def14a
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by
the Registrant ý
Filed by a Party other than the Registrant o
Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
ý Definitive Proxy Statement
o Definitive Additional Materials
o 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.
o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Aggregate number of securities to which transaction applies: |
3. Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule
0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):
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Proposed maximum aggregate value of transaction: |
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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 27,
2008
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 Friday,
June 27, 2008 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 II directors to hold office
until the 2011 Annual Meeting of Stockholders.
2. To ratify the selection by the audit committee of the
board of directors of Ernst & Young LLP as independent
auditors of the Company for its fiscal year ending
December 31, 2008.
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 28, 2008.
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
April 29, 2008
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.
MICROMET,
INC.
6707 Democracy Boulevard
Suite 505
Bethesda, Maryland 20817
PROXY
STATEMENT
FOR THE
2008 ANNUAL MEETING OF STOCKHOLDERS
June 27, 2008
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 2008 Annual Meeting of
Stockholders, including at any adjournment or postponement of
the meeting. 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 April 29, 2008 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 28, 2008 will be entitled to vote at the annual
meeting. On this record date, there were 40,828,759 shares
of common stock outstanding and entitled to vote.
Stockholder
of Record: Shares Registered in Your Name
If on April 28, 2008 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 28, 2008 your shares were held, not in your
name, but rather in an account at 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 three matters scheduled for a vote:
1. Election of three Class II directors to hold office
until the 2011 Annual Meeting of Stockholders; and
2. Ratification of the audit committee of the board of
directors selection of Ernst & Young LLP as
independent auditors of the Company for its fiscal year ending
December 31, 2008.
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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
1-800-690-6903
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 26, 2008 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 26, 2008 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 28, 2008.
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 LLP as the
Companys independent auditors for the fiscal year ending
December 31, 2008. If any other matter is properly
presented at the meeting, your proxy holder (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
December 31, 2008, to 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 2009 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 29, 2009 nor earlier than the close of business on
February 27, 2009; provided, however, that in the event
that the date of the 2009 annual meeting is before May 28,
2009 or after August 26, 2009, 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
2009 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 2009 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 also 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 Company.
You are also advised to review the Companys Amended and
Restated Bylaws, filed with the United States Securities and
Exchange Commission (SEC) as an exhibit to a Current
Report on
Form 8-K
on October 9, 2007, which contain additional requirements
about advance notice of stockholder proposals and director
nominations.
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, Proposal No. 1, 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 in person or represented by proxy and
entitled to vote. 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
40,828,759 shares outstanding and entitled to vote.
Therefore, the holders of 20,414,380 shares must be present
in person or represented by proxy to have a quorum.
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 2008.
Proposal No. 1
Election
Of Directors
Micromets board of directors is divided into three
classes. Each class consists, as nearly as possible, of
one-third of the total number of 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
2008: Dr. Christian Itin, Dr. Peter Johann and
Mr. Joseph P. Slattery. Each of the nominees listed below
is currently a director of the company, although only
Dr. Itin and Dr. Peter Johann were previously elected
by the stockholders. Mr. Slattery was appointed to the
board of directors in November 2007, at the recommendation of
the nominating & corporate governance committee.
Mr. Slattery was brought to the attention of the
nominating & corporate governance committee by the
Companys outside counsel. If elected at the annual
meeting, each of these nominees would serve until the 2011
annual meeting and until his 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 in office at the time of the 2007 Annual Meeting of
Stockholders attended the annual meeting.
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 the board of directors. 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 29, 2008.
Nominees
for Election for a Three-Year Term Expiring at the 2011 Annual
Meeting
Christian
Itin, Ph.D.
