def14a
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No.__)
Filed by the Registrantý
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))
ý Definitive Proxy Statement
¨ Definitive Additional Materials
¨ Soliciting Material Pursuant to § 240.14a-12
MICROMET, 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)
ý No fee required.
¨ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Title of each class of securities to which transaction applies: |
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Aggregate number of securities to which transaction applies: |
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was
determined): |
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Proposed maximum aggregate value of transaction: |
¨ Fee paid previously with preliminary materials.
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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. |
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Amount Previously Paid: |
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Form, Schedule or Registration Statement No.: |
MICROMET,
INC.
6707 Democracy Boulevard
Suite 505
Bethesda, Maryland 20817
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
To Be Held On June 28,
2007
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders of Micromet, Inc., a Delaware corporation (the
Company). The meeting will be held on Thursday,
June 28, 2007 at 1:00 p.m. local time at the Marriott
Suites Bethesda, 6711 Democracy Boulevard, Bethesda, Maryland
for the following purposes:
1. To elect three Class I directors to hold office
until the 2010 Annual Meeting of Stockholders.
2. To ratify the selection by the audit committee of the
board of directors of Ernst & Young AG WPG as
independent auditors of the Company for its fiscal year ending
December 31, 2007.
3. To conduct any other business properly brought before
the meeting.
These items of business are more fully described in the Proxy
Statement accompanying this Notice.
The record date for the Annual Meeting is April 30, 2007.
Only stockholders of record at the close of business on that
date may vote at the meeting or any adjournment thereof.
By Order of the Board of Directors
Matthias Alder
Secretary
Bethesda, Maryland
May 10, 2007
You are cordially invited to attend the meeting in person.
Whether or not you expect to attend the meeting, please
complete, date, sign and return the enclosed proxy, or vote over
the telephone or the Internet as instructed in these materials,
as promptly as possible in order to ensure your representation
at the meeting. A return envelope (which is postage prepaid if
mailed in the United States) is enclosed for your convenience.
Even if you have voted by proxy, you may still vote in person if
you attend the meeting. Please note, however, that if your
shares are held of record by a broker, bank or other nominee and
you wish to vote at the meeting, you must obtain a proxy issued
in your name from that record holder.
TABLE OF CONTENTS
MICROMET,
INC.
6707 Democracy Boulevard
Suite 505
Bethesda, Maryland 20817
PROXY
STATEMENT
FOR THE
2007 ANNUAL MEETING OF STOCKHOLDERS
June 28, 2007
QUESTIONS
AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING
Why am I
receiving these materials?
We have sent you this proxy statement and the enclosed proxy
card because the board of directors of Micromet, Inc. (sometimes
referred to as the Company or Micromet)
is soliciting your proxy to vote at the 2007 Annual Meeting of
Stockholders. You are invited to attend the annual meeting to
vote on the proposals described in this proxy statement.
However, you do not need to attend the meeting to vote your
shares. Instead, you may simply complete, sign and return the
enclosed proxy card, or follow the instructions contained in
these materials to submit your proxy over the telephone or on
the Internet.
The Company intends to mail this proxy statement and
accompanying proxy card on or about May 15, 2007 to all
stockholders of record entitled to vote at the annual meeting.
Who can
vote at the annual meeting?
Only stockholders of record at the close of business on
April 30, 2007 will be entitled to vote at the annual
meeting. On this record date, there were 31,504,065 shares
of common stock outstanding and entitled to vote.
Stockholder
of Record: Shares Registered in Your Name
If on April 30, 2007 your shares were registered directly
in your name with Micromets transfer agent, Mellon
Investor Services, then you are a stockholder of record. As a
stockholder of record, you may vote in person at the meeting or
vote by proxy. Whether or not you plan to attend the meeting, we
urge you to fill out and return the enclosed proxy card or vote
by proxy over the telephone or on the Internet as instructed in
these materials to ensure your vote is counted.
Beneficial
Owner: Shares Registered in the Name of a Broker or
Bank
If on April 30, 2007 your shares were held, not in your
name, but rather in the name of a brokerage firm, bank, dealer,
or other similar organization, then you are the beneficial owner
of shares held in street name and these proxy
materials are being forwarded to you by that organization. The
organization holding your account is considered to be the
stockholder of record for purposes of voting at the annual
meeting. As a beneficial owner, you have the right to direct
your broker or other agent regarding how to vote the shares in
your account. You are also invited to attend the annual meeting.
However, since you are not the stockholder of record, you may
not vote your shares in person at the meeting unless you request
and obtain a valid proxy from your broker or other agent.
What am I
voting on?
There are two matters scheduled for a vote:
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Election of three Class I directors to hold office until
the 2010 Annual Meeting of Stockholders; and
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To ratify the selection by the audit committee of the board of
directors of Ernst & Young AG WPG as independent
auditors of the Company for its fiscal year ending
December 31, 2007.
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How do I
vote?
You may either vote For all the nominees to the
board of directors or you may Withhold your vote for
any nominee you specify. For each of the other matters to be
voted on, you may vote For or Against or
abstain from voting. The procedures for voting are fairly simple:
Stockholder
of Record: Shares Registered in Your Name
If you are a stockholder of record, you may vote in person at
the annual meeting, vote by proxy using the enclosed proxy card,
vote by proxy over the telephone, or vote by proxy on the
Internet. Whether or not you plan to attend the meeting, we urge
you to vote by proxy to ensure your vote is counted. You may
still attend the meeting and vote in person even if you have
already voted by proxy.
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To vote in person, come to the annual meeting and we will give
you a ballot when you arrive.
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To vote using the proxy card, simply complete, sign and date the
enclosed proxy card and return it promptly in the envelope
provided. If you return your signed proxy card to us before the
annual meeting, we will vote your shares as you direct.
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To vote over the telephone, dial toll-free
1-800-454-8683
using a touch-tone phone and follow the recorded instructions.
You will be asked to provide the company number and control
number from the enclosed proxy card. Your vote must be received
by 11:59 pm, June 27, 2007 to be counted.
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To vote on the Internet, go to http://www.proxyvote.com to
complete an electronic proxy card. You will be asked to provide
the company number and control number from the enclosed proxy
card. Your vote must be received by 11:59 pm, June 27, 2007
to be counted.
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Beneficial
Owner: Shares Registered in the Name of Broker or
Bank
If you are a beneficial owner of shares registered in the name
of your broker, bank, or other agent, you should have received a
proxy card and voting instructions with these proxy materials
from that organization rather than from Micromet. Simply
complete and mail the proxy card to ensure that your vote is
counted. Alternatively, you may vote by telephone or over the
Internet as instructed by your broker or bank. To vote in person
at the annual meeting, you must obtain a valid proxy from your
broker, bank, or other agent. Follow the instructions from your
broker or bank included with these proxy materials, or contact
your broker or bank to request a proxy form.
We provide Internet proxy voting to allow you to vote your
shares on-line, with procedures designed to ensure the
authenticity and correctness of your proxy vote instructions.
However, please be aware that you must bear any costs associated
with your Internet access, such as usage charges from Internet
access providers and telephone companies.
How many
votes do I have?
On each matter to be voted upon, you have one vote for each
share of common stock you own as of April 30, 2007.
What if I
return a proxy card but do not make specific choices?
If you return a signed and dated proxy card without marking any
voting selections, your shares will be voted For the
election of all three nominees for director, and For
the ratification of Ernst & Young AG WPG as the
Companys independent auditors for the fiscal year ending
December 31, 2007. If any other matter is properly
presented at the meeting, your proxyholder (one of the
individuals named on your proxy card) will vote your shares
using his or her best judgment.
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Who is
paying for this proxy solicitation?
We will pay for the entire cost of soliciting proxies. In
addition to these mailed proxy materials, our directors and
employees may also solicit proxies in person, by telephone, or
by other means of communication. Directors and employees will
not be paid any additional compensation for soliciting proxies.
We may reimburse brokerage firms, banks and other agents for the
cost of forwarding proxy materials to beneficial owners.
What does
it mean if I receive more than one proxy card?
If you receive more than one proxy card, your shares are
registered in more than one name or are registered in different
accounts. Please complete, sign and return each proxy
card to ensure that all of your shares are voted.
Can I
change my vote after submitting my proxy?
Yes. You can revoke your proxy at any time before the final vote
at the meeting. If you are the record holder of your shares, you
may revoke your proxy in any one of three ways:
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You may submit another properly completed proxy card with a
later date.
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You may send a timely written notice that you are revoking your
proxy to Micromets corporate secretary at 6707 Democracy
Boulevard, Suite 505, Bethesda, Maryland 20817.
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You may attend the annual meeting and vote in person. Simply
attending the meeting will not, by itself, revoke your proxy.
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If your shares are held by your broker or bank as a nominee or
agent, you should follow the instructions provided by your
broker or bank.
When are
stockholder proposals due for next years annual
meeting?
To be considered for inclusion in next years proxy
materials, your proposal must be submitted in writing by
January 14, 2008, to Matthias Alder, the Companys
corporate secretary, at 6707 Democracy Boulevard,
Suite 505, Bethesda, Maryland 20817.
If you wish to bring business, other than through a stockholder
proposal, before the 2008 Annual Meeting of Stockholders you
should deliver your notice to the corporate secretary at the
address above not later than the close of business on
March 30, 2008 nor earlier than the close of business on
February 29, 2008; provided, however, that in the event
that the date of the 2008 annual meeting is before May 29,
2008 or after August 27, 2008, your notice must be
delivered not earlier than the close of business on the one
hundred twentieth day prior to such annual meeting and not later
than the close of business on the later of the ninetieth day
prior to such annual meeting or the tenth day following the
earlier of (i) the day on which notice of the meeting was
mailed or (ii) the date public announcement of the date of
such meeting is first made by the Company. In no event will the
public announcement of an adjournment or postponement of the
2008 annual meeting commence a new time period (or extend any
time period) for the giving of your notice as described above.
Your notice must set forth: (a) as to each person whom you
propose to nominate for election or re-election as a director,
all information relating to that person that is required to be
disclosed in solicitations of proxies for election of directors
in an election contest, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (the Exchange Act), and
Rule 14a-101
thereunder (including such persons written consent to
being named in the proxy statement as a nominee and to serving
as a director if elected); (b) as to any other business
that you propose to bring before the meeting, a brief
description of the business desired to be brought before the
meeting, the text of the proposal or business (including the
text of any resolutions proposed for consideration and, in the
event that such business includes a proposal to amend the
Companys bylaws, the language of the proposed amendment),
the reasons for conducting such business at the meeting and any
material interest in such business of yours or of the beneficial
owner, if any, on whose behalf the nomination or proposal is
made; and (c) as to you and the beneficial owner, if any,
on whose behalf the nomination or proposal is made (i) your
name and address or that of such beneficial owner, (ii) the
class and number of shares of capital stock of the Company which
are owned beneficially and of record by you and such beneficial
owner, (iii) a representation that
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you are a holder of record of stock of the Company entitled to
vote at such meeting and you intend to appear in person or by
proxy at the meeting to propose such business or nomination and
(iv) a representation whether you or the beneficial owner,
if any, intends or is part of a group which intends (y) to
deliver a proxy statement
and/or form
of proxy to holders of at least the percentage of the
Companys outstanding capital stock required to approve or
adopt the proposal or elect the nominee
and/or
(z) otherwise to solicit proxies from stockholders in
support of such proposal or nomination. The foregoing notice
requirements shall be deemed satisfied by you if you have
notified the Company of your intention to present a proposal at
the 2008 annual meeting in compliance with
Rule 14a-8
(or any successor thereof) under the Exchange Act and your
proposal has been included in a proxy statement that has been
prepared by the Company to solicit proxies for such annual
meeting.
The Company may require any proposed nominee to furnish such
other information as it may reasonably require to determine the
eligibility of such proposed nominee to serve as a director of
the corporation.
For more information, please refer to the Companys bylaws,
as amended, filed with the United States Securities and Exchange
Commission (SEC) on
Forms 8-K
on March 20, 2006, and July 26, 2006, and
Form 10-Q
filed May 10, 2006.
How are
votes counted?
Votes will be counted by the inspector of election appointed for
the meeting, who will separately count For and
Withhold and, with respect to proposals other than
the election of directors, Against votes,
abstentions and broker non-votes. Abstentions will be counted
towards the vote total for each proposal, and will have the same
effect as Against votes. Broker non-votes have no
effect and will not be counted towards the vote total for any
proposal.
What are
broker non-votes?
Broker non-votes occur when a beneficial owner of shares held in
street name does not give instructions to the broker
or nominee holding the shares as to how to vote on matters
deemed non-routine. Generally, if shares are held in
street name, the beneficial owner of the shares is entitled to
give voting instructions to the broker or nominee holding the
shares. If the beneficial owner does not provide voting
instructions, the broker or nominee can still vote the shares
with respect to matters that are considered to be
routine, but not with respect to
non-routine matters. Under the rules and
interpretations of the New York Stock Exchange,
non-routine matters are generally those involving a
contest or a matter that may substantially affect the rights or
privileges of stockholders, such as mergers or stockholder
proposals.
How many
votes are needed to approve each proposal?
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For the election of directors, the three nominees receiving the
most For votes (from the holders of votes of shares
present in person or represented by proxy and entitled to vote
on the election of directors) will be elected. Only votes
For or Withheld will affect the outcome.
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To be approved, Proposal No. 2, the ratification of
the selection of the Companys independent accountants must
receive For votes from the holders of a majority of
shares present and entitled to vote either in person or by
proxy. If you Abstain from voting, it will have the
same effect as an Against vote. Broker non-votes
will have no effect.
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What is
the quorum requirement?
A quorum of stockholders is necessary to hold a valid meeting. A
quorum will be present if stockholders holding at least a
majority of the outstanding shares are present at the meeting in
person or represented by proxy. On the record date, there were
31,504,065 shares outstanding and entitled to vote.
Your shares will be counted towards the quorum only if you
submit a valid proxy (or one is submitted on your behalf by your
broker, bank or other nominee) or if you vote in person at the
meeting. Abstentions and broker non-votes will be counted
towards the quorum requirement. If there is no quorum, the
holders of a majority of shares present at the meeting in person
or represented by proxy may adjourn the meeting to another date.
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How can I
find out the results of the voting at the annual
meeting?
Preliminary voting results will be announced at the annual
meeting. Final voting results will be published in the
Companys Quarterly Report on
Form 10-Q
for the second quarter of 2007.
Proposal 1
Election
Of Directors
Micromets board of directors is divided into three
classes. Currently, each class consists of three directors, and
each class has a three-year term. Vacancies on the board may be
filled only by persons elected by a majority of the remaining
directors. A director elected by the board to fill a vacancy in
a class, including any vacancies created by any increase in the
number of directors, shall serve for the remainder of the full
term of that class and until the directors successor is
elected and qualified.
The board of directors presently has nine members. There are
three directors in the class whose term of office expires in
2007. Mr. Phillips is currently a director of the Company
who was previously elected by the stockholders.
Messrs. Benjamin and Stampacchia became directors of the
Company upon the merger of Micromet AG and CancerVax
Corporation, a transaction which was approved by the
Companys stockholders. If elected at the annual meeting,
each of these nominees would serve until the 2010 annual meeting
and until his or her successor is elected and has qualified, or,
if sooner, until the directors death, resignation or
removal. It is the Companys policy to encourage directors
and nominees for director to attend the annual meeting. All of
the current directors of the Company who were serving as
directors of CancerVax prior to the merger between Micromet AG
and CancerVax attended the 2006 Annual Meeting of Stockholders
of CancerVax.
Directors are elected by a plurality of the votes of the holders
of shares present in person or represented by proxy and entitled
to vote on the election of directors. The three nominees
receiving the highest number of affirmative votes will be
elected. Shares represented by executed proxies will be voted,
if authority to do so is not withheld, for the election of the
three nominees named below. If any nominee becomes unavailable
for election as a result of an unexpected occurrence, your
shares will be voted for the election of a substitute nominee
proposed by Micromets management. Each person nominated
for election has agreed to serve if elected. Our management has
no reason to believe that any nominee will be unable to serve.
The following is a brief biography of each nominee and each
director whose term will continue after the annual meeting. Ages
presented are as of April 30, 2007.
Nominees
for Election for a Three-Year Term Expiring at the 2010 Annual
Meeting
Jerry C.
Benjamin
Jerry C. Benjamin, age 66, has served as a member of our
board of directors since the merger in May 2006.
Mr. Benjamin has been a General Partner of Advent Venture
Partners, a venture capital management firm in London, since
1985. Mr. Benjamin also serves on the board of directors of
Orthofix International N.V., an international orthopedics
company listed on the NASDAQ Global Market. In the past,
Mr. Benjamin has been a director of a number of public and
private health care companies.
Barclay
A. Phillips
Barclay A. Phillips, age 44, served as a member of
CancerVaxs board of directors from December 2000 to May
2006 and has continued as a director of the Company following
the merger. From 1999 to the present, Mr. Phillips has been
a Managing Director of Vector Fund Management. From 1991 to
1999, Mr. Phillips served in various roles including
Director of Private Placements and Biotechnology Analyst for
INVESCO Funds Group, Inc. From 1985 to 1990, Mr. Phillips
held positions in sales and trading with Paine Webber, Inc. and
Shearson Lehman Hutton, Inc. Over the last ten years,
Mr. Phillips has held board positions for a number of
public and private companies and currently serves as a director
and member of the audit committee of Acorda Therapeutics, Inc.,
a publicly traded biopharmaceutical company. Mr. Phillips
received a B.A. in economics from the University of Colorado in
Boulder.
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Otello
Stampacchia, Ph.D.
Otello Stampacchia, Ph.D., age 37, has served as a
member of our board of directors since the merger in May 2006
and as an Adviser to Omega Fund since 2005. The Omega Fund
acquires ownership interests in public and private
biopharmaceutical and device companies, focusing on Western
Europe and the USA. Dr. Stampacchia has been involved in
various advisory activities in biotechnology since 2001.
Previously, Dr. Stampacchia was a member of the health care
Corporate Finance and M&A team at Goldman Sachs
International in London, and he also helped initiate the health
care investment activities of Index Securities (now Index
Ventures). Dr. Stampacchia has a Ph.D. in Molecular Biology
from the University of Geneva (Switzerland), a European
Doctorate in Biotechnology (EDBT) from the European Association
for Higher Education in Biotechnology, and a M.Sc. in Genetics
from the University of Pavia (Italy).
The
Board Of Directors Recommends
A Vote in Favor of Each Named Nominee.
Directors
Continuing in Office Until the 2008 Annual Meeting
Phillip
M. Schneider
Phillip M. Schneider, age 51, served as a member of
CancerVaxs board of directors from September 2003 to May
2006 and has continued as a director of the Company following
the merger. Mr. Schneider is also chairman of the
Companys audit committee. Mr. Schneider is the former
Chief Financial Officer of IDEC Pharmaceuticals Corporation.
During his
15-year
tenure at IDEC, which ended in October 2002, he served as Senior
Vice President and Chief Financial Officer and played an
integral role in the companys growth. Prior to his
association with IDEC, Mr. Schneider held various
management positions at Syntex Pharmaceuticals Corporation and
was previously with KPMG, LLP. Mr. Schneider has served as
a director and chairman of the audit committee of Gen-Probe
Incorporated since November 2002 and serves as a member of the
board of directors and chairman of the audit committee for
Targegen, Inc., a privately held biotechnology company.
Mr. Schneider holds an M.B.A. from the University of
Southern California and a B.S. in biochemistry from the
University of California at Davis.
Christian
Itin, Ph.D.
Christian Itin, Ph.D., age 42, has served as our Chief
Executive Officer and a director since the merger in May 2006.
Dr. Itin has also served in the following capacities with
our subsidiary Micromet AG: Chief Executive Officer since March
2004, Chief Business Officer from April 2002 to March 2004, Vice
President of Business and Corporate Development from September
2001 to April 2002, Vice President of Corporate Development from
September 2000 to September 2001 and Head of IP and Licensing
from September 1999 to September 2000. Before joining Micromet,
Dr. Itin was a co-founder of Zyomyx, Inc. (Hayward, CA,
USA), a protein chip company. Dr. Itin received a Diploma
in biology and a Ph.D. in cell biology from the University of
Basel, Switzerland. In addition, he also performed post-doctoral
research at the Biocenter of Basel University and at Stanford
University School of Medicine.
Peter
Johann, Ph.D.
Peter Johann, Ph.D., age 49, has served as a member of
our board of directors since July 2006. Dr. Johann is a
Managing General Partner of NGN Capital. He joined NGN Capital
from Boehringer Ingelheim where from August 2000 to July 2004 he
served as the Division Head of Corporate Development
responsible for strategic planning, strategic projects, mergers
and acquisitions, business development and licensing. Prior to
this, Dr. Johann served from July 1998 to July 2000 at F.
Hoffmann-La Roche as Global Business Leader where he led
global business teams and was responsible for global marketing
of oncology products as well as evaluation of pipeline products
from internal and external sources. Dr. Johann joined Roche
from Boehringer Mannheim where he was Head of Business
Development and Marketing of Molecular Medicine LLC from January
1996 to June 1998. In addition to marketing and licensing
activities, Dr. Johann was involved in establishing and
managing joint venture companies as a member of the supervisory
boards of Molecular Medicine LLC and MolMed SpA. Dr. Johann
held various positions in the fields of marketing, sales and
business development with Boehringer Mannheim Biochemicals,
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Kaneka and Röhm between August 1985 and December 1995.
Dr. Johann obtained his Ph.D. from the Technical University
of Munich. Dr. Johann is a director of NitecPharma AG, a
specialist pharmaceutical company located in Switzerland, and
has been a member of the supervisory board of Jerini AG and an
observer to the board of Santhera Pharmaceuatical Holding Ltd.
Directors
Continuing in Office Until the 2009 Annual Meeting
David F.
Hale
David F. Hale, age 58, served as CancerVaxs President
and Chief Executive Officer from October 2000 to the closing of
the merger in May 2006, served as a member of CancerVaxs
board of directors from December 2000 to May 2006 and has
continued as a director of the Company following the merger.
Mr. Hale became Chairman of the board of directors in May
2006. From January 1998 to May 2000, Mr. Hale served as
President and Chief Executive Officer of Women First HealthCare,
Inc., a publicly traded specialty pharmaceuticals company. Prior
to joining Women First HealthCare, Mr. Hale served from May
1987 to November 1997 as Chairman, President and Chief Executive
Officer of Gensia, Inc., a publicly-held biopharmaceutical
company, which merged with Sicor, Inc., to
form GensiaSicor, Inc., and which was acquired by Teva
Pharmaceutical Industries Limited. He also served from February
1987 to September 1995 as Chairman of Viagene, Inc., a publicly
held biotechnology company that was acquired by Chiron, Inc.
