1994, the Board and Committee granted stock
options to officers and other employees under the 1994
Tripos Stock Option Plan subsequent to the distribution of
the Company's stock by Evans & Sutherland Computer
Corporation ("E&S") to its shareholders on June 1, 1994,
the ("Distribution"). The Committee has established
certain general guidelines in making option grants to
executive officers in an attempt to target a fixed number
of unvested option shares based upon the individual's
position with the Company and his or her existing holdings
of unvested options. The number of shares granted to each
executive officer in fiscal years 1997, 1996 and 1995 was
based upon the officer's tenure, level of responsibility,
and relative position in the Company. However, the
Committee does not adhere strictly to these guidelines and
will occasionally vary the size of the option grant made
to each executive officer as circumstances warrant.
Chief Executive Officer Compensation
The Chairman and other members of the Compensation Committee
meet semi-annually with Dr. McAlister to discuss his personal
performance during the fiscal year. The Committee's objective is to
have Dr. McAlister's base salary keep pace with the salaries being
paid to similarly situated CEOs in the software and high technology
industries, and reflect individual performance and achievement of
Tripos corporate goals. Dr. McAlister's base salary is reviewed
annually by the Compensation Committee based on these discussions
and other criteria mentioned above.
Notwithstanding anything to the contrary set forth in any of
the Company's previous filing under the Securities Exchange Act of
1934 that might incorporate future filings, including this Proxy
Statement, in whole or in part, the foregoing report and the
Performance Graph which follows shall not be deemed to be
incorporated by reference into any such filing.
Compensation Committee
Mr. Ralph S. Lobdell, Chairman
Mr. Stewart Carrell
Mr. Gary Meredith
Dr. Ferid Murad
Mr. Alfred Alberts
COMPARISON OF SHAREHOLDER RETURN
Indexed Comparison of Total Return since Distribution
Total Return Index for the NASDAQ National Market and
Total Return for NASDAQ Pharmaceutical Companies
Performance graph showing data from chart below
6/1/94 12/31/94 12/31/95 12/31/96 12/31/97
NASDAQ 100.00 103.12 145.83 179.39 220.22
Pharmaceuticals 100.00 97.46 178.29 178.81 184.77
Tripos, Inc. 100.00 86.36 154.55 213.64 265.91
Note: Assumes $100 invested on 6/1/94 in the Company, the total
return index for the NASDAQ National Market and the total return
index for NASDAQ Pharmaceutical Companies. Assumes reinvestment of
dividends on a daily basis.
The graph covers the period from June 1, 1994, the date the
Company's distribution of Common Stock to holders of record of the
Common Stock of E&S commenced, through the fiscal year ended
December 31, 1997. The graph assumes that $100 was invested on June
1, 1994 in the Company's Common Stock and in each index and that all
dividends were reinvested. No cash dividends have been declared on
the Company's Common Stock. Shareholder returns over the indicated
period should not be considered indicative of future shareholder
returns.
ANNUAL REPORT
A copy of the Annual Report of the Company for the fiscal year
ended December 31, 1997 has been mailed concurrently with this Proxy
Statement to all shareholders entitled to notice of and to vote at
the Annual Meeting. The Company filed a Form 10-K with the SEC.
Shareholders may obtain a copy of the Form 10-K without charge, by
writing to Colleen Martin/Corporate Secretary, at the Company's
executive offices at 1699 South Hanley Road, St. Louis, Missouri
63144.
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young LLP, independent certified public accountants,
has been selected by the Board of Directors as the firm to audit the
accounts and to report on the financial statements of the Company
for the current fiscal year ending December 31, 1998. Neither Ernst
& Young LLP, nor any of its members has any financial interest,
direct or indirect, in the Company, nor has Ernst & Young LLP, nor
any of its members ever been connected with the Company as promoter,
underwriter, voting trustee, director, officer or employee. It is
anticipated that a representative of Ernst & Young LLP will attend
the meeting and shall be available to respond to appropriate
questions. It is not anticipated that the representative from Ernst
& Young LLP will make any statement or presentation.
OTHER MATTERS
The Board of Directors does not know of any matters to be
presented at this Annual Meeting other than those set forth herein
and in the Notice accompanying this Proxy Statement.
TRIPOS, INC.
Colleen A. Martin
Corporate Secretary
April 7, 1998
St. Louis, Missouri
Tripos, Inc.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
April 10, 1998
Dear Shareholder:
The undersigned hereby appoints Colleen A. Martin and John D.
Yingling as proxies, each with full power to appoint her/his
substitute, and hereby authorizes them to vote all the shares of
Common Stock of Tripos, Inc. held of record by the undersigned at the
annual meeting of shareholders to be held on May 7, 1998, at 1:00
p.m., local time, at the World Trade Center St. Louis, 121 S.
Meramec, 10th Floor, Clayton, Missouri, 63105, or at any adjournment
thereof.: (1) as hereinafter specified upon the proposals listed on
the reverse and as more particularly described in the Company's proxy
statement, receipt of which is hereby acknowledged; and (2) in their
discretion upon such other matters as may properly come before the
Annual Meeting of Shareholders.
PLEASE DETACH AND MARK THE PROXY, SIGN IT ON THE REVERSE SIDE,
AND RETURN IT IN THE ENVELOPE PROVIDED BEFORE THE BEFORE THE
MEETING
- ---------------------------------------------------------------------
(Detach Proxy Form Here)
A VOTE FOR THE FOLLOWING PROPOSALS IS RECOMMENDED BY THE BOARD.
1. Election of Directors
FOR ( ) all nominees listed below WITHHOLD AUTHORITY ( )
(except as marked to the contrary below) to vote for all
nominees listed below
(INSTRUCTION: To withhold authority to vote for any individual
nominee, strike a line through the nominee's name in the list below)
Ralph Lobdell, Alfred Alberts, Stewart Carrell, John McAlister,
Gary Meredith, Ferid Murad
2. To Amend the 1994 Employee Stock Purchase Plan to increase the
number of shares reserved thereunder from 150,000 to 350,000 shares;
FOR ( ) AGAINST ( ) ABSTAIN ( )
3. To amend the 1994 Stock Option Plan to increase the number of
shares reserved thereunder from 1,100,000 to 1,280,000 shares;
FOR ( ) AGAINST ( ) ABSTAIN ( )
4. In their discretion, the proxies are authorized to vote on such
other business as may properly come before this meeting.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3.
Dated: _______________, 1998
______________________________
Signature *
______________________________
Signature, if held jointly *
*Please sign exactly as name
appears on this form. When
signing as attorney, executor,
administrator, trustee, or
guardian, please give full title
as such. If a corporation, please
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