Christian Itin, Ph.D., age 43, has served as our Chief
Executive Officer and as a director since the merger of Micromet
AG and CancerVax Corporation in May 2006. Dr. Itin has also
served in the following capacities with our subsidiary Micromet
AG prior to the merger: Chief Executive Officer from March 2004
to May 2006, 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 50, 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
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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, 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 specialty
pharmaceutical company located in Switzerland, and of NaniRx
Therapeutics, an early stage private company in New York, and
has served as a member of the supervisory board of Jerini AG, a
publicly held biopharmaceuticals company located in Germany, and
an observer to the board of Santhera Pharmaceuticals Holding
Ltd., a publicly held Swiss specialty pharmaceutical company.
Joseph P.
Slattery
Joseph P. Slattery, age 43, has served as a member of our
board of directors since November 2007. Mr. Slattery was
Chief Financial Officer and Senior Vice President of Digene
Corporation, a publicly held medical diagnostics company that
was acquired by Qiagen, N.V. in July 2007, where he was
responsible for the financial, accounting, project management,
information technology and legal functions. Prior to his
appointment as Chief Financial Officer in 2006,
Mr. Slattery served as Digenes Senior Vice President,
Finance and Information Systems beginning in 2002, and
previously held the positions of Controller and Vice President,
Finance since joining Digene in 1996 prior to the companys
initial public offering. Mr. Slattery currently serves as a
director and Chairman of the Audit Committee of TranS1, Inc., a
publicly traded medical device company focused on designing,
developing and marketing products that implement its proprietary
minimally invasive surgical approach to treat degenerative disc
disease affecting the lower lumbar region of the spine.
Mr. Slattery received a B.S. degree in accountancy from
Bentley College and is a certified public accountant.
The
Board Of Directors Recommends
A Vote in Favor of Each Named Nominee
Directors
Continuing in Office Until the 2009 Annual Meeting
David F.
Hale
David F. Hale, age 59, has been Chairman of the Board since
May 2006. He served as CancerVaxs President and Chief
Executive Officer from October 2000 to the closing of the merger
with Micromet AG in May 2006, and served as a member of
CancerVaxs board of directors from December 2000 to May
2006 when he became Chairman. Mr. Hale was appointed
Executive Chairman in December 2007 and Interim Chief Executive
Officer in January 2008 of Somaxon Pharmaceuticals, Inc., a
publicly traded biopharmaceutical company, where he was a
co-founder and previously Chairman. 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 board of directors of Santarus, Inc., and as
a director of Metabasis Therapeutics, Inc., a publicly traded
biopharmaceutical company, as Executive Chairman of SkinMedica,
Inc., and as a director of
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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 70, 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 with Micromet AG.
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 at 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, a publicly held company in the United Kingdom, 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., both publicly held biotechnology companies.
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.).
John E.
Berriman
John E. Berriman, age 60, has served as a member of our
board of directors since the closing of the merger with Micromet
AG in May 2006. Prior to the merger, Mr. Berriman was a
member of the supervisory board of Micromet AG. 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 (Chairman) and Ablynx NV. He served as
executive deputy chairman of Oxxon Therapeutics, Inc. until its
sale to Oxford BioMedica in May 2007. Mr. Berriman served
as a member of the board of directors of Alnylam
Pharmaceuticals, Inc., a publicly held company, 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.
Directors
Continuing in Office Until the 2010 Annual Meeting
Jerry C.
Benjamin
Jerry C. Benjamin, age 67, has served as a member of our
board of directors since the merger with Micromet AG in May
2006. Prior to the merger, Mr. Benjamin was a member of the
supervisory board of Micromet AG. 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 healthcare companies.
7
Barclay
A. Phillips
Barclay A. Phillips, age 45, 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 with Micromet AG. 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 of Acorda Therapeutics, Inc., a
publicly traded biopharmaceutical company. Mr. Phillips
received a B.A. in economics from the University of Colorado in
Boulder.
Otello
Stampacchia, Ph.D.
Otello Stampacchia, Ph.D., age 38, has served as a
member of our board of directors since the merger with Micromet
AG in May 2006. Prior to the merger, Dr. Stampacchia was a
member of the supervisory board of Micromet AG.
Dr. Stampacchia has been 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 United States. 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).