Mr. Hale served from April 1982 to May 1987 as President,
Chief Executive Officer and Chief Operating Officer with
Hybritech, Inc., a publicly-traded biotechnology company that
was acquired by Eli Lilly and Co. in 1986. Prior to joining
Hybritech, Mr. Hale served from January 1980 to April 1982
as Vice President, Sales and Marketing and then as Vice
President and General Manager with BBL Microbiology Systems, a
division of Becton, Dickinson & Co. From March 1971 to
December 1980, Mr. Hale held various marketing and sales
management positions with Ortho Pharmaceutical Corporation, a
division of Johnson & Johnson, Inc. Mr. Hale
currently serves as Chairman of the boards of directors of
Santarus, Inc. and Somaxon Pharmaceuticals, Inc. as a director
of Metabasis Therapeutics, Inc., publicly-traded
biopharmaceutical companies, and as executive chairman of
SkinMedica, Inc. and as a director of Verus Pharmaceuticals,
Inc. Mr. Hale is also a director of the Biotechnology
Industry Organization, BIOCOM, the California Healthcare
Institute, the Burnham Institute and is a co-founder and
chairman of CONNECT. Mr. Hale received a B.A. in biology
and chemistry from Jacksonville State University.
Michael
G. Carter, M.B., Ch.B., F.R.C.P. (Edinburgh)
Michael G. Carter, M.B., Ch.B., F.R.C.P. (Edinburgh),
age 69, served as a member of CancerVaxs board of
directors from February 2001 to May 2006 and has continued as a
director of the Company following the merger. Prior to the
merger Dr. Carter was a member of the supervisory board of
Micromet AG. Dr. Carter is a venture partner at SV Life
Sciences Advisers LLP and a member of the advisory board of Paul
Capital Royalty Fund. Dr. Carter retired from Zeneca, PLC,
a publicly traded global pharmaceutical company and predecessor
of AstraZeneca, in 1998, where he had been on the pharmaceutical
board. Dr. Carter served Zeneca as International Medical
Director from 1986 to 1989 and as International Marketing
Director from 1990 to 1995. Under his direction, Zeneca
developed and launched numerous drugs including
Casodextm,
the most widely prescribed anti-androgen for prostate cancer
therapy in the U.S.,
Zoladextm,
an LHRH analogue for prostate cancer and breast cancer; and
Arimidextm,
the first new generation aromatase inhibitor for breast cancer.
Dr. Carter also contributed to the post-marketing
development of tamoxifen, the first selective estrogen receptor
modulator approved for the treatment of breast cancer. From 1985
to 1995, Dr. Carter served as a member of the U.K.
Governments Medicines Commission. From 1976 to 1984,
Dr. Carter held several positions with Roche Products, Ltd,
including head of Medical Development and Medical Affairs and
Director of the Pharmaceutical Division. Dr. Carter
currently serves as a Director of several European and US
biopharmaceutical companies, including Fulcrum Pharmaceuticals
PLC, as Chairman of the board of directors of Metris
Therapeutics, Ltd., a biotechnology firm specializing in
womens healthcare and as a member of the boards of
directors of Santarus, Inc. and GTx, Inc. Dr. Carter is an
Elected Fellow of the Royal Pharmaceutical Society, Faculty of
Pharmaceutical Medicine, and of the Royal College of Physicians
of Edinburgh. Dr. Carter received a bachelors degree
in Pharmacy from London University (U.K.) and a medical degree
from Sheffield University Medical School (U.K.).
7
John E.
Berriman
John E. Berriman, age 59, has served as a member of our
board of directors since the closing of the merger in May 2006.
Since May 2004, Mr. Berriman has been a consultant and a
non-executive director of a number of private and public biotech
companies, including Algeta ASA and Ablynx NV. He serves as
executive deputy chairman of Oxxon Therapeutics, Inc.
Mr. Berriman served as a member of the board of directors
of Alnylam Pharmaceuticals, Inc. from July 2003 until December
2005. From August 2001 until May 2004, Mr. Berriman served
as a director of Abingworth Management, a venture capital firm
specializing in life science biomedical companies.
Mr. Berriman was a consultant to Abingworth Management from
March 1997 to August 2001. From 1989 until 1996
Mr. Berriman was an executive director of Celltech plc. He
has a degree in Chemical Engineering from the University of
Cambridge and an MBA from the London Business School.
Information
Regarding the Board of Directors and Corporate
Governance
Independence
of The Board of Directors
As required under the NASDAQ Stock Market (NASDAQ)
listing standards, a majority of the members of a listed
companys board of directors must qualify as
independent, as affirmatively determined by the
board of directors. The board consults with the Companys
counsel to ensure that the boards determinations are
consistent with relevant securities and other laws and
regulations regarding the definition of independent,
including those set forth in pertinent listing standards of the
NASDAQ, as in effect from time to time.
Consistent with these considerations, after review of all
relevant transactions or relationships between each director, or
any of his or her family members, and the Company, its senior
management and its independent auditors, the board has
affirmatively determined that all of the Companys
directors, with the exception of Dr. Itin and
Mr. Hale, are independent directors within the meaning of
the applicable NASDAQ listing standards. In addition, the
following directors who resigned upon the closing of the merger
between Micromet AG and CancerVax Corporation qualified as
independent directors within the meaning of the applicable
NASDAQ listing standards: Robert E. Kiss, CFA, James Clayburn
La Force, Jr., Ph.D., Ivor Royston, M.D. and
Gail S. Schoettler, Ph.D. In making these determinations,
the board found that none of these directors or nominees for
director had a material or other disqualifying relationship with
the Company. Dr. Itin, the Companys President and
Chief Executive Officer, is not an independent director by
virtue of his current employment with the Company. Mr. Hale
is not an independent director as a result of his serving as
President and Chief Executive Officer of CancerVax until May
2006.
Meetings
of the Board of Directors
The board of directors met fourteen times during the last fiscal
year. Each board members, with the exception of John Berriman,
attended 75% or more of the aggregate of the meetings of the
board and of the committees on which he or she served, held
during the period for which he or she was a director or
committee member. Mr. Berriman attended in excess of 70% of
the aggregate of the meetings of the board, audit committee and
compensation committee during the period from May 5, 2006
to December 31, 2006. Due to prior commitments,
Mr. Berriman was unable to attend one board meeting in June
2006 and one board meeting in July 2006.
8
Information
Regarding Committees of the Board of Directors
The board of directors has established three committees: an
audit committee, a compensation committee, and a
nominating/corporate governance committee. The following table
provides membership and meeting information for fiscal year 2006
for each of the board committees:
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Nominating/
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Name
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Audit
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Compensation
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Governance
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Mr. Jerry C. Benjamin
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X
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*
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X
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Mr. John E. Berriman
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X
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X
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Dr. Michael G. Carter
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X
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X
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Mr. David F. Hale
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Dr. Christian Itin
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Dr. Peter Johann
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Mr. Barclay A. Phillips
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X
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X
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*
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Mr. Phillip M. Schneider
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X
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*
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Dr. Otello Stampacchia
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X
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Mr. Robert E. Kiss(1)
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X
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Dr. James Clayburn
La Force, Jr.(1)
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X
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X
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Dr. Ivor Royston(1)
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X
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Dr. Gail S. Schoettler(1)
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X
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Dr. Donald Morton(1)
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Total meetings in fiscal year 2006
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5
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4
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2
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* |
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Committee Chairperson |
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(1) |
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Each of Mr. Kiss and Drs. La Force, Morton,
Royston and Schoettler resigned from the Companys board of
directors effective as of May 5, 2006, upon the closing of
the merger between Micromet AG and CancerVax Corporation. Upon
the closing, Drs. Itin and Stampacchia and
Messrs. Benjamin and Berriman joined the board of
directors. Dr. Johann joined the board in July 2006. |
Below is a description of each committee of the board of
directors. Each of the committees has authority to engage legal
counsel or other experts or consultants, as it deems appropriate
to carry out its responsibilities. The board of directors has
determined that each member of each committee meets the
applicable NASDAQ rules and regulations regarding
independence and that each member is free of any
relationship that would impair his or her individual exercise of
independent judgment with regard to the Company.
Audit
Committee
The audit committee of the board of directors was established by
the board in accordance with Section 3(a)(58)(A) of the
Securities Exchange Act of 1934 to oversee the Companys
corporate accounting and financial reporting processes and
audits of its financial statements. During the period in 2006
prior to the merger between Micromet AG and CancerVax
Corporation, the audit committee consisted of three directors:
Messrs. Schneider and Phillips, and Dr. La Force.
Since the merger, the audit committee is composed of three
directors: Messrs. Schneider, Berriman and Phillips. The
audit committee has adopted a written charter that is available
to stockholders on the Companys website at
http://www.micromet-inc.com.
Pursuant to its charter, the purpose of the audit committee is
to oversee the accounting and financial reporting processes of
the Company and the audits of the financial statements of the
Company on behalf of the board of directors and report the
results of its activities to the board. In carrying out these
responsibilities, the audit committee, among other things:
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evaluates the performance of and assesses the qualifications of
the independent auditors;
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determines and approves the engagement of the independent
auditors;
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9
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determines whether to retain or terminate the existing
independent auditors or to appoint and engage new independent
auditors;
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reviews and approves the retention of the independent auditors
to perform any proposed permissible non-audit services;
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monitors the rotation of partners of the independent auditors on
the Companys audit engagement team as required by law;
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reviews and approves or rejects transactions between the company
and any related persons;
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confers with management and the independent auditors regarding
the effectiveness of internal controls over financial reporting;
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establishes procedures, as required under applicable law, for
the receipt, retention and treatment of complaints received by
the Company regarding accounting, internal accounting controls
or auditing matters and the confidential and anonymous
submission by employees of concerns regarding questionable
accounting or auditing matters; and
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meets to review the companys annual audited financial
statements and quarterly financial statements with management
and the independent auditor, including reviewing the
Companys disclosures under Managements
Discussion and Analysis of Financial Condition and Results of
Operations.
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The board of directors reviews the NASDAQ listing standards
definition of independence for audit committee members on an
annual basis and has determined that all members of the
Companys audit committee are independent (as independence
is currently defined in Rule 4350(d)(2)(A)(i) and
(ii) of the NASDAQ listing standards). The board of
directors has also determined that Mr. Schneider qualifies
as an audit committee financial expert, as defined
in applicable SEC rules. The board made a qualitative assessment
of Mr. Schneiders level of knowledge and experience
based on a number of factors, including his formal education and
experience as a chief financial officer for public reporting
companies. In addition to the Companys audit committee,
Mr. Schneider also serves on the audit committees of
Gen-Probe, Inc. and Targegen, Inc. a privately held
biotechnology company. The board of directors has determined
that this simultaneous service does not impair
Mr. Schneiders ability to effectively serve on the
Companys audit committee.
Report of
the Audit Committee of the Board of
Directors1
The audit committee met five times during fiscal year 2006, and
scheduled its meetings with a view to ensuring that it devotes
appropriate attention to all of its tasks. The audit
committees agenda was established by the audit
committees chairman and the Companys chief financial
officer. The audit committee meetings included discussion of
significant accounting policies applied by the Company in its
financial statements, as well as alternative treatments. The
audit committees meetings included, whenever appropriate,
executive sessions in which the audit committee meets separately
with the Companys independent auditors and the
Companys Chief Financial Officer.
The audit committee has been updated quarterly on
managements process to assess the adequacy of the
Companys system of internal control over financial
reporting, the framework used to make the assessment, and
managements conclusions on the effectiveness of the
Companys internal control over financial reporting. The
audit committee has also discussed with the independent auditors
the Companys internal control assessment process,
managements assessment with respect thereto and the
independent auditors evaluation of the Companys
system of internal control over financial reporting.
The audit committee recommended to the board of directors the
engagement of Ernst & Young AG WPM as our independent
auditors for the year ending December 31, 2007, and
reviewed with senior members of the Companys financial
management team and the independent auditors the overall audit
scope and plans and the results of external audit examinations.
Although the audit committee has the sole authority to appoint
the
1 The
material in this report of the audit committee is not
soliciting material, is not deemed filed
with the SEC and is not to be incorporated by reference into any
filing of the Company under the Securities Act of 1933, or the
Securities Exchange Act of 1934, as amended.
10
independent auditors, the audit committee will continue its
long-standing practice of recommending that the board of
directors ask the Companys stockholders, at the annual
meeting, to ratify their appointment of the independent auditors.
As part of its oversight of the Companys financial
statements, the audit committee reviews and discusses with both
management and the Companys independent registered public
accountants all annual and quarterly financial statements prior
to their issuance. During fiscal year 2006, management advised
the audit committee that each set of financial statements
reviewed had been prepared in accordance with generally accepted
accounting principles, and reviewed significant accounting and
disclosure issues with the audit committee. These reviews
included discussion with the independent registered public
accountants of matters required to be discussed pursuant to
Statement on Auditing Standards No. 61 (Communication
with Audit Committees), including the quality of the
Companys accounting principles, the reasonableness of
significant judgments and the clarity of disclosures in the
financial statements. The audit committee also discussed with
Ernst & Young AG WPM matters relating to its
independence, including a review of audit and non-audit fees and
the written disclosures and letter from Ernst & Young
AG WPM to the Committee pursuant to Independence Standards
Board Standard No. 1 (Independence Discussions with Audit
Committees).
Taking all of these reviews and discussions into account, on
March 12, 2007, the audit committee recommended to the
board of directors that the audited financial statements be
included in the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2006, for filing
with the SEC.
Mr. Phillip M. Schneider
Mr. John E. Berriman
Mr. Barclay A. Phillips
Compensation
Committee
During the period in 2006 prior to the merger between Micromet
AG and CancerVax Corporation, the compensation committee
consisted of three directors: Drs. Clayburn, La Force
and Carter. Since the merger, the compensation committee has
been composed of four directors: Messrs. Benjamin and
Berriman and Drs. Carter and Stampacchia. All members of
the Companys compensation committee are independent (as
independence is currently defined in Rule 4200(a)(15) of
the NASDAQ listing standards. The compensation committee met
four times during the fiscal year. The compensation committee
has adopted a written charter that is available to stockholders
on the Companys website at
http://www.micromet-inc.com. The information contained on
the website is not incorporated by reference in, or considered
part of, this proxy statement.
The compensation committee of the board of directors acts on
behalf of the board to review, recommend for adoption and
oversee the Companys compensation strategy, policies,
plans and programs. The functions of this committee include:
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reviewing and, as it deems appropriate, recommending to our
board of directors, policies, practices and procedures relating
to the compensation of our directors, officers and other
managerial employees;
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establishing, administering and exercising authority under our
employee benefit plans;
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reviewing and approving executive officer and director
indemnification and insurance matters; and
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advising and consulting with our officers regarding compensation
matters related to managerial personnel.
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Commencing this year, the compensation committee also began to
review with management the Companys Compensation
Discussion and Analysis and to consider whether to recommend
that it be included in the proxy statement and other filings.
Compensation
Committee Processes and Procedures
The compensation committee meets at least two times annually and
with greater frequency if necessary. From time to time, various
members of management as well as outside advisors or consultants
may be invited by the compensation committee to make
presentations, provide financial or other background information
or advice or
11
otherwise participate in compensation committee meetings. In
addition, the compensation committee meets regularly in
executive session. The charter of the compensation committee
grants the committee the authority to retain, at the expense of
the Company, independent counsel, compensation and benefits
consultants and other outside experts or advisors as the
Committee believes to be necessary or appropriate. The Committee
may also utilize the services of the Companys regular
legal counsel or other advisors to the Company. During the past
fiscal year, the compensation committee engaged Top Five Data
Services, Inc. as compensation consultants. The scope and
process of the engagement and the recommendations resulting
therefrom, as well as the processes and procedures followed by
the compensation committee, are discussed in more detail in the
Compensation Discussion and Analysis section of this proxy
statement.
The specific determinations of the compensation committee with
respect to executive compensation for fiscal 2006 are also
described in greater detail in the Compensation Discussion and
Analysis section of this proxy statement.
Compensation
Committee Interlocks and Insider Participation
As noted above, the Companys compensation committee
consists of Messrs. Benjamin and Berriman, and
Drs. Carter and Stampacchia. No member of the compensation
committee has been at any time an officer or employee of the
Company. None of the Companys executive officers serves,
or in the past year has served, as a member of the board of
directors or compensation committee of any entity that has one
or more executive officers serving on its compensation committee
or on the Companys compensation committee.
Compensation
Committee Report
The compensation committee has reviewed and discussed with
management the Compensation Discussion and Analysis
(CD&A) contained in this proxy statement. Based
on this review and discussion, the compensation committee has
recommended to the board of directors that the CD&A be
included in this proxy statement and incorporated into our
Annual Report on
Form 10-K
for the fiscal year ended December 31, 2006.
Mr. Jerry C. Benjamin
Mr. John E. Berriman
Dr. Michael G. Carter
Dr. Otello Stampacchia
Nominating/Corporate
Governance Committee
During the period in 2006 prior to the merger between Micromet
AG and CancerVax Corporation, the nominating/corporate
governance committee consisted of the following three directors:
Messrs. Phillips and Kiss, and Dr. Schoettler. Since
the merger, the nominating/corporate governance committee has
been composed of the following three directors:
Messrs. Phillips and Benjamin, Dr. Carter. All members
of the nominating/corporate governance committee are independent
(as independence is currently defined in Rule 4200(a)(15)
of the NASDAQ listing standards). The nominating/corporate
governance committee met twice during fiscal year 2006. The
nominating/corporate governance committee has adopted a written
charter that is available to stockholders on the Companys
website at http://www.micromet-inc.com. The information
contained on the website is not incorporated by reference in, or
considered part of, this proxy statement. The functions of this
committee include:
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identifying and reviewing qualified candidates to become members
of our board of directors;
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recommending to the board nominees for election of directors at
the next annual meeting of stockholders (or special meeting of
stockholders at which directors are to be elected);
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selecting candidates to fill vacancies of our board of directors;
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assessing the performance of the board of directors;
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making recommendations to the board regarding committee
membership;
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12
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developing and recommending to our board of directors our
corporate governance guidelines; and
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overseeing the evaluation of our board of directors and the
chief executive officer.
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Director
Nomination Process
Director
Qualifications
In evaluating director nominees, the nominating/corporate
governance committee considers, among others, the following
factors:
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the appropriate size of our board of directors;
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personal and professional integrity, ethics and values;
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experience in corporate management, such as serving as an
officer or former officer of a publicly held company;
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experience in our industry;
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experience as a board member of another publicly-held company;
and
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experience with relevant social concerns.
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The
nominating/corporate
governance committees goal is to assemble a board of
directors that brings to our Company a variety of perspectives
and skills derived from high quality business and professional
experience. In doing so, the nominating/corporate governance
committee also considers candidates with appropriate
non-business backgrounds. There are no stated minimum criteria
for director nominees, although the
nominating/corporate
governance committee may also consider such other facts as it
may deem are in the best interests of our Company and our
stockholders. The
nominating/corporate
governance committee does, however, believe it appropriate for
at least one, and, preferably, several, members of our board of
directors to meet the criteria for an audit committee
financial expert as defined by SEC rules. The
nominating/corporate governance committee also believes it
appropriate for our Chief Executive Officer to participate as a
member of our board of directors.
Identification
and Evaluation of Nominees for Directors
The
nominating/corporate
governance committee identifies nominees for director by first
evaluating the current members of our board of directors who are
willing to serve on our board. Current members with
qualifications and skills that are consistent with the
nominating/corporate governance committees criteria for
service on our board of directors and who are willing to
continue to serve on our board are considered for re-nomination,
balancing the value of continuity of service by existing members
of our board of directors with that of obtaining a new
perspective. If any member of our board of directors does not
wish to serve on our board or if our board of directors decides
not to re-nominate a member for re-election, the
nominating/corporate
governance committee identifies the desired skills and
experience of a new nominee in light of the criteria discussed
above. The nominating/corporate governance committee generally
polls our board of directors and members of management for their
recommendations. The
nominating/corporate
governance committee may also review the composition and
qualification of the boards of directors of our competitors, and
may seek input from industry experts or analysts. The
nominating/corporate governance committee reviews the
qualifications, experience and background of the candidates.
Final candidates are interviewed by our independent directors
and executive management. In making its determinations, the
nominating/corporate
governance committee evaluates each individual in the context of
our board of directors as a whole, with the objective of
assembling a group that can best help perpetuate the success of
our company and represent stockholder interests through the
exercise of sound business judgment. After review and
deliberation of all feedback and data, the nominating/corporate
governance committee makes its recommendation to our board of
directors. Historically, the
nominating/corporate
governance committee has not relied on third-party search firms
to identify board of directors candidates. The
nominating/corporate
governance committee may in the future choose to do so in those
situations where they believe that particular qualifications are
required or that external resources may be best able to identify
appropriate candidates.
13
In October 2006, the
nominating/corporate
governance committee adopted the following policy regarding the
procedures for considering director candidate recommendations of
our stockholders. Stockholders wishing to recommend a candidate
for the position as a member of the Companys board of
directors shall write to the Companys corporate secretary
at the address set forth on the cover of this proxy statement
and include the following information:
a. the stockholders name and contact information;
b. a statement that the writer is a stockholder and is
proposing a candidate for consideration by the
nominating/corporate governance committee;
c. the name of and contact information for the candidate
and a statement that the candidate is willing to be considered
and serve as a director, if nominated and elected;
d. a statement of the candidates business and
educational experience;
e. information regarding each of the qualifications listed
above, other than that regarding board of directors size and
composition, sufficient to enable the nominating/corporate
governance committee to evaluate the candidate;
f. a statement of the value that the candidate would add to
our board of directors;
g. a statement detailing any relationship between the
candidate and any customer, supplier or competitor of our
company;
h. detailed information about any relationship or
understanding between the proposing stockholder and
candidate; and
i. a list of three character references, including complete
contact information for such references.
The Companys corporate secretary will promptly forward any
recommendation of a stockholder that meets the requirements set
forth above to the chairman of the Companys
nominating/corporate governance committee. The
nominating/corporate
governance committee will evaluate any recommendations from
stockholders that meet the requirements set forth above in the
same manner that potential nominees suggested by board members,
management or other parties are evaluated. We have not received
director candidate recommendations from our stockholders for the
2007 annual meeting of stockholders.
Stockholder
Communications with the Board of Directors
Historically, the Company has not provided a formal process
related to stockholder communications with the board.
Nevertheless, every effort has been made to ensure that the
views of stockholders are heard by the board or individual
directors, as applicable, and that appropriate responses are
provided to stockholders in a timely manner. Nevertheless,
during the upcoming year the nominating/corporate governance
committee will give full consideration to the adoption of a
formal process for stockholder communications with the board
and, if adopted, publish it promptly and post it to the
Companys website.
Code
Of Ethics
The Company has adopted the Micromet Code of Ethics that applies
to all officers, directors and employees. The Code of Ethics is
available on our website at
http://www.micromet-inc.com.
If the Company makes any substantive amendments to the Code of
Ethics or grants any waiver from a provision of the Code to any
executive officer or director, the Company will promptly
disclose the nature of the amendment or waiver on its website.
14
Proposal 2
Ratification
of Selection of Independent Auditors
The audit committee of the board of directors has selected
Ernst & Young AG WPG as the Companys independent
auditors for the fiscal year ending December 31, 2007 and
has further directed that management submit the selection of
independent auditors for ratification by the stockholders at the
annual meeting. Ernst & Young AG WPG has audited the
Companys financial statements since the merger of Micromet
AG and CancerVax Corporation in May 2006 and its affiliate
Ernst & Young LLP audited the financial statements of
CancerVax Corporation since its inception in June 1998.
Representatives of Ernst & Young AG WPG are expected to
be present at the annual meeting. They will have an opportunity
to make a statement if they so desire and will be available to
respond to appropriate questions.
Neither the Companys bylaws nor other governing documents
or law require stockholder ratification of the selection of
Ernst & Young AG WPG as the Companys independent
auditors. However, the audit committee of the board is
submitting the selection of Ernst & Young AG WPG to the
stockholders for ratification as a matter of good corporate
practice. If the stockholders fail to ratify the selection, the
audit committee of the board will reconsider whether or not to
retain that firm. Even if the selection is ratified, the audit
committee of the board in its discretion may direct the
appointment of different independent auditors at any time during
the year if they determine that such a change would be in the
best interests of the Company and its stockholders.
The affirmative vote of the holders of a majority of the shares
present in person or represented by proxy and entitled to vote
at the annual meeting will be required to ratify the selection
of Ernst & Young AG WPG. Abstentions will be counted
toward the tabulation of votes cast on proposals presented to
the stockholders and will have the same effect as negative
votes. Broker non-votes are counted towards a quorum, but are
not counted for any purpose in determining whether this matter
has been approved.
Principal
Accountant Fees and Services
In connection with the audit of the 2006 financial statements,
the audit committee of the board of directors entered into an
engagement agreement with Ernst & Young AG WPG, which
sets forth the terms by which Ernst & Young AG WPG will
perform audit services for the Company.
The following table represents aggregate fees billed to the
Company for the fiscal years ended December 31, 2006 and
December 31, 2005 by Ernst & Young AG WPG, the
Companys principal accountant in fiscal year 2006 and
Ernst & Young LLP, the Companys principal
accountant in fiscal year 2005, respectively. All fees set forth
below were approved by the audit committee.
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
2006
|
|
|
2005
|
|
|
|
(In thousands)
|
|
|
Audit Fees(1)
|
|
$
|
724
|
|
|
$
|
244
|
|
Audit-related Fees(2)
|
|
|
|
|
|
|
50
|
|
Tax Fees(3)
|
|
|
14
|
|
|
|
110
|
|
All Other Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Fees
|
|
$
|
738
|
|
|
$
|
404
|
|
|
|
|
(1) |
|
Includes fees for the audits of the Companys annual
financial statements for 2006 and 2005 included in its Annual
Reports on
Form 10-K,
the audits of managements assessment of the effectiveness
of internal control over financial reporting, the reviews of the
Companys interim period financial statements for 2006 and
2005 included in its quarterly reports on
Form 10-Q
and related services that are normally provided in connection
with regulatory filings or engagements. |
|
(2) |
|
Represents fees for due diligence related to the merger with
Micromet AG. |
15
|
|
|
(3) |
|
Consists of fees in 2006 for preparation of tax returns for
Tarcanta Limited, a subsidiary of the Company located in
Ireland. Fees in 2005 consist of tax compliance services of
approximately $49,000 and fees for tax advice and tax planning
services of approximately $61,000. |
Pre-Approval
Policies and Procedures.
Our audit committee has established a policy that generally
requires that all audit and permissible non-audit services
provided by our independent registered public accounting firm
will be pre-approved by the audit committee. The audit committee
has delegated pre-approval authority to its chairman when
expedition of services is necessary. These services may include
audit services, audit-related services, tax services and other
services. The audit committee considers whether the provision of
each non-audit service is compatible with maintaining the
independence of our registered public accounting firm.
Pre-approval is detailed as to the particular service or
category of services and is generally subject to a specific
budget. Our independent registered public accounting firm and
management are required to periodically report to the audit
committee regarding the extent of services provided by the
independent registered public accounting firm in accordance with
this pre-approval, and the fees for the services performed to
date.
The
Board of Directors Recommends
A Vote in Favor of Proposal 2.
Executive
Officers
The following table lists the names, ages and positions of
individuals currently serving as executive officers of the
Company. The ages of the individuals are provided as of
April 30, 2007.
Executive
Officers
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Position
|
|
Christian Itin, Ph.D.
|
|
|
42
|
|
|
President and Chief Executive
Officer
|
Patrick A.
Baeuerle, Ph.D.
|
|
|
49
|
|
|
Senior Vice President, Chief
Scientific Officer
|
Carsten
Reinhardt, M.D., Ph.D.
|
|
|
40
|
|
|
Senior Vice President, Clinical
Development
|
Jens Hennecke, Ph.D.
|
|
|
39
|
|
|
Vice President, Business
Development
|
Christopher P. Schnittker
|
|
|
38
|
|
|
Senior Vice President, Chief
Financial Officer
|
Matthias Alder
|
|
|
42
|
|
|
Senior Vice President, General
Counsel and Corporate Secretary
|
Christian Itin, PhD., has served as our Chief Executive
Officer since May 2006. Dr. Itin has also served in the
following capacities with our subsidiary Micromet AG: Chief
Executive Officer since March 2004, Chief Business Officer from
April 2002 to March 2004, Vice President of Business and
Corporate Development from September 2001 to April 2002, Vice
President of Corporate Development from September 2000 to
September 2001 and Head of IP and Licensing from September 1999
to September 2000. Before joining Micromet, Dr. Itin was a
co-founder of Zyomyx, Inc. (Hayward, CA, USA), a protein chip
company. Dr. Itin received a Diploma in biology and a Ph.D.
in cell biology from the University of Basel, Switzerland; he
also performed post-doctoral research at the Biocenter of Basel
University and at Stanford University School of Medicine.
Patrick A. Baeuerle, Ph.D. has served as our Chief
Scientific Officer since May 2006. Dr. Baeuerle has also
served as Chief Scientific Officer of Micromet AG since October
1998. From February 1996 to September 1998, Dr. Baeuerle
headed the drug discovery activities of Tularik Inc. in South
San Francisco, CA, as Director, Drug Discovery. From
October 1994 to February 1996, Dr. Baeuerle served as a
full Professor and Chairman of Biochemistry at the Medical
Faculty of Freiburg University, Germany. In 1989, he was awarded
a group leader position at the Gene Center in Martinsried,
Germany, where he did seminal research on transcription factor
NF-kappaB. According to a survey by the Institute for Scientific
Information (ISI, Philadelphia, PA, USA), Dr. Baeuerle was
Germanys most frequently cited biomedical scientist of the
past decade, and 38th worldwide. He has published more than
190 scientific papers, and four educational children books on
biology. In addition, Dr. Baeuerle is the first
16
recipient of the Prix Européen de lAvenir and an
elected member of the European Molecular Biology Organization
(EMBO). He was appointed Honorary Professor of Immunology at the
University of Munich in 2000. Dr. Baeuerle performed his
Ph.D. work at the Max Planck Institute for Psychiatry in
Martinsried and at the European Molecular Biology Laboratory
(EMBL) in Heidelberg, obtained a Ph.D. degree in biology from
the University of Munich, and performed his post-doctoral
research with David Baltimore at the Whitehead Institute of the
Massachusetts Institute of Technology (MIT), Cambridge, MA.
Carsten Reinhardt, M.D., Ph.D., has served as
our Senior Vice President of Clinical Development since May 2006
and has served in the same capacity with Micromet AG since June
2005. Before joining Micromet, Dr. Reinhardt was
International Medical Leader for Herceptin at
Hoffmann-La Roche (Basel, Switzerland) between 2003 and
2005, and Head of Clinical Development at Fresenius Biotech
(Munich, Germany) until 2003. From 1995 to 2000,
Dr. Reinhardt worked at various academic institutions
(University of Tübingen, Max-Planck-Institute of
Psychiatry, Munich) to complete his curriculum in Neurology.
Between 1991 and 1995 Dr. Reinhardt performed his Ph.D.
thesis in Cellular Immunology at the Institute of Immunology in
Munich, Germany. Dr. Reinhardt received a Medical Degree in
1994 from University of Munich, Germany. Dr. Reinhardt is a
Visiting Professor for Pharmaceutical Medicine at the University
of Basel.
Jens Hennecke, Ph.D., has served as our Vice
President and Head of Business Development since May 2006 and
has served in the same capacity with Micromet AG since April
2004. Mr. Hennecke joined Micromet in October 2001 as
Manager, Business Development, and has served as Associate
Director, Business Development, from April 2003 to September
2003 and as Director Business Development from October 2003 to
March 2004. Mr. Hennecke studied biology at the University
of Göttingen, Germany, and performed his Ph.D. thesis in
protein engineering at the Institute of Molecular Biology and
Biophysics at the ETH Zürich, Switzerland; he also
performed post-doctoral research in X-ray crystallography at the
Department of Molecular and Cellular Biology at Harvard
University, Cambridge, MA.
Christopher P. Schnittker has served as our Senior Vice
President and Chief Financial Officer since October 2006. From
September 2003 to June 2006, Mr. Schnittker served as
Senior Vice President and Chief Financial Officer for Cytogen
Corporation, a publicly traded biopharmaceutical company. Prior
to joining Cytogen, Mr. Schnittker was Senior Vice
President, Chief Financial Officer and Corporate Secretary of
Genaera Corporation (formerly Magainin Pharmaceuticals, Inc.)
from June 2000 to August 2003. Prior to joining Genaera,
Mr. Schnittker served as Director of Finance from August
1999 to May 2000 and Controller from December 1997 to August
1999 at GSI Commerce, Inc., a publicly traded technology
company. From June 1995 to December 1997, Mr. Schnittker
held several positions of increasing responsibility at
Rhône-Poulenc Rorer, Inc. (now sanofi aventis). Prior to
that, Mr. Schnittker held various positions of increasing
responsibility at Price Waterhouse LLPs (now
PricewaterhouseCoopers LLP) Life Sciences audit practice from
September 1990 to June 1995. Mr. Schnittker received his
B.A. degree in Economics and Business with a concentration in
Accounting from Lafayette College and is a certified public
accountant licensed in the State of New Jersey.
Matthias Alder has served as our Senior Vice President,
General Counsel and Corporate Secretary since July 2006.
Previously, he was a partner with Cooley Godward LLP, a leading
U.S. law firm, where he established and co-chaired the
firms East Coast Life Sciences Practice. Starting in 1994
and before joining Cooley in 1997, he was in-house counsel for
the pharmaceutical business of Novartis in Basel, Switzerland.
Between 1988 and 1994, he worked in law firms in Switzerland and
in Miami, FL. He is admitted to practice in the State of
California, New York, and Virginia, and the Canton of Zurich,
Switzerland. Mr. Alder received an LL.M. degree in
International and Comparative Law from the University of Miami
in 1990. He earned the equivalent of a J.D. degree (lic. iur.)
from the University of Basel, Switzerland, graduating magna cum
laude in 1988.
17
Security
Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the
ownership of the Companys common stock as of
March 30, 2007 by: (i) each director and nominee for
director; (ii) each of the executive officers named in the
Summary Compensation Table; (iii) all executive officers
and directors of the Company as a group; and (iv) all those
known by the Company to be beneficial owners of more than five
percent of its common stock. The address for all directors and
executive officers is c/o Micromet, Inc., 6707 Democracy
Boulevard, Suite 505, Bethesda, Maryland 20817.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial Ownership(1)
|
|
|
|
|
|
|
|
|
|
Right to Acquire
|
|
|
|
|
|
|
|
|
|
Beneficial
|
|
|
|
|
|
|
|
|
|
Ownership Under
|
|
|
|
|
|
|
Number of
|
|
|
Options Exercisable
|
|
|
Percent of
|
|
Name and Address of Beneficial Owner
|
|
Shares
|
|
|
Within 60 Days
|
|
|
Total
|
|
|
5% Stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
Entities affiliated with Advent
Venture Partners
|
|
|
3,528,875
|
(2)
|
|
|
0
|
|
|
|
11.2
|
%
|
25 Buckingham Gate
London SW1E 6LD
United Kingdom
|
|
|
|
|
|
|
|
|
|
|
|
|
Omega Fund I, L.P.
|
|
|
3,257,936
|
(3)
|
|
|
0
|
|
|
|
10.3
|
%
|
c/o
13-15
Victoria Road
St. Peter Port
Guernsey GY1 3ZD
Channel Islands
United Kingdom
|
|
|
|
|
|
|
|
|
|
|
|
|
3i Group plc
|
|
|
2,940,435
|
|
|
|
0
|
|
|
|
9.3
|
%
|
91 Waterloo Road
London SE1 8XP
United Kingdom
|
|
|
|
|
|
|
|
|
|
|
|
|
Entities affiliated with NGN Capital
|
|
|
2,222,222
|
(4)
|
|
|
565,278
|
(5)
|
|
|
8.7
|
%
|
369 Lexington Avenue,
17th Floor
New York, New York 10017
|
|
|
|
|
|
|
|
|
|
|
|
|
International Biotechnology Trust
plc
|
|
|
1,907,390
|
|
|
|
0
|
|
|
|
6.1
|
%
|
31 Gresham Street
London NW1 2BE
United Kingdom
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald L. Morton, M.D.
|
|
|
1,727,160
|
(6)
|
|
|
0
|
|
|
|
5.5
|
%
|
1374 Bella Oceana Vista
Pacific Palisades, California 90630
|
|
|
|
|
|
|
|
|
|
|
|
|
MedImmune Ventures, Inc.
|
|
|
1,660,483
|
|
|
|
0
|
|
|
|
5.3
|
%
|
One MedImmune Way
Gaithersburg, Maryland 20878
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officers and
Directors:
|
|
|
|
|
|
|
|
|
|
|
|
|
Christian Itin, Ph.D.
|
|
|
2,885
|
|
|
|
262,678
|
|
|
|
*
|
|
David F. Hale
|
|
|
214,529
|
(7)
|
|
|
482,255
|
(7)
|
|
|
2.2
|
%
|
Christopher P. Schnittker
|
|
|
0
|
|
|
|
0
|
|
|
|
*
|
|
Gregor Mirow, M.D.
|
|
|
7,870
|
|
|
|
228,391
|
|
|
|
*
|
|
William R. LaRue
|
|
|
27,089
|
(8)
|
|
|
36,041
|
|
|
|
*
|
|
Patrick A.
Baeuerle, Ph.D.
|
|
|
22,563
|
|
|
|
209,861
|
|
|
|
*
|
|
Carsten
Reinhardt, M.D., Ph.D.
|
|
|
0
|
|
|
|
61,617
|
|
|
|
*
|
|
Matthias Alder
|
|
|
0
|
|
|
|
0
|
|
|
|
*
|
|
Guy Gammon, M.B., B.Sc.,
M.R.C.P.
|
|
|
23,027
|
|
|
|
33,334
|
|
|
|
*
|
|
Dennis Van Epps, Ph.D.
|
|
|
34,340
|
|
|
|
33,333
|
|
|
|
*
|
|
Michael G. Carter, M.B., Ch.B.,
F.R.C.P.
|
|
|
757
|
|
|
|
41,113
|
|
|
|
*
|
|
Barclay A. Phillips
|
|
|
335,589
|
(9)
|
|
|
20,832
|
|
|
|
1.1
|
%
|
Phillip M. Schneider
|
|
|
0
|
|
|
|
35,984
|
|
|
|
*
|
|
Jerry C. Benjamin
|
|
|
3,528,875
|
(2)
|
|
|
16,666
|
|
|
|
11.2
|
%
|
John E. Berriman
|
|
|
0
|
|
|
|
25,660
|
|
|
|
*
|
|
Otello Stampacchia, Ph.D.
|
|
|
3,257,936
|
(3)
|
|
|
11,666
|
|
|
|
10.4
|
%
|
Peter Johann, Ph.D.
|
|
|
2,222,222
|
(4)
|
|
|
565,278
|
(5)
|
|
|
8.7
|
%
|
All currently serving executive
officers and directors as a group (14 serving )
|
|
|
9,585,356
|
|
|
|
1,777,624
|
|
|
|
34.1
|
%
|
18
|
|
|
* |
|
Less than one percent. |
|
(1) |
|
This table is based upon information supplied by officers,
directors and principal stockholders and in certain cases upon
information supplied on Schedules 13D and 13G filed with the
Securities and Exchange Commission (the SEC). Unless
otherwise indicated in the footnotes to this table and subject
to community property laws where applicable, the Company
believes that each of the stockholders named in this table has
sole voting and investment power with respect to the shares
indicated as beneficially owned. Applicable percentages are
based on 31,504,065 shares outstanding March 30, 2007,
adjusted as required by rules promulgated by the SEC. |
|
(2) |
|
Consists of 1,785,787 shares held of record by Advent
Private Equity Fund III A Limited
Partnership; 874,759 shares held of record by Advent
Private Equity Fund III B Limited
Partnership; 244,118 shares held of record by Advent
Private Equity Fund III C Limited
Partnership; 480,071 shares held of record by Advent
Private Equity Fund III D Limited
Partnership; 69,111 shares held of record by Advent Private
Equity Fund III GmbH & Co. KG; 57,189 shares
held of record by Advent Private Equity Fund III Affiliates
Limited Partnership; and 17,840 shares held of record by
Advent Management III Limited Partnership. Jerry Benjamin,
a director of the Company, is a general partner of Advent
Venture Partners LLP, which is the sole owner of the sole owner
of the general partner of Advent Private Equity Fund III
GmbH & Co. KG. Advent Venture Partners LLP is also the
sole owner of the general partner of Advent Management III
Limited Partnership, which is general partner of each of Advent
Private Equity Fund III A Limited
Partnership, Advent Private Equity Fund III
B Limited Partnership, Advent Private Equity
Fund III C Limited Partnership, Advent
Private Equity Fund III D Limited
Partnership and Advent Private Equity Fund III Affiliates
Limited Partnership. As a result, Mr. Benjamin shares
voting and dispositive power with respect to the shares held by
these entities and disclaims beneficial ownership of the shares
in which he has no pecuniary interest. |
|
(3) |
|
Otello Stampacchia, a director of the Company, is the sole
shareholder of Sigma Holding Limited, which is the sole
shareholder of Omega Fund Management Limited, which is the sole
shareholder of Omega Fund GP, Ltd., which is the general
partner of Omega Fund I, L.P. Connie Helyar, Andrew Guille
and John Luff are also directors of Omega Fund GP, Ltd.
Accordingly, each of Dr. Stampacchia, Ms. Helyar and
Messrs. Guille and Huff may be deemed to share voting and
dispositive power with respect to the shares held by Omega
Fund I, L.P. and each disclaims beneficial ownership of the
reported securities except to the extent of his or her pecuniary
interest therein. |
|
(4) |
|
Consists of 1,289,778 shares held of record by NGN Biomed
Opportunity I, L.P. and 932,444 shares held of record
by NGN Biomed Opportunity I GmbH & Co. Beteiligungs KG.
Dr. Johann, a director of the Company, is the managing
general partner of NGN Capital LLC, which is the sole general
partner of the general partner of NGN Biomed Opportunity I,
L.P. and is also the managing limited partner of NGN Biomed
Opportunity I GmbH & Co. Beteiligungs KG. As a result,
Dr. Johann may be deemed to share voting and dispositive
power with respect to the shares beneficially held by these
entities and disclaims beneficial ownership of the reported
securities except to the extent of his pecuniary interest
therein. |
|
(5) |
|
Consists of a warrant exercisable for 322,445 shares and
held of record by NGN Biomed Opportunity I, L.P. and a
warrant exercisable for 233,111 shares and held of record
by NGN Biomed Opportunity I GmbH & Co. Beteiligungs KG.
Also includes 9,722 shares of common stock issuable upon
exercise of a stock option held by NGN Capital LLC and
exercisable within sixty days of March 30, 2007.
Dr. Johann, a director of the Company, is the managing
general partner of NGN Capital LLC, which is the sole general
partner of the general partner of NGN Biomed Opportunity I,
L.P. and is also the managing limited partner of NGN Biomed
Opportunity I GmbH & Co. Beteiligungs KG. As a result,
Dr. Johann may be deemed to share voting and dispositive
power with respect to the shares beneficially held by these
entities and disclaims beneficial ownership of the reported
securities except to the extent of his pecuniary interest
therein. |
|
(6) |
|
Represents 1,512,732 shares of common stock held of record
by the Donald L. Morton Family Trust, dated June 2, 1989,
of which Dr. Morton is the trustee, 48,157 shares of
common stock held of record by the Donald L. Morton, M.D.,
Grantor Retained Annuity Trust, dated September 6, 2002, of
which Dr. Morton is the grantor, and 133,333 shares of
common stock held of record by the Donald L. Morton, M.D.,
Grantor Retained Annuity Trust #2, dated September 27,
2005, of which Dr. Morton is the grantor. The
48,157 shares held by the Donald L. Morton, M.D.,
Grantor Retained Annuity Trust dated September 6, 2002 are
currently distributable to The |
19
|
|
|
|
|
Morton Childrens Trust, a trust of which Dr. Morton
is the grantor. Dr. Morton disclaims beneficial ownership
of the 48,157 shares held by the Donald L.
Morton, M.D., Grantor Retained Annuity Trust dated
September 6, 2002 and the 133,333 shares held by the
Donald L. Morton, M.D., Grantor Retained Annuity
Trust #2 dated September 27, 2005. Also includes
32,938 shares held of record by OncoVac, Inc., of which the
Donald L. Morton Family Trust dated June 2, 1989 is the
sole stockholder. |
|
(7) |
|
Represents 135,831 shares of common stock held of record by
Mr. Hale, 77,184 shares of common stock held of record
by the Hale Family Trust, dated February 10, 1986, of which
Mr. Hale is a co-trustee, and 1,514 shares of common
stock held of record by the Michael T. Hale Trust, dated
December 26, 1991, for the benefit of Shane Hale, Tara
Hale, Erin Hale and David Garrett Hale. Mr. Hale disclaims
beneficial ownership of the 1,514 shares held by the
Michael T. Hale Trust, dated December 26, 1991. Of the
options which Mr. Hale holds 214,477 options have an
exercise price of between $8.46 and $9.90 per share and 91,566
options have an exercise price of between $23.79 and
$36.00 per share. |
|
(8) |
|
Represents 4,362 shares of common stock held of record by
Mr. LaRue and 22,727 shares of common stock held of
record by the William R. and Joyce E. LaRue Family Trust, dated
November 4, 1991, of which Mr. LaRue is a co-trustee. |
|
(9) |
|
Represents 250,580 shares held of record by Vector
Later-Stage Equity Fund II (QP), L.P. and
83,526 shares held of record by Vector Later-Stage Equity
Fund II, L.P. Mr. Phillips is the managing member of
Vector Fund Management II, L.L.C., which is the general partner
of Vector Later-Stage Equity Fund II (QP), L.P. and Vector
Later-Stage Equity Fund II, L.P. Mr. Phillips
disclaims beneficial ownership of these shares, except to the
extent of his pecuniary interest in the named fund. Also
includes 1,317 shares held of record by the Barclay A.
Phillips, IRA Rollover. Also includes 166 shares held of
record by Mr. Phillips. |
Section 16(a)
Beneficial Ownership
Reporting Compliance
Section 16(a) of the Exchange Act requires the
Companys directors and executive officers, and persons who
own more than ten percent of a registered class of the
Companys equity securities, to file with the SEC initial
reports of ownership and reports of changes in ownership of
common stock and other equity securities of the Company.
Officers, directors and greater than ten percent stockholders
are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file.
To the Companys knowledge, based solely on a review of the
copies of such reports furnished to the Company and written
representations that no other reports were required, during the
fiscal year ended December 31, 2006, all Section 16(a)
filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with,
with the exception of Mr. Benjamin. Mr. Benjamin filed
one Form 4 two days late, which reported three transactions.
Executive
Compensation
Compensation
Discussion and Analysis
Philosophy
of Our Executive Compensation Program
Our compensation committee has established a philosophy of
pay for performance to provide guidance for
executive compensation. We recognize that attracting, retaining
and motivating executive officers and other key employees are
critical to executing our corporate strategy and increasing
shareholder value. Our philosophy, therefore, is to fairly
compensate executive officers, with an emphasis on providing
incentives that promote both our short-term and long-term
objectives. Achievement of short-term objectives is rewarded
through the payment of base salary and annual bonuses
historically paid in cash, while grants of stock options that
vest over time encourage executive officers to focus on our
long-term goals. The compensation committee has the discretion
to materially increase or decrease compensation based on the
levels of achievement of the Companys abd the
officers objectives and performance.
20
In order to create the corporate environment for a successful
implementation of our long-term strategy, our executive
compensation program is further designed to encourage and reward
our senior management for:
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building shareholder value;
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implementing the corporate strategy as defined by the board of
directors;
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progressing the development of our product candidates towards
commercialization;
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conducting the business in a cost-efficient manner, applying
prudent financial planning, accounting and oversight;
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increasing public awareness of the company; and
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establishing and maintaining a highly committed and creative
organization living up to the highest ethical and business
standards.
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The market for experienced management is highly competitive in
our industry. We aim to attract and retain highly qualified
executives to manage each of our business functions. In doing
so, we seek to draw upon a pool of talent that is highly sought
after by both large and established pharmaceutical and
biotechnology companies in our geographic area and by other
development stage life science companies. As a result of the
merger between Micromet AG and CancerVax Corporation described
below, our research and development center is located in
Germany, while our finance, legal and corporate functions are
located in the United States. For that reason, our senior
management must be able to function in an international
environment and have the ability to manage personnel in
different countries and deal with language and cultural
differences. As a result, our executives are recruited from
positions in the United States and in Europe, and we compete
directly with international pharmaceutical and biotechnology
companies for experienced executives.
Overview
of Executive Compensation
Our executive compensation program consists of five components,
each of which is described in greater detail below:
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base salary;
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annual variable performance-based bonus awards, payable in cash
or equity;
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long-term stock-based incentive awards;
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other benefits, such as medical, dental, vision and life
insurance and disability coverage and participation in our
401(k) plan; and
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protections in the event of change of control and termination.
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Impact of
Merger between Micromet AG and CancerVax Corporation on
Compensation
CancerVax Corporation merged with Micromet AG, a privately held
German company, on May 5, 2006. As a result, this
Compensation Discussion and Analysis includes information on
compensation paid to certain individuals who served as officers
of CancerVax Corporation until the time of the merger and
certain individuals who served as officers of Micromet AG and
became officers of the Company upon closing of the merger.
Concurrently with the closing of the merger, the combined
company was renamed Micromet, Inc., and the Company
effected a
1-for-3
reverse stock split affecting all outstanding shares of Common
Stock, and as a result all share numbers described herein give
effect to such reverse stock split. In connection with the
merger, we underwent a significant change in management. As a
condition of the merger agreement, certain of the existing
directors of CancerVax resigned from the board of directors, and
certain members of Micromet AGs supervisory board were
appointed to fill these resulting vacancies. Additionally,
certain of the executive officers of CancerVax were terminated
or left the Company following the completion of the merger, and
the continuing executive team consisted almost exclusively of
former management of Micromet AG. David Hale, CancerVaxs
former president and chief executive officer, resigned these
positions upon the effectiveness of the merger, but remained on
the Companys board of directors as its new chairman.
21
As a result of the management team of Micromet AG becoming the
management team of the merged company, certain of the former
executive officers of CancerVax were terminated without cause
under the terms of their then-existing employment agreements. As
a result of these terminations, the Company was obligated to pay:
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twelve months of salary continuation payments at each affected
executives monthly base salary, except for Mr. Hale
who received eighteen months of salary continuation payments;
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an amount equal to the average of the executives bonuses
for the three years prior to the date of termination (prorated
for the period of time served by the executive during 2006 for
all executives other than Mr. Hale, whose bonus was not
prorated);
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costs associated with the executives continuation of
health insurance under COBRA for twelve months;
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life insurance benefits coverage to the extent the executive was
receiving such benefits prior to the date of
termination; and
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costs for outplacement services, up to $15,000.
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As a result of these provisions, Guy Gammon, CancerVaxs
Vice President of Clinical Development, and Dennis Van Epps,
CancerVaxs Vice President of Research, received amounts
such that they were among the Companys most highly
compensated executive officers during 2006, despite the fact
that they were not employed by us as executive officers as of
December 31, 2006 or left the Company shortly after the
closing of the merger. As a result, the compensation of
Messrs. Gammon and Van Epps in respect of services by such
officers to the Company in 2006 is reflected in the compensation
tables below.
As noted above, in connection with the merger, David F. Hale
resigned as president and chief executive officer of the
Company, but remained on the board of directors, assuming the
role of chairman. In connection with this transition and prior
to the closing of the merger, CancerVax and Mr. Hale
entered into an amendment to Mr. Hales then-existing
employment agreement. Under the terms of the amendment,
Mr. Hales resignation constituted a termination of
employment without cause following a change in control, as a
result of which the unvested portion of Mr. Hales
stock awards (consisting of options to purchase
54,369 shares of common stock), excluding
Mr. Hales stock option award granted to him on
March 20, 2006, was automatically accelerated. In addition,
under the terms of his amended employment agreement,
Mr. Hale was requested by the Company and agreed to take a
portion of his severance in the common stock of the Company at
fair market value. Mr. Hale received severance payments as
part of his termination, which were paid as follows:
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On May 5, 2006, Mr. Hale received a cash payment of
$227,200, plus 34,268 fully vested shares of the Companys
common stock (equal to $227,200 divided by $6.63, which was the
closing price of the Companys common stock on The NASDAQ
National Market on the trading date immediately preceding the
merger closing date, which price gives pro forma effect to the
1-for-3
reverse split effected on the merger closing date, of which
12,251 shares were withheld by the Company to satisfy tax
withholding obligations); and
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On January 4, 2007, Mr. Hale received a cash payment
of $317,800, plus 83,400 fully vested shares of the
Companys common stock (equal to $250,200, divided by
$3.00, which was the closing price of the Companys common
stock on The Nasdaq Global Market on the immediately preceding
trading date).
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As part of Mr. Hales severance arrangement, he is
also entitled to continued health benefits and life insurance
coverage at the Companys expense through November 2007,
and up to $15,000 in outplacement services. Mr. Hales
compensation received from the Company in respect of his service
to the Company during 2006 is reflected in the compensation
tables below.
Two executive officers of CancerVaxs management terminated
their employment with the Company at or shortly after the
merger, but remained as consultants to the combined company for
a period following the termination of their employment. William
LaRue, CancerVaxs Senior Vice President and Chief
Financial Officer, resigned his position with the company as of
June 1, 2006. Hazel Aker, CancerVaxs Senior Vice
President and General Counsel, resigned her position with the
Company as of May 5, 2006 upon the closing of the merger.
Each of Mr. LaRue and Ms. Aker served as a consultant
to the combined company from the date of termination of their
22
employment through August 15, 2006, and each was paid total
compensation of $50,000 for consulting services. As
Mr. LaRue served as CancerVaxs principal financial
officer until the date of his termination, his compensation
received from the Company in respect of his service to the
Company during 2006 is reflected in the compensation tables
below.
The merger also resulted in the Company assuming the existing
compensation obligations of Micromet AG with respect to certain
members of Micromet AGs management team who became
executive officers of the combined company in connection with
the merger. With respect to Dr. Itin, Mr. Mirow,
Dr. Baeuerle and Dr. Reinhardt, the Company negotiated
revised terms of employment with these executive officers at or
around the time of the merger. Additionally, as noted below, in
connection with the merger, these members of Micromet AGs
management team also received stock options that were assumed by
the combined company in the merger, becoming options to purchase
stock of Micromet, Inc. These assumed options had exercise
prices significantly below the trading price of the
Companys common stock immediately prior to the closing of
the merger.
Role of
Our Compensation Committee
Our compensation committee has the primary authority to
determine our companys compensation philosophy and
approves and administers our executive compensation and benefit
programs. Our compensation committee is appointed by our board
of directors, and consists entirely of directors who are
outside directors for purposes of
Section 162(m) of the Internal Revenue Code and
non-employee directors for purposes of
Rule 16b-3
under the Exchange Act. In order to ensure a full and frank
exchange of views by its members, the compensation committee
maintains the practice of holding executive sessions, without
management present, at each meeting of the committee. Since the
closing of the merger in May 2006, our compensation committee
has been comprised Messrs. Benjamin and Berriman, and Drs.
Carter and Stampacchia. Mr. Benjamin serves as the
committees chairman. Prior to the merger, CancerVaxs
compensation committee consisted of Dr. Carter, as well as
Drs. Royston and La Force. Drs. Royston and
La Force resigned their positions as directors and
compensation committee members of the Company upon the closing
of the merger.
Our compensation committee reviews the performance of our
executive officers, including the named executive officers,
during the first quarter of each fiscal year, and when
circumstances warrant, at times during the year. In connection
with this review, the committee reviews and, where appropriate,
adjusts base salaries of the executive officers, determines
their incentive bonuses relating to performance during the prior
year, and approves our management incentive compensation plan
for the upcoming year, including targets and individual and
corporate objectives for the year, which are then approved by
the board of directors. The committee also periodically reviews
equity holdings of the executive officers, including stock
options, in order to determine whether such officers are
appropriately incentivized and whether the grant of additional
stock options is appropriate or warranted.
During 2006, the CancerVax board of directors approved a
management incentive compensation plan for 2006, which was
designed to reward CancerVaxs executive officers for the
achievement of corporate objectives for 2006. In October 2006
our Compensation Committee ratified this incentive plan to be
used for evaluating performance of our executive officers during
2006, including those officers of Micromet AG who became
executive officers of the combined company. In February 2007,
the compensation committee awarded bonuses under the management
incentive compensation plan for 2006 and adopted a similar plan
for 2007.
The compensation committee believes that it is important that
the Companys executive compensation packages remain
competitive with other biopharmaceutical companies of a similar
size and stage of clinical development as the Company. In this
regard the committee engaged the services of Top Five Data
Services, Inc. (Top Five), an independent
compensation consulting firm. With the assistance of Top Five,
the compensation committee developed a list of comparable
biopharmaceutical companies that the compensation committee
determined were similar to our Company in terms of nature of
operations, stage of development, market capitalization or
number of employees. Some of these comparable companies have
product candidates with a similar therapeutic focus to ours. As
part of the committees evaluation of our executive
compensation during 2006, each element of the Companys
compensation program described below was compared, or
benchmarked, with the compensation programs of this peer group
of comparable companies. The committee, with the assistance of
Top Five, also benchmarked the total cash-based compensation
paid to our executive officers (including target bonuses
23
under our management incentive compensation plan), as well as
total compensation (including equity and all other components),
with the executive compensation packages of these comparable
companies. These comparisons are described below under
Elements of Our Executive Compensation Program.
Data regarding compensation history and market comparisons for
our Chief Executive Officer and each other named executive
officer were provided by Top Five to the compensation committee.
The chief executive officer made recommendations to the
compensation committee relating to compensation for each of the
other named executive officers, which the committee took under
advisement in its compensation decisions, but the committee may
accept or reject the chief executive officers
recommendations in its sole discretion. Executive officers were
not present at the time their compensation was discussed by the
compensation committee.
Elements
of Our Executive Compensation Program
As noted above and discussed more fully below, we utilize a mix
of compensation elements to provide short-term and long-term
incentives to our executives. The amount of each element of
compensation for the named executive officers is determined by
the compensation committee. These elements are described below.
The committees policy for allocating between short-term
and long-term compensation is designed to ensure adequate base
compensation to attract and retain executive personnel, while
providing incentives to maximize long-term value for the Company
and its stockholders. The committee has no predetermined policy
or target for the allocation between either cash and non-cash or
short-term and long-term incentive compensation. Rather, the
committee reviews historical and comparative information
regarding current and long-term goals in order to determine the
appropriate mix.
In order to specify our expectations with regard to our
executive officers duties and responsibilities, and to
provide greater certainty with regard to the amounts payable to
our executive officers in connection with certain terminations
or change in control events, our compensation committee has
approved, and we have entered into, employment agreements with
each of our executive officers. Except as provided below, all of
the employment agreements with our executive officers contain
substantially similar terms. Pursuant to the employment
agreements, each executive officer is required to devote
substantially all of his time and attention to our Company.
Short-term
Compensation
We utilize short-term compensation in the form of base salary,
annual adjustments to base salary and incentive-based bonuses
payable in cash or equity, to attract and retain qualified and
motivated executives and to reward our senior management for
sustaining the high level of engagement and effort required to
overcome near-term challenges and achieve near-term corporate
goals.
Base Salary. We strive to set an executive
officers base salary at levels which are necessary to
attract and retain qualified executives. Based on our
compensation committees benchmarking procedures, we
generally seek to set the base salaries of our executive
officers at approximately the 50th percentile for
comparable companies.
As a general matter, the base salary for each of our named
executive officers is initially established through negotiation
at the time the officer is hired, taking into account the
executives qualifications, experience, prior salary and
competitive salary information for corresponding positions in
comparable geographic locations. The committee also considers
any unique personal circumstances that motivated the executive
to leave his or her prior position and join our company. Each of
our executive officers then executes an employment agreement
that establishes the initial base salary. The employment
agreements do not provide for automatic annual increases in
salary; rather, the compensation committee annually reviews
these base salaries and makes adjustments to the salaries of
each named executive officer, taking into account seniority,
experience, position and functional role, level of
responsibility and the executives accomplishments against
individual and corporate objectives. Salaries may also be
reviewed throughout the year in the case of promotions or other
significant changes in the executives responsibilities. We
do not apply specific formulas to determine base salary
increases.
During 2006, as a result of the merger between Micromet AG and
CancerVax Corporation, the senior management of CancerVax was
replaced in its entirety by the senior management of Micromet
AG, whose salaries reflected local conditions and the
circumstances of Micromet AG. Our executives who are located in
Germany are
24
paid in Euros (). In this Compensation
Discussion and Analysis, where we have converted Euros to
U.S. Dollars, we have used an exchange rate of
$1.3335 per Euro, which was the published rate from the
OANDA Corporation currency database as of March 31, 2007.
Upon consummation of the merger, the compensation committee
authorized the Company to continue paying base salaries in the
same amounts as such individuals were receiving prior to the
merger under their employment agreements with Micromet AG. These
base salaries were 260,000, or approximately
$346,700, for Dr. Itin, our President and Chief Executive
Officer; 187,000, or approximately $249,900, for
Gregor Mirow, our former Senior Vice President of
Operations; 230,000, or approximately $306,700, for
Dr. Baeuerle, our Senior Vice President and Chief
Scientific Officer; and 180,000, or approximately
$240,000, for Dr. Reinhardt, our Senior Vice President of
Clinical Development. These base salaries had been established
by the compensation committee of the supervisory board of
Micromet AG based upon standards at comparable privately held
German biotechnology companies. Due to German statutory legal
requirements, Dr. Itins employment agreement with
Micromet AG was terminated as of the effective date of the
merger, and the combined company entered into a letter agreement
with Dr. Itin under which we agreed to compensate
Dr. Itin in the same manner as he was being compensated
prior to the merger, until a new employment agreement could be
finalized. In June 2006, following the merger, Dr. Itin,
Dr. Baeuerle and Dr. Reinhardt entered into new
employment agreements with the Company that superseded their
employment agreements with Micromet AG. As part of these
employment agreements, the base salaries for Dr. Itin,
Mr. Mirow and Dr. Baeuerle were increased
to 268,000, or approximately $357,400, for
Dr. Itin; 190,000, or approximately $253,400,
for Mr. Mirow; and 237,000, or approximately
$316,000, for Dr. Baeuerle.
As indicated above, after the merger, the compensation committee
engaged Top Five to conduct a survey of the compensation of
executives in comparable companies, including base salary
levels. After a review of the survey results the compensation
committee made a base salary adjustment for Dr. Reinhardt,
as the committee concluded that his base salary was
significantly below the median base salary for executives in
comparable positions at comparable companies.
Dr. Reinhardts base salary was increased
to 220,000, or approximately $293,400, effective as
of October 1, 2006.
In July 2006, the Company hired Matthias Alder to serve as our
Senior Vice President, General Counsel and Corporate Secretary.
Prior to joining the Company, Mr. Alder was a partner of
the Companys outside law firm, Cooley Godward Kronish LLP.
Taking into account various factors, including
Mr. Alders particular qualifications, his prior
involvement and familiarity with the Company in his role as
outside counsel, and his prior compensation as a partner of
Cooley Godward Kronish LLP, the compensation committee set
Mr. Alders initial base salary at $300,000 per
year. As an incentive for Mr. Alder to join our company,
the committee also agreed to make a supplemental payment of
$100,000 for the six months ending December 31, 2006, in
recognition of Mr. Alders decision to forfeit an
expected bonus from his former law firm.
In October 2006, the Company hired Christopher Schnittker to
serve as our Senior Vice President and Chief Financial Officer.
Based upon the base salaries of chief financial officers of
comparable companies, the compensation committee set
Mr. Schnittkers initial base salary at
$230,000 per year.
Based on a review of information from Top Five, the compensation
committee established base salaries for our named executive
officers to be in effect until the next annual review by the
committee. We expect these annual reviews to take place in the
first few months of each year. The base salaries for 2007,
retroactive to January 1, 2007 are 280,000, or
approximately $373,400, for Dr. Itin; $230,000 for
Mr. Schnittker; 248,000, or approximately
$330,700, for Dr. Baeuerle; 230,000, or
approximately $306,700, for Dr. Reinhardt; and $300,000 for
Mr. Alder. There was no increase in the base salaries for
Messrs. Schnittker or Alder, as each of them had joined the
Company in the second half of 2006. The increases for
Dr. Itin, Dr. Baeuerle and Dr. Reinhardt for 2007
were approximately 4%-5% over their base salaries as of the end
of 2006, after taking into account their contributions during
2006, their importance to the Companys development
programs and compensation levels of similarly situated
companies. In December 2006, Mr. Mirow entered into a
separation agreement with the Company, and he terminated his
employment with the Company effective in March 2007. In light of
Mr. Mirows imminent separation, at the time base
salaries were determined for 2007, he did not receive a base
salary increase for 2007.
Management Incentive Compensation Plan. The
compensation committee intends that a significant percentage of
each executive officers total short-term compensation be
made contingent upon the Companys
25
performance as well as upon his or her level of performance and
contribution toward the Companys performance. With this
component of our overall compensation program, we aim to
incentivize our executives to strive for exceptional performance
and the achievement of short-term corporate goals. We generally
seek to set targets for this short-term incentive compensation
at levels that, when combined with the executives base
salary, will cause the total cash compensation target for the
year to be close to the median levels for total short-term cash
compensation of executives in similar positions at comparable
companies.
The compensation committee establishes an annual management
incentive compensation plan, approved by our board of directors,
under which our management and other key employees, may be
eligible to receive annual performance bonuses. The annual
performance bonuses for participants in this plan are based on
the achievement of corporate goals and, except for our chief
executive officer, individual goals. Under this plan, incentive
bonuses may be paid in cash, through the issuance of stock or
stock options, or by a combination of cash, stock
and/or stock
options, at the discretion of the compensation committee,
subject to the approval of the board of directors. For 2006, all
such payments were made in cash.
Prior to the merger, the CancerVax board of directors had
approved the 2006 management incentive compensation plan.
However, in light of the changes in the composition of the board
of directors the compensation committee and the executive
management of the combined company following the merger, in
October 2006, the compensation committee of the combined company
ratified the 2006 management incentive compensation plan and
determined that the executive officers of Micromet AG who became
executive officers of the combined company would be eligible to
participate in the plan for 2006. In February 2007, the
compensation committee adopted a similar management incentive
compensation plan for 2007.
Generally, in order to be eligible to participate in the
management incentive compensation plan, an executive officer
must have been employed by the Company for at least three months
prior to the end of the year, and must have received certain
minimum performance review ratings. In order to establish the
corporate goals for a given year, the chief executive officer
presents to the compensation committee for approval a list of
the overall corporate objectives for the coming year, which are
subject to final approval by the board. The chief executive
officer, in consultation with the other executive officers
participating in the incentive plan, then develops a list of key
individual objectives for each of these executive officers. All
executive officers participating in the management incentive
compensation plan then develop a list of key individual
objectives, which must be approved by the chief executive
officer. Similar to the establishment of the objectives, the
compensation committee pursues a participatory process by which
each executive officer provides input with respect to whether he
believes that the objectives have been achieved.
Under the plan, each year the compensation committee designates
for each executive officer a target bonus amount, expressed as a
percentage of his salary. If an executive is not employed for
the full year, his or her incentive compensation will be
prorated. For 2006, the target bonus percentage for
Dr. Itin, our chief executive officer, was 50% of his base
salary, and for each of Mr. Alder, Mr. Mirow,
Dr. Baeuerle and Dr. Reinhardt, the other named
executive officers who were employed by the Company at the end
of the year and therefore participated in the incentive plan,
the target bonus was 35% of base salary. Mr. Schnittker did
not participate in the incentive plan for 2006, as he was not
employed by the Company for at least three months prior to the
end of the year. The 2007 incentive plan includes the same
target bonus percentages for the above individuals (excluding
Mr. Mirow, whose employment terminated in March
2007) as 2006, and Mr. Schnittkers target is
also 35% of his base salary for 2007.
The calculation of the incentive bonus to be paid to our chief
executive officer is entirely dependent upon the achievement of
our corporate performance goals. The corporate performance goals
for 2006 included the closing of certain corporate transactions,
financial goals, investor relations goals, the hiring of certain
key personnel, the achievement of regulatory milestones in our
clinical programs, and the achievement of certain results in our
research programs. The 2007 corporate performance goals
established by the compensation committee include the closing of
certain corporate transactions, share price performance goals,
investor relations goals, the hiring of certain key personnel,
the achievement of regulatory milestones in our clinical
programs, and the achievement of certain results in our research
programs. With respect to 2006, the corporate performance goals
were generally designed to be achievable given effective
performance of the executive officers and the Company. With
respect to 2007, the corporate performance goals have generally
been designed to be achievable given the effective
26
performance of the executive officers and the Company, but also
include a target amount for revenues to be generated from
research and development collaborations with third parties that
will require extraordinary efforts and a confluence of favorable
circumstances in order to be achieved.
For other executive officers, other than the chief executive
officer, the calculation of the incentive bonus depends upon the
achievement of both corporate and individual goals. The
individual goals vary between executive officers based upon each
executive officers job responsibilities, but they are
generally designed to provide incentives for the officer to help
the Company achieve its corporate goals. For 2006, the incentive
bonus for each of our executive officers other than the chief
executive officer was based 75% on the achievement of corporate
goals and 25% on the achievement of individual goals. For 2007,
the incentive plan approved by the compensation committee
provides for the same weighting of corporate and individual
goals.
When evaluating achievement of both corporate and individual
goals, the compensation committee places performance into one of
four categories: performance met or exceeded objectives or was
excellent in view of prevailing conditions; performance
generally met the years objectives or was very acceptable
in view of prevailing conditions; performance met some, but not
all, objectives; and performance was not acceptable in view of
prevailing conditions. Each of these categories results in a
range of multipliers to the target amount of the executive
officers bonus that is applicable to the individuals
corporate and, except in the case of the chief executive
officer, individual goals. The compensation committee has
discretion with respect to the actual multiplier to apply in
each case. For 2006 and 2007, the ranges for the four categories
were and are 75% to 150%, 50% to 75%, 25% to 50%, and 0%,
respectively. As a result, payments under this incentive
compensation plan could range from zero to 150% of the
respective target bonuses. Additionally, our compensation
committee retains the discretion to award additional bonuses
outside of the scope of the management incentive compensation
plan in extraordinary circumstances, although the committee did
not do so for 2006.
In February 2007, the compensation committee awarded incentive
compensation to our eligible named executive officers relating
to 2006 performance. For all participants, the committee
concluded that approximately 73% of the Companys corporate
objectives for 2006 had been accomplished, and therefore that
percentage was used as the multiplier for the portion of each
executives target bonus that was attributable to corporate
objectives. Total payments under the incentive plan were
calculated as set forth in the following table, and information
relating to these awards has also been included in the
Grants of Plan-Based Awards in Fiscal 2006 table
contained elsewhere in this proxy statement:
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Target Bonus (Base
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Portion of Target
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Portion of Target
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Percentage
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Percentage
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Salary times 50%
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Attributable to
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Attributable to
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Multiplier for
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Multiplier for
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for CEO and 35% for
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Corporate
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Individual
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Corporate
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Individual
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Total
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Name
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other officers)
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Objectives
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Objectives
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Objectives
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Objectives
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Award
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Christian Itin
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$174,200
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100
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%
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0
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%
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73
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%
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N/A
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$
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130,000
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Gregor Mirow
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$ 86,450
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75
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%
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25
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%
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73
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%
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80
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%
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$
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50,000
|
|
Matthias Alder
|
|
|
$ 52,500(prorated)
|
|
|
|
75
|
%
|
|
|
25
|
%
|
|
|
73
|
%
|
|
|
90
|
%
|
|
$
|
40,000
|
|
Patrick Baeuerle
|
|
|
$107,835
|
|
|
|
75
|
%
|
|
|
25
|
%
|
|
|
73
|
%
|
|
|
92.5
|
%
|
|
$
|
85,000
|
|
Carsten Reinhardt
|
|
|
$ 86,450
|
|
|
|
75
|
%
|
|
|
25
|
%
|
|
|
73
|
%
|
|
|
86.5
|
%
|
|
$
|
70,000
|
|
Long-term
Compensation
We believe that long-term compensation is an important component
of our overall executive compensation package, as it is intended
to incentivize our executives to pursue the creation of long
term stockholder value. In addition, because of the long
development cycles of product candidates in our industry, we
believe that there can be significant long-term rewards for
executives who remain with our company over a longer period of
time. Based on our compensation committees benchmarking,
we seek to establish levels of option grants as part of our
long-term compensation philosophy that provide for potential
stock ownership levels around the 50th percentile of
companies in our peer group, without taking into account any
stock ownership outside of the context of equity awards under
our equity incentive plan. This benchmarking is individually
tailored, however, by our compensation committee, such that the
projected stock ownership for some executives receiving high
performance ratings are between the 50th and
75th percentiles for our peer group.
27
At present, our long-term compensation consists solely of stock
options. Our 2003 equity incentive award plan also allows us to
provide other types of equity awards to our executive officers,
but our compensation committee does not currently anticipate
granting any types of equity awards other than stock options to
our executive officers. In addition, prior to the merger with
Micromet AG, CancerVax Corporation maintained an employee stock
purchase plan, which was available for all employees, although
this plan is not currently in use by the Company.
The compensation committee believes that grants of stock options
to our executive officers will allow the Company to:
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|
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|
further align interests between the executive and our
stockholders; and
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|
|
|
maintain competitive levels of total compensation by providing
an opportunity for increased equity ownership.
|
The Companys executive officers, along with all of the
Companys other employees, are eligible to participate in
the Companys 2003 equity incentive award plan. Stock
option grant levels are determined based on data from a
comparable group of companies gathered by, and recommendations
made by, Top Five. Option grants vary among executive officers
based on their positions and performance and are not granted
automatically to our executives on an annual basis. Newly hired
or promoted executive officers also typically receive stock
option grants in connection with those events. In addition, the
compensation committee considers the competitive conditions
applicable to the executive officers specific position. We
believe this strategy is consistent with the approach of other
development stage companies in our industry and, in our
compensation committees view, is appropriate for aligning
the interests of our executives with those of our stockholders
over the long term.
We believe that option-based compensation encourages retention
of our executive officers, as the awards are generally designed
to vest over time, usually four years for new hires, with
one-fourth of the number of shares vesting on the first
anniversary of the date of hire, and the remainder vesting in
equal monthly installments thereafter. In November 2006, the
compensation committee approved a new form of stock option
agreement, which changed the vesting schedule with respect to
options granted to existing employees (as opposed to new hires)
to monthly vesting in equal installments over a three-year
period from the date of grant. The committee was of the opinion
that this change to the vesting schedule would improve the
incentive set with stock option grants, as employees would see
an immediate impact of the stock option grant rather than only
after a one year waiting period. Stock options generally have a
term of ten years from the date of grant, and prior to exercise
of an option, the holder has no rights as a stockholder with
respect to the shares subject to such option, including voting
rights. We generally do not permit the early exercise of stock
options prior to vesting.
Our 2003 equity incentive award plan initially defined the
exercise price of our stock options to be the closing price of
our common stock on the NASDAQ Global Market on the trading day
immediately prior to the grant date. In November 2006, our
compensation committee established a process for the grant of
future stock options to existing and newly hired executives and
employees pursuant to which the grant will become effective on
the first day of the month following the decision of the
compensation committee to make the option grant, with the
exercise price to be the closing price of our common stock on
the last trading day preceding the effective date of the grant.
This procedure provides transparency to our employees and our
investors, and is followed rigorously to ensure that the
exercise price of our options will not be subject to concerns
that backdating of the options may have occurred at the time of
grant. Our compensation committee does not have any plan or
practice to coordinate stock option grants with the release by
the Company of material nonpublic information or any other
investor relations activities. Stock options are generally
approved at meetings of the compensation committee rather than
the full board of directors.
We do not have any security ownership guidelines or requirements
for our executive officers. The tables, elsewhere in this proxy
statement entitled Grants of Plan-Based Awards in Fiscal
2006 and Outstanding Equity Awards at
December 31, 2006 summarize the option awards made to
our named executive officers in 2006 and the stock option
holdings of our named executive officers as of December 31,
2006. For those named executive officers who were employed by
CancerVax prior to the merger with Micromet AG, namely
Messrs. Hale, LaRue, Gammon and Van Epps, such individuals
were awarded stock options by the former CancerVax compensation
committee. For Messrs. Alder and Schnittker, who joined the
Company after the merger, their option grants made in connection
28
with the commencement of their employment were determined by our
compensation committee in accordance with the objectives and
criteria described above.
For those named executive officers who were previously the
executive officers of Micromet AG, namely Dr. Itin,
Mr. Mirow, Dr. Baeuerle and Dr. Reinhardt, such
individuals had previously been holders of options to purchase
shares of capital stock of Micromet AG. As part of the business
discussions between CancerVax and Micromet relating to the
merger, it was agreed by the parties that options to purchase
Micromet AG capital stock would not be assumed in the merger. In
an effort to incentivize the individuals who would constitute
the new executive management team of the combined company
following the merger, the parties to the merger agreed that
these individuals would be granted options to purchase shares of
common stock of Micromet Holdings, Inc., a newly-established
parent company of Micromet AG that was the constituent party to
the merger with CancerVax. These named executive officers
received options on April 24, 2006 that were assumed by the
Company as a result of the merger. The share numbers for these
option grants in the Grants of Plan-Based Awards in Fiscal
2006 table below reflect the
agreed-upon
exchange ratio in the merger. The effective exercise price for
these stock options was set at 25% of the closing price of
CancerVax common stock on the trading date immediately preceding
the closing date of the merger. The parties to the merger agreed
to this discounted exercise price after taking into account that
these officers would forfeit options to purchase Micromet AG
capital stock.
Of the shares of our common stock underlying the options issued
to Dr. Itin, Mr. Mirow, Dr. Baeuerle and
Dr. Reinhardt at the time of the merger, 50% of such shares
were immediately vested upon grant, with the remaining 50%
vesting over two years, or through April 2008. This shortened
vesting period, when compared with the Companys standard
vesting schedule described above, was intended to recognize the
prior service of these individuals while employed by Micromet
AG, while also providing an incentive for such executive
officers to remain with the Company. While the aggregate number
of shares underlying these assumed Micromet Holdings, Inc. stock
options was negotiated by CancerVax and Micromet AG as part of
the merger discussions, the allocation of these options among
the individual executive officers was determined by the
compensation committee of the supervisory board of Micromet AG
and the recommendations of Dr. Itin as the chief executive
officer of Micromet AG. The allocation took into account each
recipients seniority with Micromet AG and the options
which they forfeited as a result of the merger.
In determining the stock option grants to be recommended for
grant to our executive officers in 2007, the compensation
committee evaluated each executives current stock option
holdings and potential ownership percentage of the Company on an
as-exercised basis. Assuming a scheduled increase in the number
of shares authorized for issuance under our 2003 equity
incentive award plan in June 2007, the compensation committee
then approved new grants of stock options that, when added to
the executives existing option holdings, would result in
total holdings near the 25th percentile for our peer group.
The options approved for grant by our compensation committee in
February 2007 will not take effect until such time as the share
reserve under our 2003 equity incentive award plan is
sufficiently large in order to accommodate such grants, either
as a result of the reversion of previously granted and forfeited
options to the plan or of the replenishment of our share reserve
in June 2007 in accordance with the terms of the plan. The
exercise price of all such grants will be equal to the closing
price of our common stock on the last trading day preceding the
grant date, and all such options will vest over a three-year
period in equal monthly installments. The share amounts approved
for option grants were 750,000 shares for Dr. Itin,
300,000 shares for Dr. Baeuerle, 100,000 shares
for Dr. Reinhardt, 50,000 shares for Mr. Alder
and 25,000 shares for Mr. Schnittker.
Other Benefits. In order to attract and retain
talented professionals, we provide our US-based executive
officers the following standard benefits:
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Medical, vision and dental insurance;
|
|
|
|
Life insurance;
|
|
|
|
Short-and long-term disability insurance;
|
|
|
|
Personal paid time off and other paid holidays; and
|
|
|
|
A 401(k) defined contribution plan. The Company does not make
matching contributions to the 401(k) plan.
|
29
To our Germany-based named executive officers, we make cash
payments in amounts comparable to those that Micromet AG is
making under government-mandated social security and health
insurance benefits programs for its employees in Germany. In
addition, we hold a group accident insurance policy that covers
those executives in the event of accident-related disability or
death.
We believe that these benefits are consistent with those offered
by other companies and specifically with those companies with
which we compete for employees.
We do not provide pension arrangements or post-retirement health
coverage for our executives or employees, nor do we provide any
nonqualified defined contribution plans or other deferred
compensation plans.
Perquisites. We also limit the perquisites
that we make available to our executive officers. Prior to the
merger with CancerVax, Mr. Hale received an automobile
allowance of $1,000 per month, which was eliminated upon
the closing of the merger. Under the terms of their employment
agreements, the Company is required to reimburse each of
Messrs. Alder and Schnittker for the cost of accidental
death and dismemberment, long-term care and life insurance in
place at the time they joined the Company. With respect to
Mr. Schnittker, the Company has agreed to pay all of
Mr. Schnittkers reasonable expenses in connection
with his relocation to the Washington, DC area as a result of
the relocation of the Companys executive offices in April
2007. In addition, the Company has agreed to reimburse
Mr. Schnittker for up to $25,000 in mortgage payments
incurred while attempting to sell his current residence after
his relocation to the Washington, DC area.
As noted above, Mr. Hale resigned his position as president
and chief executive officer of the Company upon the closing of
the merger with Micromet AG but remains as the chairman of the
Companys board of directors. In October 2006, our
compensation committee approved, and the Company entered into,
an agreement with Mr. Hale to reimburse him for 50% of the
current annual salary of his executive assistant, or
$38,000 per year. Due to the amount of time spent by
Mr. Hale on Company matters as its chairman, the committee
believed that it was appropriate to reimburse this expense. This
agreement was given retroactive effect to the closing of the
merger in May 2006 and will continue in effect during such time
as Mr. Hale continues to serve as the chairman of the
Companys board of directors. Mr. Hales
executive assistant is not employed by the Company, and the
Company is not responsible for the payment of any employee
benefits to Mr. Hales executive assistant or for the
withholding of any payroll or other taxes on the reimbursements
paid to Mr. Hale. The compensation committee will review
this agreement on an annual basis.
Change
of Control and Termination Protection
We believe that reasonable severance benefits for our executive
officers are important because it may be difficult for our
executive officers to find comparable employment within a short
period of time. We also believe that it is important to protect
our executive officers in the event of a change of control
transaction involving our company, as a result of which such
officers might have their employment terminated. In addition, we
believe that the interests of management should be aligned with
those of our stockholders as much as possible, and we believe
that providing protection upon a change of control is an
appropriate counter to any disincentive such officers might
otherwise perceive in regard to transactions that may be in the
best interest of our stockholders. As part of our normal course
of business, we engage in discussions with other biotechnology
and pharmaceutical companies about possible collaborations and
licensing transactions, as well as other ways in which the
companies may work together to further our respective long-term
objectives. In addition, many larger, established pharmaceutical
companies consider companies at similar stages of development to
ours as potential acquisition targets. We desire to encourage
our management team to act in the best interests of our
stockholders, even though their employment with the Company
could be terminated as a result of the transaction. As a result
of these considerations by our compensation committee, the
employment agreements with our executive officers provide for
severance benefits to be paid if the executives are terminated
under certain conditions, as well as benefits in connection with
a change in control of the Company.
Our employment agreements with our executive officers provide
each executive with certain severance benefits in the event his
employment is terminated by us other than for cause, if the
executive resigns for good reason or in the case of the
permanent disability of the executive. Specifically, in the
event of such a termination, the
30
executive officer will receive, conditioned upon the receipt by
the Company of a general release of claims, the following
benefits:
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|
|
|
|
any accrued but unpaid base salary as of the date of termination;
|
|
|
|
an amount that is the greater of (a) twelve months of
salary continuation payments (or eighteen months for
Dr. Itin upon termination in connection with a change of
control) or (b) the benefits under any other severance
benefit plan of the Company applicable to the executive officer;
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|
|
|
an amount equal to the average of the executive officers
bonuses for the three years prior to the date of termination
(which bonus will be prorated for the period of time served by
the executive during the year of termination, except if the
termination is within six months prior to or twelve months
following a change of control, in which case such bonus will not
be prorated; in addition, Dr. Itins bonus would not
be prorated in any event);
|
|
|
|
costs associated with the executives continuation of
health insurance under COBRA for twelve months (or eighteen
months for Dr. Itin upon termination in connection with a
change of control);
|
|
|
|
life insurance benefits coverage to the extent the executive was
receiving such benefits prior to the date of
termination; and
|
|
|
|
costs for outplacement services, up to $15,000.
|
In addition, in the event of the death of an executive officer,
the officers estate will be entitled to receive accrued
but unpaid base salary through the date of death, plus any other
amounts to which the officer was entitled under any bonus or
compensation plan or practice of the Company at the time of the
executives death; twelve months of salary continuation
payments; an amount equal to the officers bonus for the
year in which the death occurs, payable over the twelve month
period commencing on the date of death; and costs associated
with the continuation of health insurance for the
executives dependents under COBRA for twelve months.
In addition to the foregoing benefits, if the executive
officers employment is terminated by us other than for
cause, if the executive resigns for good reason or in the case
of the permanent disability or death of the executive, that
portion of the executives stock awards which would have
vested if the executive had remained employed for an additional
twelve months will immediately vest on the date of termination.
In the event of a change of control of the Company, 50% of each
executives unvested stock awards will immediately become
vested and exercisable on the date of the change of control.
Further, if the executive officers employment is
terminated by us other than for cause, or if the executive
resigns for good reason, within six months prior to or twelve
months following a change of control, all of the officers
remaining unvested stock awards will automatically vest and
become exercisable on the later of the date of termination or
the date of the first closing of any transaction or the
stockholder vote resulting in such change of control. For
Dr. Itin only, in the event of a change of control any
remaining unvested stock awards will become vested and
exercisable on the six-month anniversary of the date of the
change of control if he is employed by the Company at that time.
For purposes of the employment agreements, cause
generally means the executives material breach of the
executives employment agreement or any other written
agreement between the executive and the Company; the
executives gross negligence or willful misconduct in the
performance of his duties; the executives commission of
any act or omission constituting dishonesty or fraud that has a
material adverse impact on the Company; the executives
conviction of, or plea of guilty or no contest to, a felony;
conduct by the executive which in the good faith and reasonable
determination of the board of directors demonstrates gross
unfitness of the executive to serve; the executives
failure to attempt in good faith to implement a clear and
reasonable directive of the board of directors after written
notice of such failure, and failure by the executive to cure the
same within fifteen business days after receipt of such notice;
persistent unsatisfactory performance of the executives
job duties after written notice of such and failure to cure the
same after having been provided with a reasonable opportunity to
cure, if deemed curable; or executives breach of his
fiduciary duty to the Company. Prior to any determination by us
that cause has occurred, we will provide the
executive with written notice of the reasons for such
determination, afford the executive a reasonable opportunity to
remedy any such breach, and provide the executive an opportunity
to be heard prior to the final decision to terminate the
executives employment.
31
For purposes of the employment agreements, good
reason generally means the assignment to the executive of
any duties or responsibilities which result in the material
diminution of the executives position; a reduction in the
executives base salary; a relocation of the
executives place of employment to a location outside the
metropolitan area in which the executive works (or, for United
States executives, in excess of fifty miles from the
Companys executive offices), except for required travel on
company business; any material breach by us of the
executives employment after written notice of such breach
and failure by us to cure the breach within fifteen business
days after receipt of such notice; any purported termination of
the executives employment for cause by the Company that is
not in accordance with the definition of cause set forth in the
employment agreement; any failure to pay the executive the
earned bonus for any period under any management incentive
compensation plan adopted by the Company, if a majority of other
officers of the Company have been paid bonuses for such period
under such plan; or any failure by the Company to obtain the
assumption of the executives employment agreement by any
successor or assignee of the Company.
In December 2006, the Company and Gregor Mirow agreed to a
separation agreement, and Mr. Mirow departed the Company in
March 2007. Mr. Mirow was deemed to have been terminated
without cause under his employment agreement, and accordingly,
he was entitled to the severance benefits described above and
the acceleration of vesting of all of his stock options. His
twelve months of salary continuation was paid as a lump sum
payment of approximately $277,000 on the termination date.
As described above, in connection with the merger between
CancerVax and Micromet AG, a number of members of the executive
team of CancerVax were terminated without cause or terminated
their employment with CancerVax for good reason. These CancerVax
executive officers had employment agreements with CancerVax that
provided for severance benefits similar to those described above
and currently in place for the Company. As a result, the Company
was required to make salary continuation payments and prorated
bonus payments to such officers, including Messrs. Hale,
Gammon and Van Epps, described above and in the compensation
tables below.
Total
Compensation
We intend to continue our strategy of compensating our named
executive officers at competitive levels consistent with those
described above, with the opportunity to earn above-market pay
for above-market performance, through programs that emphasize
performance-based incentive compensation in the form of cash and
equity. To that end, total executive compensation is structured
to ensure that, due to the nature of our business, there is an
equal focus on our financial performance, individual
performance, and the progress toward executing our long-term
corporate strategy. For 2006, the total compensation paid to the
named executive officers who were serving as our executive
officers at the end of 2006 fell at or near the median of total
compensation paid to executives holding equivalent positions in
our comparable group of companies. We believe that this position
was consistent with our financial performance, the individual
performance of each of our named executive officers and the
progress towards achieving our long-term strategic goals. We
also believe that the total compensation was reasonable in the
aggregate.
In light of our compensation philosophy, we believe that the
total compensation package for our executives should continue to
consist of base salary, annual cash incentive awards (bonus)
tied to corporate and individual performance objectives,
long-term equity-based incentive compensation, and the other
benefits described above. The 2007 base salaries and incentive
compensation levels have been established to result in total
compensation to our named executive officers within a range of
compensation paid to executives holding equivalent positions in
our comparable group of companies. The competitive posture of
our total annual compensation versus the market benchmarks will
vary from year to year based on corporate and individual
performance, as well as the performance of the comparable group
companies and their respective levels of annual performance
bonus awards made to their executive officers.
Evolution
of our Compensation Strategy
Our compensation strategy is necessarily tied to the stage of
our corporate development. Accordingly, the specific direction,
emphasis and components of our executive compensation program
continue to evolve in parallel
32
with the evolution of our corporate and business strategy. Our
Compensation Discussion and Analysis will, in the future,
reflect these evolutionary changes.
Impact of
Financial Accounting and Tax Considerations on Compensation
Decisions
As described in greater detail in Managements
Discussion and Analysis of Financial Condition and Results of
Operations of our Annual Report on
Form 10-K
for the year ended December 31, 2006, beginning in 2006, we
account for stock-based compensation provided to our employees
in accordance with Statement of Financial Accounting Standards
(SFAS) No. 123(R). SFAS No. 123(R)
requires us to estimate the fair value of stock-based
compensation at the time of the award and record that value as
an expense over the vesting period of the award. Applicable
accounting rules also require us to record cash compensation as
an expense at the time the obligation is accrued.
Unless and until we achieve sustained profitability, the
availability to us of a tax deduction for compensation expense
will not be material to our compensation decisions. We structure
cash incentive compensation so that it is taxable to our
executive officers at the time it is paid. We currently intend
that all cash compensation paid will be tax deductible by us.
However, with respect to equity compensation awards, while any
gain recognized by employees from nonqualified options should be
deductible, to the extent that an option constitutes an
incentive stock option, gain recognized by the optionee will not
be deductible by us if there is no disqualifying disposition by
the optionee. In addition, if we grant restricted stock awards
that are not subject to performance vesting, they may not be
fully deductible by us at the time the award is otherwise
taxable to the recipient. With respect to equity and cash
compensation, we generally seek to structure such awards so that
they do not constitute deferred compensation under
Section 409A of the Internal Revenue Code, or the Code,
thereby avoiding penalties and taxes on such compensation
applicable to deferred compensation.
Limitations on deductibility of compensation may occur under
Section 162(m) of the Code, which generally limits the tax
deductibility of compensation paid by a public company to its
chief executive officer and certain other highly compensated
executive officers to $1 million in the year the
compensation becomes taxable to the executive officer. There is
an exception to the limit on deductibility for performance-based
compensation that meets certain requirements.
The non-performance based compensation paid in cash to our
executive officers in 2006 did not exceed the $1 million
limit per officer, and the compensation committee does not
anticipate that the non-performance based compensation to be
paid in cash to our executive officers in 2007 will exceed that
limit. In addition, our 2003 equity incentive award plan has
been structured so that any compensation paid in connection with
the exercise of option grants under that plan with an exercise
price equal to at least the fair market value of the option
shares on the date of grant will qualify as performance-based
compensation and therefore not subject to the deduction
limitation.
We periodically review the potential consequences of
Section 162(m) and may structure the performance-based
portion of our executive compensation to comply with certain
exemptions in Section 162(m). However, we reserve the right
to use our judgment to authorize compensation payments that do
not comply with the exemptions in Section 162(m) when we
believe that such payments are appropriate and in the best
interests of our stockholders, after taking into account
changing business conditions or the officers performance.
Summary
Compensation Table
The following table shows for the fiscal year ended
December 31, 2006, compensation awarded to or paid to, or
earned by, (i) all persons who served as the Companys
principal executive officer during fiscal 2006, (ii) all
persons who served as the Companys principal financial
officer in fiscal 2006, (iii) its three other most highly
compensated executive officers at December 31, 2006 and
(iv) two additional officers whose employment ended in 2006
and are included because their compensation exceeds that of
other named executive officers. For amounts payable in Euros
33
we have used an exchange rate of $1.3335 per Euro, which
was the published rate from the OANDA Corporation currency
database as of March 31, 2007.
Summary
Compensation Table for Fiscal 2006
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Non-Equity
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|
Option
|
|
Incentive Plan
|
|
All Other
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Name and Principal Position
|
|
Year
|
|
Salary(1)($)
|
|
Awards(9)($)
|
|
Compensation(10)($)
|
|
Compensation($)
|
|
Total(14)
|
|
Christian Itin
|
|
|
2006
|
|
|
|
357,378
|
|
|
|
754,964
|
|
|
|
130,000
|
|
|
|
16,888
|
(15)
|
|
|
1,259,230
|
|
President and Chief Executive
Officer(2)
|
|
|
|
|
|
|
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|
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David F. Hale
|
|
|
2006
|
|
|
|
242,155
|
|
|
|
1,283,441
|
|
|
|
|
|
|
|
1,174,113
|
(11)
|
|
|
2,699,709
|
|
Former Chief Executive Officer(5)
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|
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|
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|
Christopher Schnittker
|
|
|
2006
|
|
|
|
51,142
|
|
|
|
12,141
|
|
|
|
|
|
|
|
|
|
|
|
63,283
|
|
Senior Vice President, and Chief
Financial Officer(3)
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregor K. Mirow
|
|
|
2006
|
|
|
|
253,365
|
|
|
|
505,991
|
|
|
|
50,000
|
|
|
|
14,347
|
(15)
|
|
|
823,703
|
|
Senior Vice President, Operations
and Former Acting Chief Financial Officer(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William R. LaRue
|
|
|
2006
|
|
|
|
133,051
|
|
|
|
373,602
|
|
|
|
|
|
|
|
50,000
|
|
|
|
556,653
|
|
Former Chief Financial Officer(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patrick A. Baeuerle
|
|
|
2006
|
|
|
|
316,040
|
|
|
|
603,165
|
|
|
|
85,000
|
|
|
|
16,724
|
(15)
|
|
|
1,020,929
|
|
Senior Vice President and Chief
Scientific Officer(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carsten Reinhardt
|
|
|
2006
|
|
|
|
293,370
|
|
|
|
196,382
|
|
|
|
70,000
|
|
|
|
11,873
|
(15)
|
|
|
571,625
|
|
Senior Vice President, Clinical
Development(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Matthias Alder
|
|
|
2006
|
|
|
|
148,682
|
|
|
|
71,132
|
|
|
|
40,000
|
|
|
|
100,000
|
(16)
|
|
|
359,814
|
|
Senior Vice President and General
Counsel(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guy Gammon, M.B., B.Sc.,
|
|
|
2006
|
|
|
|
150,960
|
|
|
|
358,147
|
|
|
|
|
|
|
|
294,552
|
(12)
|
|
|
803,659
|
|
M.R.C.P. (U.K.) Former Vice
President, Clinical Development(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis Van Epps, Ph.D.
|
|
|
2006
|
|
|
|
90,205
|
|
|
|
327,840
|
|
|
|
|
|
|
|
240,255
|
(13)
|
|
|
658,300
|
|
Former Vice President, Research(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Amounts in this column reflect base salary for each of the named
executive officers earned in 2006. Amounts in this column also
include any salary contributed by the named executive officer to
our 401(k) plan during the period for which they were employed
by the Company. |
|
(2) |
|
With respect to Drs. Itin, Baeuerle and Reinhardt, and
Mr. Mirow, each of such individuals became an employee of
the Company on May 5, 2006, in connection with the merger
between CancerVax and Micromet AG. Prior to such date, these
individuals were employees of Micromet AG, and their
compensation as officers of that entity from January 1,
2006 to May 4, 2006 has not been included in this table.
For information concerning these individuals base salaries
for 2006 and 2007, see the Compensation Discussion and Analysis
section of this proxy statement. |
|
(3) |
|
Mr. Schnittker became our Senior Vice President and Chief
Financial Officer on October 10, 2006. For information
concerning his base salary for 2006 and 2007, see the
Compensation Discussion and Analysis section of this proxy
statement. |
34
|
|
|
(4) |
|
Mr. Alder became our Senior Vice President, General Counsel
and Corporate Secretary on July 1, 2006. For information
concerning his base salary for 2006 and 2007, see the
Compensation Discussion and Analysis section of this proxy
statement. |
|
(5) |
|
Mr. Hales employment with the Company as its chief
executive officer was terminated on May 5, 2006 in
connection with the merger with Micromet AG. Upon the
consummation of the merger, Mr. Hale remained on the board
of directors of the Company and assumed the position of chairman
of the board. |
|
|
|
Mr. Hales termination of employment with the Company
was deemed to be other than for cause in connection
with a change of control of the Company. Under
Mr. Hales employment agreement with the Company, as
amended, he was entitled to receive his base salary in effect
immediately prior to the date of termination for the
eighteen month period following the date of termination,
plus an amount equal to his average bonus for the years 2003 to
2005. In connection with the merger, Mr. Hale was asked by
the Company and agreed to take a portion of his severance in
shares of the Companys stock at fair market value. In this
regard, Mr. Hale has received the following severance
payments: (i) a cash payment of $227,200, on May 5,
2006, (ii) a number of shares of the Companys common
stock equal to $227,200 divided by the closing price of the
Companys common stock on The NASDAQ National Market, on
May 4, 2006, which was $6.63 per share after giving
prospective effect to the 1-for-3 reverse merger on May 5,
2006, (iii) a cash payment of $317,800 on January 4,
2007, (iv) a number of shares of the Companys common
stock on January 4, 2007 equal to $250,200 divided by the
closing price of the Companys common stock on
December 29, 2006, which was $3.00 per share. In
addition, under his employment agreement, Mr. Hale was
entitled to receive (i) reimbursement of health insurance
premiums for up to 18 months, (ii) life insurance
benefits through February 2007 and (iii) up to $15,000 in
costs for outplacement services until March 2007. For the shares
issued to Mr. Hale in May 2006, the Company withheld
12,251 shares (at a value of $6.63 per share) from the
gross number of 34,268 shares that would have otherwise
been payable to Mr. Hale, in order to satisfy tax
withholding obligations. |
|
|
|
In addition, under our non-employee director compensation
policy, Mr. Hale also was entitled to receive (i) an
annual retainer of $85,000 per year for service as chairman
of the board, (ii) a retainer of $4,000 per quarter
for service as a director and (iii) a fee of
$1,500 per board meeting attended. In accordance with the
Companys non-employee director compensation policy adopted
at the time of the merger, for the first year following the
merger, fees paid to Mr. Hale in accordance with his
service as chairman are to be paid in shares of the
Companys common stock rather than in cash. During 2006,
Mr. Hale earned $85,000 in chairman retainer fees, $10,666
in director service fees and $10,500 in fees for attendance at
board meetings. This total of $106,166 was paid in shares of the
Companys common stock valued at the closing price of the
Companys common stock on the trading date immediately
preceding the date of payment. For the shares issued to
Mr. Hale in consideration of his chairman retainer fees,
the Company withheld 4,273 shares (at a value of $6.63 per
share) from the gross number of shares that would have otherwise
been payable to Mr. Hale, in order to satisfy tax
withholding obligations. |
|
|
|
Of the options which Mr. Hale holds, 214,477 options have
exercise prices between $8.46 and $9.90, per share and 91,566
options have exercise prices between $23.79 and $36.00, per
share. |
|
|
|
In October 2006, our compensation committee approved, and the
Company entered into, an agreement with Mr. Hale to
reimburse him for 50% of the current annual salary of his
executive assistant, or $38,000 per year. This agreement
was given retroactive effect to the closing of the merger in May
2006 and will continue in effect during such time as
Mr. Hale continues to serve as the chairman of the board of
directors. Mr. Hales executive assistant is not
employed by the Company, and the Company is not responsible for
the payment of any employee benefits to Mr. Hales
executive assistant or for the withholding of any payroll or
other taxes on the reimbursements paid to Mr. Hale. The
compensation committee will review the agreement on an annual
basis. |
|
(6) |
|
Mr. LaRues employment with the Company was terminated
effective June 1, 2006. Mr. LaRue provided consulting
services to the Company from June 1, 2006 until
August 15, 2006 in exchange for fixed compensation in the
amount of $50,000, which is reflected in the Other
Compensation column. |
|
(7) |
|
Dr. Gammons employment with the Company was
terminated effective July 14, 2006, and the amount
reflected in the Salary column represents base
salary earned through that date. Under the terms of |
35
|
|
|
|
|
Dr. Gammons employment agreement, his termination was
deemed to be other than for cause, and as a result
Dr. Gammon was entitled to receive (i) twelve months
of salary continuation payments, (ii) a prorated bonus
equal to the average of his bonus for the three prior years
multiplied by the portion of 2006 during which Dr. Gammon
provided services to the Company, (iii) reimbursement of
twelve months of health insurance premiums, and (iv) up to
$15,000 in costs for outplacement services. This total severance
compensation is included in the Other Compensation
column. |
|
(8) |
|
Dr. Van Eppss employment with the Company was
terminated effective April 15, 2006, and the amount
reflected in the Salary column represents base
salary earned through that date. Under the terms of Dr. Van
Eppss employment agreement, his termination was deemed to
be other than for cause, and as a result Dr. Van Epps was
entitled to receive (i) twelve months of salary
continuation payments, (ii) a prorated bonus equal to the
average of his bonus for the three prior years multiplied by the
portion of 2006 during which Dr. Van Epps provided services
to the Company, (iii) reimbursement of twelve months of
health insurance premiums, and (iv) up to $15,000 in costs
for outplacement services. This total severance compensation is
included in the Other Compensation column. |
|
(9) |
|
Amounts in this column represent the compensation costs incurred
by the Company during 2006 related to stock options held by the
named executive officer, rather than an amount paid to or
realized by the named executive officer. These amounts were
calculated utilizing the provisions of
SFAS No. 123(R), using a Black-Scholes pricing model
and assuming no forfeiture of awards granted to the named
executive officers. For additional information regarding
assumptions made by the Company in valuing equity awards under
SFAS 123(R), see Notes 3 and 15 to the Companys
consolidated financial statements for the year ended
December 31, 2006 and Note 1 to CancerVax
Corporations consolidated financial statements for the
year ended December 31, 2005. |
|
(10) |
|
Amounts in this column consist of the total performance-based
compensation earned by the named executive officers under the
Companys 2006 Management Incentive Bonus Plan for service
rendered in fiscal year 2006, which amounts were awarded in
February 2007. A presentation of the potential incentive
compensation for 2006 for each of the named executive officers
is set forth in the Grants of Plan-Based Awards in Fiscal
2006 table below, and a discussion of the methodology by
which the awards under the 2006 Management Incentive
Compensation Plan were determined is set forth in the
Compensation Discussion and Analysis section of this
proxy statement. |
|
(11) |
|
Amounts in this column are comprised of the following:
(i) $106,166 in director fees as described in footnote
(5) above, paid in shares of the Companys common
stock at fair market value; (ii) severance benefits of
$1,022,400, of which $545,000 was paid in cash and $477,400 was
paid in shares of the Companys common stock as described
in footnote (5) above; (iii) $7,462 for health
insurance premiums paid on behalf of Mr. Hale as described
in footnote (5) above; (iv) $4,231 for an auto
allowance, which Mr. Hale was paid prior to the merger,
through May 2006; (v) $9,029 for life insurance premiums
accrued on Mr. Hales behalf in 2006 and that will be
paid by the Company in 2007 and (vi) $24,825 for
reimbursement of 50% of the salary of Mr. Hales
administrative assistant for the period of May 5, 2006
through December 31, 2006 as described in footnote
(5) above. |
|
(12) |
|
Represents severance benefits as described in footnote
(7) above of $236,250 in salary continuation payments, of
which $108,281 was paid in 2006 and $127,969 was accrued in 2006
and will be paid in 2007, $32,070 as a prorated bonus, as
determined in accordance with the officers employment
agreement, $11,232 for health insurance premiums paid on behalf
of Dr. Gammon and $15,000 for executive outplacement
services paid on behalf of Dr. Gammon. |
|
(13) |
|
Represents severance benefits as described in footnote
(8) above of $223,000 in salary continuation payments, all
of which was paid in 2006, and $17,255 as a prorated bonus, as
determined in accordance with the officers employment
agreement. No further severance benefits remain to be paid. |
|
(14) |
|
The dollar values in this column for each named executive
officer represent the sum of all compensation referenced in the
preceding columns. |
|
(15) |
|
Amounts are comprised of payments made from May to December by
the Company to the executive officer in lieu of payments on the
officers behalf into the state pension, unemployment and
health insurance system. |
36
|
|
|
|
|
Also includes premiums paid by the Company on the officers
behalf for accidental death and disability insurance. |
|
(16) |
|
Represents a transition payment for 2006 only. |
Grants
of Plan-Based Awards
The following table shows for the fiscal year ended
December 31, 2006, certain information regarding minimum
target and maximum cash bonuses that could have been earned in
2006 under our 2006 Management Incentive Compensation Plan for
each of the named executive officers, as well as each stock
option granted to each named executive officer during 2006.
Grants of
Plan-Based Awards in Fiscal 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts
|
|
|
Number of
|
|
|
|
|
|
Grant Date
|
|
|
|
|
|
|
Under Non-Equity
|
|
|
Securities
|
|
|
Exercise or
|
|
|
Fair Value
|
|
|
|
|
|
|
Incentive Plan Awards(1)
|
|
|
Underlying
|
|
|
Base Price of
|
|
|
of Stock and
|
|
|
|
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Options
|
|
|
Option Awards
|
|
|
Option Awards
|
|
Name
|
|
Grant Date
|
|
|
($)(5)
|
|
|
($)(2)
|
|
|
($)(4)
|
|
|
(#)
|
|
|
($/Sh)
|
|
|
($)(12)
|
|
|
Christian Itin
|
|
|
5/5/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
340,772
|
(6)
|
|
|
1.66
|
(6)
|
|
|
1,124,514
|
|
|
|
|
10/3/06
|
|
|
|
43,550
|
|
|
|
174,200
|
|
|
|
261,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Hale
|
|
|
3/20/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,333
|
(7)
|
|
|
8.61
|
(7)
|
|
|
194,985
|
|
|
|
|
5/5/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,000
|
(8)
|
|
|
6.63
|
(8)
|
|
|
319,179
|
|
Christopher Schnittker
|
|
|
11/13/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
(9)
|
|
|
2.60
|
(9)
|
|
|
369,280
|
|
Gregor Mirow
|
|
|
5/5/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
228,391
|
(6)
|
|
|
1.66
|
(6)
|
|
|
753,667
|
|
|
|
|
10/3/06
|
|
|
|
5,403
|
|
|
|
86,450
|
|
|
|
129,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William LaRue
|
|
|
3/27/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
(10)
|
|
|
8.70
|
(10)
|
|
|
45,012
|
|
Patrick Baeuerle
|
|
|
5/5/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
272,253
|
(6)
|
|
|
1.66
|
(6)
|
|
|
898,408
|
|
|
|
|
10/3/06
|
|
|
|
6,740
|
|
|
|
107,835
|
|
|
|
161,753
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carsten Reinhardt
|
|
|
5/5/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
79,936
|
(6)
|
|
|
1.66
|
(6)
|
|
|
263,781
|
|
|
|
|
10/3/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
170,064
|
(11)
|
|
|
2.62
|
(11)
|
|
|
316,421
|
|
|
|
|
10/3/06
|
|
|
|
5,403
|
|
|
|
86,450
|
|
|
|
129,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Matthias Alder
|
|
|
7/27/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
250,000
|
(11)
|
|
|
3.70
|
(11)
|
|
|
661,585
|
|
|
|
|
10/3/06
|
|
|
|
3,281
|
(3)
|
|
|
52,500
|
(3)
|
|
|
78,750
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
Guy Gammon
|
|
|
3/27/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,667
|
(10)
|
|
|
8.70
|
(10)
|
|
|
38,042
|
|
Dennis Van Epps
|
|
|
3/27/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,667
|
(10)
|
|
|
8.70
|
(10)
|
|
|
38,042
|
|
|
|
|
(1) |
|
Our 2006 Management Incentive Plan is administered by our
compensation committee to reward certain key employees of the
Company, including the named executive officers. The operation
of the incentive compensation plan is described in detail in the
Compensation Discussion and Analysis section of this
proxy statement. Actual amounts that were paid to our named
executive officers under the 2006 management incentive
compensation plan are disclosed in the Summary Compensation
Table for 2006 under the column Non-Equity Incentive Plan
Compensation. |
|
(2) |
|
The Management Incentive Compensation Plan approved by the
compensation committee establishes a target bonus amount,
expressed as a percentage of the salary of the participating
executive officers. For 2006, the target bonus percentage for
Dr. Itin, our chief executive officer, was 50% of his base
salary, and for each of Mr. Alder, Mr. Mirow,
Dr. Baeuerle and Dr. Reinhardt, the other named
executive officers who were employed by the Company at the end
of 2006 and therefore participated in the incentive plan, the
target bonus was 35% of his base salary. Mr. Schnittker did
not participate in the incentive plan for 2006, as he was not
employed by the Company for at least three months prior to the
end of the year. Messrs. Hale, LaRue, Gammon and Van Epps
did not participate in the incentive plan for 2006, as they
terminated their employment with the Company during the year. |
37
|
|
|
|
|
For executive officers other than the chief executive officer,
the calculation of the incentive bonus depends upon the
achievement of both corporate and individual goals. For 2006,
the incentive bonus for each of our executive officers other
than the chief executive officer was based 75% on the
achievement of corporate goals and 25% on the achievement of
individual goals, while the incentive bonus for the chief
executive officer was based 100% on the achievement of corporate
goals. |
|
(3) |
|
The amounts of Mr. Alders threshold, target and
maximum payouts under the incentive compensation plan were
prorated, as he was not employed by the Company until July 2006. |
|
(4) |
|
When evaluating achievement of both corporate and individual
goals, the compensation committee placed performance into one of
four categories: excellent; very acceptable; performance met
some, but not all, objectives; and not acceptable. Each of these
categories results in a range of multipliers to the target
amount of the executive officers bonus that is applicable
to the individuals corporate and, except in the case of
the chief executive officer, individual goals. The compensation
committee has discretion with respect to the actual multiplier
to apply in each case. For 2006, the ranges for the four
categories were 75% to 150%; 50% to 75%; 25% to 50%; and 0%,
respectively. As a result, payments under this incentive
compensation plan for 2006 could range from zero to 150% of the
respective target bonuses. Therefore, the maximum
amount reported is equal to 150% of the target. |
|
(5) |
|
For the chief executive officer, 100% of his target payout is
based upon the achievement of corporate goals, and the minimum
payout for performance met some, but not all,
objectives was 25%. As a result, the threshold
payout for the chief executive officer is equal to 25% of his
target. For each of the other named executive
officers participating in the incentive compensation plan, 75%
of the target payout is based upon the achievement of corporate
goals and 25% is based upon the achievement of individual goals.
Assuming that achievement of the corporate goals is deemed to be
not acceptable and therefore no award is made for
75% of the target, the threshold payout would be
equal to the target multiplied by the 25% multiplier
for the individual goals portion multiplied by 25% for minimum
payout for performance met some, but not all,
objectives, or 6.25% of the target. |
|
(6) |
|
These named executive officers received options in Micromet
Holdings on April 24, 2006 that were assumed by the Company
as a result of the merger on May 5, 2006, at which time the
exercise price became fixed. The share numbers for these option
grants reflect the
agreed-upon
exchange ratio in the merger. The effective exercise price for
these stock options was set at 25% of the closing price of
CancerVax common stock on the trading date immediately preceding
the closing date of the merger. The parties to the merger agreed
to this discounted exercise price after taking into account that
these officers would forfeit options to purchase Micromet AG
capital stock. Of the shares underlying these options, 50% of
such shares were immediately vested upon grant, with the
remaining 50% vesting in 24 equal monthly installments. |
|
(7) |
|
The exercise price per share is equal to the closing price of
the Companys common stock on the date of grant. The option
vests monthly over 36 months for so long as Mr. Hale
continues to provide service to the Company as a director. |
|
(8) |
|
This stock option was granted to Mr. Hale in accordance
with the Companys non-employee director compensation
policy for his service as the chairman of the board. The
exercise price per share is equal to the closing price of the
Companys common stock on the trading date immediately
proceeding the date of grant. The option vests monthly over
36 months for so long as Mr. Hale continues to provide
service to the Company as a director. |
|
(9) |
|
The exercise price per share is equal to the closing price of
the Companys common stock on the trading date immediately
preceding the date of grant. Twenty-five percent of the shares
underlying the option vest on October 10, 2007, the first
anniversary of Mr. Schnittkers date of hire, with the
remainder vesting in 36 equal monthly installments thereafter. |
|
(10) |
|
These stock options vested in full upon termination of the
employment of these individuals with the Company and will remain
exercisable for a period of one year following such termination. |
|
(11) |
|
The exercise price per share is equal to the closing price of
the Companys common stock on date of grant. Twenty-five
percent of the shares underlying the option vest on the first
anniversary of the date of grant, with the remainder vesting in
36 equal monthly installments thereafter. |
38
|
|
|
(12) |
|
Amounts in this column were calculated utilizing the provisions
of SFAS No. 123(R), using a Black-Scholes pricing
model. For additional information regarding assumptions made by
the Company in valuing equity awards under
SFAS No. 123(R), see Notes 3 and 15 to the
Companys consolidated financial statements for the year
ended December 31, 2006 and Note 1 to CancerVax
Corporations consolidated financial statements for the
year ended December 31, 2005. |
Outstanding
Equity Awards at December 31, 2006
The following table shows, as of December 31, 2006, certain
information regarding outstanding equity awards at fiscal year
end for the named executive officers, all of which are
unexercised stock options. All share numbers and option prices
in the table below give effect to a
1-for-3
reverse stock split on May 5, 2006.
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Number of
|
|
|
|
|
|
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
|
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
|
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
Market Price of
|
|
|
|
|
Options
|
|
Options
|
|
Exercise
|
|
Common Stock on
|
|
Option
|
|
|
Exercisable
|
|
Unexercisable
|
|
Price
|
|
Date of Grant
|
|
Expiration
|
Name
|
|
(#)
|
|
(#)
|
|
($)
|
|
($)(7)
|
|
Date
|
|
Christian Itin
|
|
|
227,181
|
|
|
|
113,591
|
(1)
|
|
|
1.66
|
|
|
|
6.51
|
(8)
|
|
|
5/5/16
|
|
David Hale
|
|
|
102,879
|
|
|
|
0
|
|
|
|
3.23
|
|
|
|
3.23
|
(12)
|
|
|
12/19/10
|
|
|
|
|
68,182
|
|
|
|
0
|
|
|
|
9.90
|
|
|
|
9.90
|
(12)
|
|
|
3/20/12
|
|
|
|
|
83,333
|
|
|
|
0
|
|
|
|
9.90
|
|
|
|
9.90
|
(12)
|
|
|
6/13/13
|
|
|
|
|
66,666
|
|
|
|
0
|
|
|
|
36.00
|
|
|
|
36.00
|
|
|
|
3/4/14
|
|
|
|
|
24,900
|
|
|
|
0
|
|
|
|
23.79
|
|
|
|
23.25
|
|
|
|
2/09/15
|
|
|
|
|
50,000
|
|
|
|
0
|
|
|
|
8.46
|
|
|
|
8.37
|
|
|
|
6/14/15
|
|
|
|
|
50,000
|
|
|
|
0
|
|
|
|
4.44
|
|
|
|
4.44
|
|
|
|
11/3/15
|
|
|
|
|
8,332
|
|
|
|
25,001
|
(9)
|
|
|
8.61
|
|
|
|
8.61
|
|
|
|
3/20/16
|
|
|
|
|
13,611
|
|
|
|
56,389
|
(10)
|
|
|
6.63
|
|
|
|
6.51
|
|
|
|
5/5/16
|
|
Christopher Schnittker
|
|
|
0
|
|
|
|
200,000
|
(3)
|
|
|
2.60
|
|
|
|
2.40
|
|
|
|
11/13/16
|
|
Gregor Mirow
|
|
|
152,261
|
|
|
|
76,130
|
(2)
|
|
|
1.66
|
|
|
|
6.51
|
(8)
|
|
|
5/5/16
|
|
William LaRue(11)
|
|
|
16,041
|
|
|
|
0
|
|
|
|
4.44
|
|
|
|
4.44
|
|
|
|
08/15/07
|
|
|
|
|
20,000
|
|
|
|
0
|
|
|
|
8.70
|
|
|
|
9.00
|
|
|
|
08/15/07
|
|
Patrick Baeuerle
|
|
|
181,502
|
|
|
|
90,751
|
(4)
|
|
|
1.66
|
|
|
|
6.51
|
(8)
|
|
|
5/5/16
|
|
Carsten Reinhardt
|
|
|
53,290
|
|
|
|
26,646
|
(4)
|
|
|
1.66
|
|
|
|
6.51
|
(8)
|
|
|
5/5/16
|
|
|
|
|
0
|
|
|
|
170,064
|
(5)
|
|
|
2.62
|
|
|
|
2.62
|
|
|
|
10/3/16
|
|
Matthias Alder
|
|
|
0
|
|
|
|
250,000
|
(6)
|
|
|
3.70
|
|
|
|
3.70
|
|
|
|
7/27/16
|
|
Guy Gammon(11)
|
|
|
16,667
|
|
|
|
0
|
|
|
|
4.44
|
|
|
|
4.44
|
|
|
|
07/14/07
|
|
|
|
|
16,667
|
|
|
|
0
|
|
|
|
8.70
|
|
|
|
9.00
|
|
|
|
07/14/07
|
|
Dennis Van Epps(11)
|
|
|
16,667
|
|
|
|
0
|
|
|
|
4.44
|
|
|
|
4.44
|
|
|
|
04/15/07
|
|
|
|
|
16,667
|
|
|
|
0
|
|
|
|
8.70
|
|
|
|
9.00
|
|
|
|
04/15/07
|
|
|
|
|
(1) |
|
One-half of the shares underlying these grants were vested upon
grant with the remainder vesting in 24 equal monthly
installments through April 24, 2008. If the executive
officers employment is terminated other than for cause, if
the executive resigns for good reason or in the case of the
permanent disability or death of the executive, that portion of
the executives stock awards which would have vested if the
executive had remained employed for an additional 12 months
will immediately vest on the date of termination. In addition,
if the executive officers employment is terminated other
than for cause, or if the executive resigns for good reason,
within six months prior to or 12 months following a change
of control, all of the officers outstanding unvested stock
awards will automatically vest and become exercisable on the
later of the date of termination or the date of the first
closing of any transaction or the stockholder vote resulting in
such change of control. Further, in the event of a change of
control of the Company, 50% of the executives unvested
stock awards will immediately |
39
|
|
|
|
|
become vested and exercisable on the date of the change of
control, and any remaining unvested stock awards will become
vested and exercisable on the six-month anniversary of the date
of the change of control if the executive is employed by the
Company at that time. |
|
(2) |
|
One-half of the shares underlying these grants were vested upon
grant upon closing of the merger, with the remainder vesting in
twenty four equal monthly installments through April 24,
2008. In connection with a separation agreement entered into by
the Company with Mr. Mirow with an effective date of
March 15, 2007, all of Mr. Mirows outstanding
unvested stock options automatically vested and may be exercised
by Mr. Mirow on or before March 15, 2008. |
|
(3) |
|
Twenty-five percent of the shares underlying this option vest on
October 10, 2007, with the remainder vesting in 36 equal
monthly installments thereafter. If the executive officers
employment is terminated other than for cause, if the executive
resigns for good reason or in the case of the permanent
disability or death of the executive, that portion of the
executives stock awards which would have vested if the
executive had remained employed for an additional 12 months
will immediately vest on the date of termination. In addition,
if the executive officers employment is terminated other
than for cause, or if the executive resigns for good reason,
within six months prior to or 12 months following a change
of control, all of the executives outstanding unvested
stock awards will automatically vest and become exercisable on
the later of the date of termination or the date of the first
closing of any transaction or the stockholder vote resulting in
such change of control. Further, in the event of a change of
control of the Company, 50% of the executives unvested
stock awards will immediately become vested and exercisable on
the date of the change of control. |
|
(4) |
|
One-half of the shares underlying these grants were vested upon
grant upon closing of the merger, with the remainder vesting in
24 equal monthly installments through April 24, 2008. If
the executive officers employment is terminated other than
for cause, if the executive resigns for good reason or in the
case of the permanent disability or death of the executive, that
portion of the executives stock awards which would have
vested if the executive had remained employed for an additional
12 months will immediately vest on the date of termination.
In addition, if the executive officers employment is
terminated other than for cause, or if the executive resigns for
good reason, within six months prior to or 12 months
following a change of control, all of the executives
outstanding unvested stock awards will automatically vest and
become exercisable on the later of the date of termination or
the date of the first closing of any transaction or the
stockholder vote resulting in such change of control. Further,
in the event of a change of control of the Company, 50% of the
executives unvested stock awards will immediately become
vested and exercisable on the date of the change of control. |
|
(5) |
|
Twenty-five percent of the shares underlying this option vest on
October 3, 2007, with the remainder vesting in 36 equal
monthly installments thereafter. If the executive officers
employment is terminated other than for cause, if the executive
resigns for good reason or in the case of the permanent
disability or death of the executive, that portion of the
executives stock awards which would have vested if the
executive had remained employed for an additional 12 months
will immediately vest on the date of termination. In addition,
if the executive officers employment is terminated other
than for cause, or if the executive resigns for good reason,
within six months prior to or 12 months following a change
of control, all of the executives outstanding unvested
stock awards will automatically vest and become exercisable on
the later of the date of termination or the date of the first
closing of any transaction or the stockholder vote resulting in
such change of control. Further, in the event of a change of
control of the Company, 50% of the executives unvested
stock awards will immediately become vested and exercisable on
the date of the change of control. |
|
(6) |
|
Twenty-five percent of the shares underlying this option vest on
July 27, 2007, with the remainder vesting in 36 equal
monthly installments thereafter. If the executive officers
employment is terminated other than for cause, if the executive
resigns for good reason or in the case of the permanent
disability or death of the executive, that portion of the
executives stock awards which would have vested if the
executive had remained employed for an additional 12 months
will immediately vest on the date of termination. In addition,
if the executive officers employment is terminated other
than for cause, or if the executive resigns for good reason,
within six months prior to or 12 months following a change
of control, all of the executives outstanding unvested
stock awards will automatically vest and become exercisable on
the later of the date of termination or the date of the first
closing of any transaction or the stockholder vote resulting in
such change of control. Further, in the event of a change of
control of the Company, 50% of the executives unvested
stock awards will immediately become vested and exercisable on
the date of the change of control. |
40
|
|
|
(7) |
|
This column lists the closing price of the Companys common
stock on the date of grant. |
|
(8) |
|
These options were granted by Micromet Holdings, Inc. prior to
the merger at a time when that companys shares were not
publicly traded. The options were assumed by the Company as of
May 5, 2006, at which time the exercise price became fixed
at 25% of the closing price of the Companys common stock
on May 4, 2006, the trading date immediately preceding the
merger. The closing price as of May 4, 2006 was
$6.63 per share, after giving pro forma effect for the
1-for-3
reverse stock split on that date. |
|
(9) |
|
This option vests in 36 equal monthly installments beginning on
April 20, 2006 for so long as Mr. Hale continues to
provide services to the Company. |
|
(10) |
|
This option vests in 36 equal monthly installments beginning
June 5, 2006 for so long as Mr. Hale serves as a
director. |
|
(11) |
|
Each of Messrs. LaRue, Gammon and Van Epps terminated their
employment with the Company during 2006, and in connection with
such terminations, vesting of their options has ceased. |
|
(12) |
|
These options were granted prior to the Companys stock
being publicly traded. Option exercise price was based on the
board of directors assessment of fair market value on the date
of grant. |
Option
Exercises and Stock Vested
None of the named executive officers exercised any stock options
during 2006, and no awards of shares of the Companys
common stock vested during 2006. Accordingly, the Options
Exercised and Stock Vested table is not presented.
Pension
Benefits
None of our named executive officers participate in or have
account balances in non-qualified defined benefit plans or
supplemental executive retirement plans sponsored by us.
Accordingly, the Pension Benefits table is not
presented. The compensation committee, which is comprised solely
of outside directors as defined for purposes of
Section 162(m) of the Internal Revenue Code, as amended,
may elect to adopt qualified or non-qualified defined benefit
plans if the committee determines that doing so is in the best
interests of the Company and its stockholders.
Nonqualified
Deferred Compensation
None of our named executive officers participate in or have
account balances in any non-qualified defined contribution plans
or other deferred compensation plans maintained by us.
Accordingly, the Nonqualified Deferred Compensation
table is not presented. The compensation committee, which is
comprised solely of outside directors as defined for
purposes of Section 162(m) of the Internal Revenue Code, as
amended, may elect to provide our officers and other employees
with non-qualified defined contribution or deferred compensation
benefits if the committee determines that doing so is in the
best interests of the Company and its stockholders.
Potential
Payments Upon Termination or
Change-in-Control
As described in the Compensation Discussion and Analysis section
of this proxy statement, we have entered into employment
agreements with our named executive officers that provide for
certain post-termination benefits in the event of death or
permanent disability of the executive, upon termination of the
executive by the Company without cause, or upon
termination by the executive for good reason. In
certain cases, these benefits are increased upon a termination
without cause or termination for good reason in connection with
a change of control transaction involving the Company. Our
compensation committee believes that such provisions are
instrumental in attracting qualified personnel to serve as
executives of our Company but that they also help to align the
interests of our senior management with those of our
stockholders.
In the event of termination for permanent disability or death,
termination without cause or termination for good reason, the
named executive officers who have employment agreements with us
or in the event of death, his or her estate, will receive,
conditioned upon the receipt by the Company of a general release
of claims, the following benefits:
|
|
|
|
|
any accrued but unpaid base salary as of the date of termination;
|
41
|
|
|
|
|
twelve months of salary continuation payments (or eighteen
months for Dr. Itin if such termination was without cause
or for good reason and was within six months prior to or within
twelve months following a change of control);
|
|
|
|
an amount equal to the average of the executive officers
bonuses for the three years prior to the date of termination
(which bonus will be prorated for the period of time served by
the executive during the year of termination, except if the
termination is within six months prior to or twelve months
following a change of control, in which case such bonus will not
be prorated; in addition, Dr. Itins bonus would not
be prorated in any event), provided that in the event of death,
the bonus payable will be equal to the bonus payable for the
year in which the death occurs, payable in 12 monthly
installments;
|
|
|
|
costs associated with the executives and his
dependents continuation of health insurance under COBRA
for twelve months (or eighteen months for Dr. Itin,
Dr. Reinhardt, Dr. Baeuerle and Mr. Alder upon
termination in connection with a change of control);
|
|
|
|
for termination other than for death, life insurance benefits
coverage for twelve months (or eighteen months for
Dr. Itin, Dr. Reinhardt, Dr. Baeuerle and
Mr. Alder upon termination in connection with a change of
control) to the extent the executive was receiving such benefits
prior to the date of termination; and
|
|
|
|
for termination other than for death, costs for outplacement
services, up to $15,000 (or 15,000 for
Drs. Itin, Baeuerle, and Reinhardt).
|
In addition to the foregoing benefits, if the executive
officers employment is terminated by us other than for
cause, if the executive resigns for good reason or in the case
of the permanent disability or death of the executive, that
portion of the executives stock awards which would have
vested if the executive had remained employed for an additional
twelve months will immediately vest on the date of termination.
Further, if the executive officers employment is
terminated by us other than for cause, or if the executive
resigns for good reason, within six months prior to or twelve
months following a change of control, all of the officers
outstanding unvested stock awards will automatically vest and
become exercisable on the later of the date of termination or
the date of the first closing of any transaction or the
stockholder vote resulting in such change of control.
In the event of a change of control of the Company, 50% of each
executives unvested stock awards will immediately become
vested and exercisable on the date of the change of control, and
in the case of Dr. Itin only, any remaining unvested stock
awards will become vested and exercisable on the six-month
anniversary of the date of the change of control if he is
employed by the Company at that time.
For purposes of the employment agreements, cause
generally means the executives material breach of the
executives employment agreement or any other written
agreement between the executive and the Company; the
executives gross negligence or willful misconduct in the
performance of his duties; the executives commission of
any act or omission constituting dishonesty or fraud that has a
material adverse impact on the Company; the executives
conviction of, or plea of guilty or no contest to, a felony;
conduct by the executive which in the good faith and reasonable
determination of the board of directors demonstrates gross
unfitness of the executive to serve; the executives
failure to attempt in good faith to implement a clear and
reasonable directive of the board of directors after written
notice of such failure, and failure by the executive to cure the
same within fifteen business days after receipt of such notice;
persistent unsatisfactory performance of the executives
job duties after written notice of such and failure to cure the
same after having been provided with a reasonable opportunity to
cure, if deemed curable; or executives breach of his
fiduciary duty to the Company. Prior to any determination by us
that cause has occurred, we will provide the
executive with written notice of the reasons for such
determination, afford the executive a reasonable opportunity to
remedy any such breach, and provide the executive an opportunity
to be heard prior to the final decision to terminate the
executives employment.
For purposes of the employment agreements, good
reason generally means the assignment to the executive of
any duties or responsibilities which result in the material
diminution of the executives position; a reduction in the
executives base salary; a relocation of the
executives place of employment to a location outside the
metropolitan area in which the executive works (or, for United
States executives, in excess of fifty miles from the
Companys executive offices), except for required travel on
Company business; any material breach by us of the
executives employment after written notice of such breach
and failure by us to cure the breach within fifteen business
days after
42
receipt of such notice; any purported termination of the
executives employment for cause by the Company that is not
in accordance with the definition of cause set forth in the
employment agreement; any failure to pay the executive the
earned bonus for any period under any management incentive
compensation plan adopted by the Company, if a majority of other
officers of the Company have been paid bonuses for such period
under such plan; or any failure by the Company to obtain the
assumption of the executives employment agreement by any
successor or assignee of the Company.
The named executive officers who were employees of CancerVax
Corporation prior to the merger and whose employment terminated
in connection with the merger (namely Messrs. Hale, LaRue,
Gammon and Van Epps) each had employment agreements with
CancerVax with substantially similar provisions to those
described above.
If the employment of each named executive officer had been
terminated due to death, permanent disability, termination
without cause or termination for good reason as of
December 31, 2006, the estimated benefits that each would
have received under their employment agreements would have been
as set forth in the table below. For amounts payable in Euros to
Dr. Itin, Mr. Mirow, Dr. Baeuerle and
Dr. Reinhardt, we have used an exchange rate of
$1.3335 per Euro, which was the published rate from the
OANDA Corporation currency database as of March 31, 2007.
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|
Incremental
|
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|
|
|
|
|
|
|
|
Payment Upon
|
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|
|
|
|
|
|
|
|
|
|
|
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|
|
Termination
|
|
|
|
|
|
|
Payments Receivable upon Termination from Death
|
|
|
for Disability,
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Intrinsic
|
|
|
|
|
|
without Cause
|
|
|
Receivable
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
|
Total
|
|
|
or with
|
|
|
due to
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Received
|
|
|
Good Reason
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
due to
|
|
|
Maximum
|
|
|
for Disability,
|
|
|
|
Salary
|
|
|
|
|
|
Health-care
|
|
|
Stock
|
|
|
Termination
|
|
|
Outplacement
|
|
|
without Cause
|
|
|
|
Continuation
|
|
|
Bonus
|
|
|
Benefits
|
|
|
Options
|
|
|
from Death
|
|
|
Costs
|
|
|
or for
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)(1)
|
|
|
($)
|
|
|
($)
|
|
|
Good Reason
|
|
|
Christian Itin
|
|
|
363,000
|
|
|
|
130,000
|
|
|
|
3,792
|
|
|
|
114,159
|
|
|
|
610,951
|
|
|
|
20,000
|
|
|
|
630,951
|
|
David Hale
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(2)
|
Christopher Schnittker
|
|
|
230,000
|
|
|
|
|
|
|
|
10,524
|
|
|
|
21,666
|
|
|
|
262,190
|
|
|
|
15,000
|
|
|
|
277,190
|
|
Gregor Mirow(4)
|
|
|
258,000
|
|
|
|
50,000
|
|
|
|
3,792
|
|
|
|
76,509
|
|
|
|
388,301
|
|
|
|
20,000
|
|
|
|
408,301
|
|
William LaRue
|
|
|
|
(3)
|
|
|
|
(3)
|
|
|
|
(3)
|
|
|
|
(3)
|
|
|
|
(3)
|
|
|
|
(3)
|
|
|
|
(3)
|
Patrick Baeuerle
|
|
|
321,000
|
|
|
|
85,000
|
|
|
|
4,385
|
|
|
|
91,204
|
|
|
|
501,589
|
|
|
|
20,000
|
|
|
|
521,589
|
|
Carsten Reinhardt
|
|
|
298,000
|
|
|
|
70,000
|
|
|
|
1,888
|
|
|
|
45,627
|
|
|
|
415,515
|
|
|
|
20,000
|
|
|
|
435,515
|
|
Matthias Alder
|
|
|
300,000
|
|
|
|
40,000
|
|
|
|
14,610
|
|
|
|
|
|
|
|
354,610
|
|
|
|
15,000
|
|
|
|
369,610
|
|
Guy Gammon
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(2)
|
Dennis Van Epps
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(1) |
|
The intrinsic value of additional stock options shown above is
the difference between the closing stock price of $3.00 per
share on December 29, 2006 and the exercise price, times
the number of additional shares that would have vested upon
termination. |
|
(2) |
|
Each of Messrs. Hale, Gammon and Van Epps were terminated
in connection with the merger between CancerVax Corporation and
Micromet AG. Amounts received by these individuals in connection
with their termination have been reported in the Summary
Compensation Table for 2006 under the heading All Other
Compensation. |
|
(3) |
|
Mr. LaRue terminated his employment with the Company as of
June 1, 2006. He did not receive any benefits in connection
with his termination other than as reported in the Summary
Compensation Table for 2006. |
|
(4) |
|
Mr. Mirow entered into a separation agreement with the
Company regarding his termination, which became effective in
March 2007. The amounts reported in this table for
Mr. Mirow assume that he had not entered into any such
separation agreement prior to December 31, 2006. |
If the Company had entered into a change of control transaction
on December 31, 2006, or if the employment of each of the
named executive officers had been terminated as of
December 31, 2006, and such termination was without cause
or for good reason and was within six months prior to or within
twelve months following a change of control, the estimated
benefits that each named executive officer would have received
under their employment agreements would have been as set forth
in the following table. For amounts payable in Euros to
Dr. Itin, Mr. Mirow,
43
Dr. Baeuerle and Dr. Reinhardt, we have used an
exchange rate of $1.3335 per Euro, which was the published
rate from the OANDA Corporation currency database as of
March 31, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incremental Payments for Termination
|
|
|
|
|
|
|
Intrinsic
|
|
|
in Connection with Change of Control
|
|
|
Total
|
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intrinsic
|
|
|
Receivable
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
|
due to
|
|
|
|
Vested
|
|
|
|
|
|
|
|
|
Healthcare
|
|
|
|
|
|
Additional
|
|
|
Termination
|
|
|
|
Stock Options
|
|
|
|
|
|
|
|
|
and Life
|
|
|
Maximum
|
|
|
Vested Stock
|
|
|
in Connection
|
|
|
|
Upon Change
|
|
|
Salary
|
|
|
|
|
|
Insurance
|
|
|
Outplacement
|
|
|
Options Upon
|
|
|
with Change
|
|
|
|
of Control
|
|
|
Continuation
|
|
|
Bonus
|
|
|
Benefits
|
|
|
Costs
|
|
|
Termination
|
|
|
of Control
|
|
Name
|
|
($)(1)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)(1)
|
|
|
($)
|
|
|
Christian Itin
|
|
|
76,106
|
|
|
|
544,500
|
|
|
|
130,000
|
|
|
|
5,688
|
|
|
|
20,000
|
|
|
|
76,106
|
|
|
|
852,400
|
|
David Hale
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(2)
|
Christopher Schnittker
|
|
|
40,000
|
|
|
|
230,000
|
|
|
|
|
|
|
|
10,524
|
|
|
|
15,000
|
|
|
|
40,000
|
|
|
|
335,524
|
|
Gregor Mirow(4)
|
|
|
51,007
|
|
|
|
258,000
|
|
|
|
50,000
|
|
|
|
5,688
|
|
|
|
20,000
|
|
|
|
51,007
|
|
|
|
435,702
|
|
William LaRue
|
|
|
|
(3)
|
|
|
|
(3)
|
|
|
|
(3)
|
|
|
|
(3)
|
|
|
|
(3)
|
|
|
|
(3)
|
|
|
|
(3)
|
Patrick Baeuerle
|
|
|
60,803
|
|
|
|
321,000
|
|
|
|
85,000
|
|
|
|
6,578
|
|
|
|
20,000
|
|
|
|
60,803
|
|
|
|
554,184
|
|
Carsten Reinhardt
|
|
|
50,165
|
|
|
|
298,000
|
|
|
|
70,000
|
|
|
|
2,832
|
|
|
|
20,000
|
|
|
|
50,165
|
|
|
|
491,162
|
|
Matthias Alder
|
|
|
|
|
|
|
300,000
|
|
|
|
40,000
|
|
|
|
21,915
|
|
|
|
15,000
|
|
|
|
|
|
|
|
376,915
|
|
Guy Gammon
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(2)
|
Dennis Van Epps
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
|
(1) |
|
The intrinsic value of additional stock options which would vest
in upon a change of control of the Company and upon a
termination in connection with a change of control of the
Company is based upon a closing stock price of $3.00 per share
on December 29, 2006. In the event of a change of control
of the Company, on December 31, 2006, 50% of the unvested
stock options would have vested at the time of the ownership
change, with the remaining 50% vesting if the executive officer
is terminated within twelve months thereafter. |
|
(2) |
|
Each of Messrs. Hale, Gammon and Van Epps were terminated
in connection with the merger between CancerVax Corporation and
Micromet AG. Amounts received by these individuals in connection
with their termination has been reported in the Summary
Compensation Table for 2006 under the heading All Other
Compensation. |
|
(3) |
|
Mr. LaRue terminated his employment with the Company as of
June 1, 2006. He did not receive any benefits in connection
with his termination other than as reported in the Summary
Compensation Table for 2006. |
|
(4) |
|
Mr. Mirow entered into a separation agreement with the
Company regarding his termination, which became effective in
March 2007. The amounts reported in this table for
Mr. Mirow assume that he had not entered into any such
separation agreement prior to December 31, 2006. |
44
Director
Compensation
The following table shows for the fiscal year ended
December 31, 2006 certain information with respect to the
compensation of all directors of the Company:
Director
Compensation for Fiscal Year 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or
|
|
Option
|
|
|
|
|
Paid in Cash
|
|
Awards
|
|
Total
|
Name
|
|
($)(1)
|
|
($)(2)(3)
|
|
($)
|
|
Jerry C. Benjamin
|
|
|
24,166
|
(10)
|
|
|
49,531
|
(21)
|
|
|
73,697
|
|
John E. Berriman
|
|
|
23,666
|
(11)
|
|
|
74,823
|
(22)
|
|
|
98,489
|
|
Michael G. Carter
|
|
|
29,500
|
(12)
|
|
|
84,654
|
(23)
|
|
|
114,154
|
|
David F. Hale
|
|
|
|
(4)
|
|
|
|
(4)
|
|
|
|
(4)
|
Christian Itin
|
|
|
|
(5)
|
|
|
|
(5)
|
|
|
|
(5)
|
Peter Johann
|
|
|
9,667
|
(7) (13)
|
|
|
14,026
|
(24)
|
|
|
23,693
|
|
Robert E. Kiss(6)
|
|
|
6,833
|
(8) (14)
|
|
|
6,631
|
(25)
|
|
|
13,464
|
|
James Clayburn La Force(6)
|
|
|
8,333
|
(15)
|
|
|
8,225
|
(26)
|
|
|
16,558
|
|
Donald L. Morton(6)
|
|
|
|
|
|
|
|
(27)
|
|
|
|
|
Barclay A. Phillips
|
|
|
33,500
|
(9) (16)
|
|
|
48,698
|
(28)
|
|
|
82,198
|
|
Ivor Royston(6)
|
|
|
6,833
|
(17)
|
|
|
6,631
|
(29)
|
|
|
13,464
|
|
Phillip M. Schneider
|
|
|
32,500
|
(18)
|
|
|
88,936
|
(30)
|
|
|
121,436
|
|
Gail Schoettler(6)
|
|
|
6,833
|
(19)
|
|
|
11,824
|
(31)
|
|
|
18,657
|
|
Otello Stampacchia
|
|
|
21,666
|
(20)
|
|
|
34,603
|
(32)
|
|
|
56,269
|
|
|
|
|
(1) |
|
Prior to the merger between Micromet AG and CancerVax
Corporation, directors of CancerVax received an annual fee of
$16,000 for service as a director. In addition, directors of
CancerVax received $1,500 for each regularly scheduled board
meeting attended and $750 for each regularly scheduled committee
meeting attended. For director service after the effective date
of the merger, directors receive an annual retainer fee of
$16,000 for director service, paid in quarterly installments, a
fee of $1,500 for each board meeting attended and a fee of
$1,000 for each committee meeting attended. In addition, each
non-employee director receives the director fee with respect to
telephonic board meetings and committee meetings if such
telephonic meetings last approximately two hours or longer. |
|
(2) |
|
Prior to the merger between Micromet AG and CancerVax
Corporation, any independent director who was elected to
CancerVaxs board of directors was granted an option to
purchase 25,000 shares of common stock on the date of his
or her initial election to the board of directors. In addition,
each independent director was granted an option to purchase
10,000 shares of common stock on the date of each annual
meeting at an exercise price per share equal to the fair market
value of the common stock on such date. Pursuant to the
Companys non-employee director compensation policy adopted
in connection with the merger, each non-employee director, other
than the chairman of the board, received a non-qualified stock
option to purchase 35,000 shares of the Companys
common stock, and the chairman received a non-qualified stock
option to purchase 70,000 shares of the Companys
common stock on the merger closing date. Directors who join the
board after the merger also receive a non-qualified stock option
to purchase 35,000 shares of Company common stock on the
date of initial appointment. Each of these options vests in
equal installments at the end of each calendar month over a
period of three years from the date of grant, such that each
stock option shall be 100% vested on the third anniversary of
its date of grant, subject to a directors continuing
service on the board through such dates. The exercise price for
each of the grants awarded at the closing of the merger was
$6.63. |
|
|
|
Further, prior to the merger, the chairman of CancerVaxs
audit committee received an additional annual option to purchase
5,000 shares of common stock and the chairman of each of
the compensation committee and nominating/corporate governance
committee received an additional annual option to purchase
2,500 shares of common stock. Pursuant to the
Companys Non-Employee Director Compensation policy |
45
|
|
|
|
|
adopted in connection with the merger, on the merger date, and
thereafter on the date of each annual meeting of the
Companys stockholders, (i) the chairman of the audit
committee received and will receive a non-qualified stock option
to purchase 7,500 shares of the Companys common
stock, (ii) the chairman of the compensation committee
received and will receive a non-qualified stock option to
purchase 5,000 shares of the Companys common stock,
and (iii) the chairman of the nominating/corporate
governance committee received and will receive a non-qualified
stock option to purchase 2,500 shares of the Companys
common stock. Each of these options vests in equal installments
at the end of each calendar month over a period of one year from
the date of grant, such that each stock option shall be 100%
vested on the first anniversary of the date of grant, subject to
a directors continuing service on the board through such
date. The exercise price for each of the grants awarded at the
closing of the merger was $6.63. |
|
|
|
All non-employee directors, other than the chairman of the
board, will receive a non-qualified stock option to purchase
15,000 shares of the Companys common stock on the
date of each annual meeting of the Companys stockholders,
and the chairman will receive a non-qualified stock option to
purchase 30,000 shares of the Companys common stock
on the date of each annual meeting of the Companys
stockholders. Each of these options vests in equal installments
at the end of each calendar month over a period of one year from
the date of grant, such that each stock option shall be 100%
vested on the first anniversary of the date of grant, subject to
a directors continuing service on the board through such
date. The per share price of each option granted and to be
granted to a non-employee director will equal 100% of the
closing price of a share of the Companys common stock on
the date the option is granted. |
|
(3) |
|
Amounts in this column represent the compensation costs incurred
by the Company during 2006 related to stock options held by the
named executive officer, rather than an amount paid to or
realized by the named executive officer. These amounts were
calculated utilizing the provisions of
SFAS No. 123(R), using a Black-Scholes pricing model
and assuming no forfeiture of awards granted to the director.
For additional information regarding assumptions made by the
Company in valuing equity awards under SFAS 123(R), see
Notes 3 and 15 to the Companys consolidated financial
statements for the year ended December 31, 2006 and
Note 1 to CancerVax Corporations consolidated
financial statements for the year ended December 31, 2005. |
|
(4) |
|
Mr. Hale also served as President and Chief Executive
Officer of the Company from January 1, 2006 through
May 5, 2006. Mr. Hales compensation for service
as a director of the Company, as well as his compensation in his
capacity as President and Chief Executive Officer of the
Company, has been fully reflected in the Summary Compensation
Table. |
|
(5) |
|
Dr. Itin also served as President and Chief Executive
Officer of the Company from May 5, 2006 through
December 31, 2006. Dr. Itin did not receive any
compensation as a director of the Company during 2006.
Dr. Itins compensation in his capacity as President
and Chief Executive Officer of the Company has been fully
reflected in the Summary Compensation Table. |
|
(6) |
|
Each of Mr. Kiss and Drs. La Force, Morton,
Royston and Schoettler resigned his or her position as a
director of the Company on May 5, 2006 upon the closing of
the merger between CancerVax Corporation and Micromet AG. |
|
(7) |
|
Fees were paid to NGN Capital LLC. |
|
(8) |
|
Fees were paid to J.P. Morgan Investment Management, Inc. |
|
(9) |
|
Fees were paid to Vector Fund Management II, LLC. |
|
(10) |
|
Comprised of $10,666 in director retainer fees, $10,500 in board
meeting attendance fees and $3,000 in committee meeting
attendance fees. |
|
(11) |
|
Comprised of $10,666 in director retainer fees, $9,000 in board
meeting attendance fees and $4,000 in committee meeting
attendance fees. |
|
(12) |
|
Comprised of $16,000 in director retainer fees, $10,500 in board
meeting attendance fees and $3,000 in committee meeting
attendance fees. |
|
(13) |
|
Comprised of $6,667 in director retainer fees and $3,000 in
board meeting attendance fees. |
|
(14) |
|
Comprised of $5,333 in director retainer fees and $1,500 in
board meeting attendance fees. |
46
|
|
|
(15) |
|
Comprised of $5,333 in director retainer fees, $1,500 in board
meeting attendance fees and $1,500 in committee meeting
attendance fees. |
|
(16) |
|
Comprised of $16,000 in director retainer fees, $12,000 in board
meeting attendance fees and $5,500 in committee meeting
attendance fees. |
|
(17) |
|
Comprised of $5,333 in director retainer fees and $1,500 in
board meeting attendance fees. |
|
(18) |
|
Comprised of $16,000 in director retainer fees, $12,000 in board
meeting attendance fees and $4,500 in committee meeting
attendance fees. |
|
(19) |
|
Comprised of $5,333 in director retainer fees and $1,500 in
board meeting attendance fees. |
|
(20) |
|
Comprised of $10,666 in director retainer fees, $9,000 in board
meeting attendance fees and $2,000 in committee meeting
attendance fees. |
|
(21) |
|
The aggregate number of option awards outstanding at
December 31, 2006 was 40,000 shares. The grant date
fair value, as calculated in accordance with
SFAS No. 123(R), of the grant to Mr. Benjamin was
$182,388 on May 5, 2006. |
|
(22) |
|
The aggregate number of option awards outstanding at
December 31, 2006 was 53,155 shares. The grant date
fair value, as calculated in accordance with
SFAS No. 123(R), of the grant to Mr. Berriman was
$219,499 on May 5, 2006. |
|
(23) |
|
The aggregate number of option awards outstanding at
December 31, 2006 was 68,609 shares. The grant date
fair value, as calculated in accordance with
SFAS No. 123(R), of each grant to Dr. Carter was
$219,499 on May 5, 2006, $14,668 on June 14, 2005,
$75,492 on July 23, 2003, $0 on April 4, 2001 and $0
on December 19, 2000. |
|
(24) |
|
The aggregate number of option awards outstanding at
December 31, 2006 was 35,000 shares, which were held
in the name of NGN Capital LLC. The grant date fair value, as
calculated in accordance with SFAS No. 123(R), of the
grant to NGN Capital LLC was $96,628 on December 21, 2006. |
|
(25) |
|
There were no option awards outstanding at December 31,
2006. The grant date fair value, as calculated in accordance
with SFAS No. 123(R), of the grant to Mr. Kiss
was $14,668 on June 14, 2005. |
|
(26) |
|
There were no option awards outstanding at December 31,
2006. The grant date fair value, as calculated in accordance
with SFAS No. 123(R), of each grant to
Dr. La Force was $10,078 on June 14, 2005, and
$75,658 on July 23, 2003. |
|
(27) |
|
There were no option awards outstanding at December 31,
2006 to Dr. Morton. |
|
(28) |
|
The aggregate number of option awards outstanding at
December 31, 2006 was 44,167 shares. The grant date
fair value, as calculated in accordance with
SFAS No. 123(R), of each grant to Mr. Phillips
was $170,989 on May 5, 2006 and $14,668 on June 14,
2005. |
|
(29) |
|
There were no option awards outstanding at December 31,
2006. The grant date fair value, as calculated in accordance
with SFAS No. 123(R), of the grant to Dr. Royston
was $14,668 on June 14, 2005. |
|
(30) |
|
The aggregate number of option awards outstanding at
December 31, 2006 was 59,318 shares. The grant date
fair value, as calculated in accordance with
SFAS No. 123(R), of the grant to Mr. Schneider
was $193,787 on May 5, 2006, $22,002 on June 14, 2005
and $174,633 on September 10, 2003. |
|
(31) |
|
There were no option awards outstanding at December 31,
2006 to Dr. Schoettler. The grant date fair value, as
calculated in accordance with SFAS No. 123(R), of each
grant to Dr. Schoettler was $18,335 on June 14, 2005,
$65,332 on July 23, 2003 and $12,793 on May 29, 2002. |
|
(32) |
|
The aggregate number of option awards outstanding at
December 31, 2006 was 35,000 shares. The grant date
fair value, as calculated in accordance with
SFAS No. 123(R), of each grant to Dr. Stampacchia
was $159,590 on May 5, 2006. |
47
Transactions
With Related Persons
Related-Person
Transactions Policy and Procedures
Under its charter, our audit committee is responsible for
reviewing and approving all related party transactions. We
annually require each of our directors and executive officers to
complete a director and officer questionnaire that elicits
information about related person transactions, including any
such transactions which are required to be disclosed under the
rules of the SEC. In addition, under our Code of Ethics our
directors, officers and employees are expected to avoid
conflicts of interest with the Company and are required to
report any such conflicts of interest to our General Counsel or,
in the case of our directors, to the full board. Our audit
committee reviews all such transactions and relationships which
come to its attention either through the director and officer
questionnaires or otherwise, and considers whether to approve or
take other appropriate action with respect to such transactions
or relationships.
Certain
Related-Person Transactions
The Company has entered into indemnity agreements with certain
officers and directors which provide, among other things, that
the Company will indemnify such officer or director, under the
circumstances and to the extent provided for therein, for
expenses, damages, judgments, fines and settlements he or she
may be required to pay in actions or proceedings which he or she
is or may be made a party by reason of his or her position as a
director, officer or other agent of the Company, and otherwise
to the fullest extent permitted under Delaware law and the
Companys bylaws.
Householding
of Proxy Materials
The SEC has adopted rules that permit companies and
intermediaries (e.g., brokers) to satisfy the delivery
requirements for proxy statements and annual reports with
respect to two or more stockholders sharing the same address by
delivering a single proxy statement addressed to those
stockholders. This process, which is commonly referred to as
householding, potentially means extra convenience
for stockholders and cost savings for companies.
This year, a number of brokers with account holders who are
Micromet stockholders will be householding our proxy
materials. A single proxy statement will be delivered to
multiple stockholders sharing an address unless contrary
instructions have been received from the affected stockholders.
Once you have received notice from your broker that they will be
householding communications to your address,
householding will continue until you are notified
otherwise or until you revoke your consent. If, at any time, you
no longer wish to participate in householding and
would prefer to receive a separate proxy statement and annual
report, please notify your broker. Direct your written request
to Micromet, Inc., Attn: Corporate Secretary, 6707 Democracy
Boulevard, Suite 505, Bethesda, Maryland 20817.
Stockholders who currently receive multiple copies of the proxy
statement at their addresses and would like to request
householding of their communications should contact
their brokers.
Other
Matters
The board of directors knows of no other matters that will be
presented for consideration at the annual meeting. If any other
matters are properly brought before the meeting, it is the
intention of the persons named in the accompanying proxy to vote
on such matters in accordance with their best judgment.
By Order of the board of directors
Matthias Alder
Secretary
May 10, 2007
A copy of the Companys Annual Report to the Securities
and Exchange Commission on
Form 10-K
for the fiscal year ended December 31, 2006 is available
without charge upon written request to: Corporate Secretary,
Micromet, Inc., 6707 Democracy Boulevard, Suite 505,
Bethesda, Maryland 20817.
48
Micromet, Inc. THIS PROXY IS SOLICITED ON BEHLAF OF THE BOARD OF DIRECTORS ANNUAL MEETING OF
STOCKHOLDERS JUNE 28, 2007 The stockholder(s) hereby appoint Christopher Schnittker and Matthias
Alder, or either of the, as proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as described on the reverse side of this ballot, all of
the shares of common stock of Micromet, Inc. that the stockholder(s) is/are entitled to vote at the
Annual Meeting of Stockholders to be held at 1:00 pm, Eastern Time on June 28, 2007, at the
Marriott Suites Bethesda, 6711 Democracy Boulevard, Bethesda, Maryland, and any adjournment or
postponement thereof. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE
STOCKHOLDER(S). IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
NOMINEES LISTED ON THE REVERSE SIDE FOR THE BOARD OF DIRECTORS AND FOR EACH PROPOSAL. PLEASE MARK,
SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE. CONTINUED AND TO
BE SIGNED ON THE REVERSE SIDE Address Changes/Comments: (if you noted any Address
Changes/Comments above, please mark corresponding box on the reverse side.) |
Micromet, Inc. VOTE BY INTERNET www.proxyvote.com 6707 Democracy Boulevard Use the Internet to
transmit your voting instructions and for electronic delivery of information up until 11:59 PM
Suite 505 Eastern Time the day before the cut-off or meeting date. Bethesda, MD 20817 Have your
proxy card in hand when you access the web site. You will be prompted to enter your 12-digit
Control Number which is located below to obtain your records and create an electronic voting
instruction form. VOTE BY PHONE 1-800-690-6903 Use any touch-tone telephone to transmit
your voting instructions up until 11:59 P.M. Eastern time the day before the cut-off or meeting
date. Have your proxy card in hand when you call. You will be prompted to enter your 12-digit
Control Number which is located below and then follow the simple instructions the Vote Voice
provides you. VOTE BY MAIL Mark, sign and date your proxy card and return it in the
postage-paid envelope weve provided or return to Micromet, Inc. c/o ADP, 51 Mercedes Way,
Edgewood, NY 11717 TO VOTE, MARK BLOCKS BELOW IN BLUE, OR BLACK INK AS FOLLOWS: KEEP THIS
PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS
VALID ONLY WHEN SIGNED AND DATED. THE DIRECTORS RECOMMEND A VOTE FOR ITEMS 1, 2 AND 3 Vote on
Directors 1. To elect as Directors of Micromet, Inc. the nominees For Withhold For All
To withhold authority to vote, mark For All Except listed below: All All
Except and write the nominees number on the line below. 01) Jerry C. Benjamin 02) Barclay A.
Phillips 03) Otello Stampacchia, Ph.D. Vote on Proposals For Against Abstain 2.
To ratify the selection by the audit committee of the board of directors of Ernst & Young AG WPM as
independent auditors of the Company for its fiscal year ending December 31, 2007. 3. To
conduct any other business properly brought before the meeting. The shares represented by this
proxy when properly executed will be voted in the manner directed herein by the undersigned
Stockholder(s). If no direction is made, this proxy will be voted FOR items 1, 2 and 3. If any
other matters properly come before the meeting, or if cumulative voting is required, the person
named in this proxy will vote in their discretion. Signature [PLEASE SIGN WITHIN BOX] Date
Signature (Joint Owners) Date |