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 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. 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 director attended 75% or more of the board meetings
held during the period in which he or she was a director.
Further, each director attended 75% or more of the aggregate of
the meetings of the board and of the committees on which he
served.
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 2007 for each of the board committees:
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Nominating &
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Corporate
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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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X
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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(1)
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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. Joseph P. Slattery
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X
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*
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Total meetings in fiscal year 2007
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6
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4
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9
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(1) |
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Mr. Schneider resigned from the board effective
November 16, 2007 and was succeeded by Mr. Slattery on
the same date. |
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Committee Chairperson |
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 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
Exchange Act to oversee the Companys corporate accounting
and financial reporting processes and audits of its financial
statements. In 2007, the audit committee was composed of three
directors: Mr. Schneider, who was succeeded as chairman by
Mr. Slattery in November 2007, and Messrs. 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.
The information contained on the website is not incorporated by
reference in, or considered part of, this proxy statement.
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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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 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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reviews the procedures established by the Company 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 auditors, 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 Rules 4350(d)(2)(A)(i) and
(ii) of the NASDAQ listing standards). The board of
directors has also determined that Mr. Slattery qualifies
as an audit committee financial expert as defined in
applicable SEC rules. The board made a qualitative assessment of
Mr. Slatterys level of knowledge and experience based
on a number of factors, including his formal education and
experience as a chief financial officer for a public reporting
company.
The audit committee met six times during fiscal year 2007. The
audit committees agenda for each meeting 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 met separately with the Companys independent
auditors and the Companys chief financial officer.
The audit committee is 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.
In March, 2008, the audit committee recommended to the board of
directors the engagement of Ernst & Young LLP as our
independent auditors for the year ending December 31, 2008,
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 independent auditors, the audit committee will continue its
practice of recommending that the board of directors ask the
Companys stockholders, at the annual meeting, to ratify
their appointment of the Companys independent auditors.
Report of
the Audit Committee of the Board of
Directors1
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, including the audited financial statements
for the fiscal year ended December 31,
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, as
amended, or the Exchange Act, whether made before or after the
date hereof and irrespective of any general incorporation
language in any such filing.
10
2007. During fiscal year 2007, 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), as amended (AICPA, Professional
Standards, Vol. 1. AU section 380), as adopted by the
Public Company Accounting Oversight Board (PCAOB) in
Rule 3200T, 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 WPG matters relating to its
independence, including a review of audit and non-audit fees and
the written disclosures and letter from Ernst & Young
AG WPG to the committee required by Independence Standards
Board Standard No. 1 (Independence Discussions with Audit
Committees), as adopted by the PCAOB in Rule 3600T.
Taking all of these reviews and discussions into account, on
March 11, 2008, 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, 2007.
Mr. Joseph P. Slattery, Chairman
Mr. John E. Berriman
Mr. Barclay A. Phillips
Compensation
Committee
During the period from January 1 to June 28, 2007, the
compensation committee consisted of four directors:
Messrs. Benjamin and Berriman, and Drs. Carter and
Stampacchia. On June 28, 2007, the board appointed
Dr. Peter Johann as the fifth member of the
compensation committee. 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 reviews,
recommends for adoption by the board, and oversees the
Companys compensation philosophy, strategy, policies,
plans and programs. The functions of this committee include:
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reviewing and approving corporate performance objectives
relevant to the compensation of the Companys chief
executive officer and evaluating his performance in light of
these stated objectives;
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reviewing and approving compensation and management incentive
compensation plans for all executive officers, other officers
(as such term is defined in
Rule 16a-1,
promulgated under the Exchange Act), vice presidents, and other
employees with a base salary greater than or equal to $250,000,
or 180,000 for employees based in Germany;
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reviewing and, as it deems appropriate, recommending to our
board of directors all compensation for any director of the
Company, including making recommendations with respect to awards
under the Companys equity incentive plans;
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reviewing and approving base salaries of the executive officers
of the Company, as well as other terms of employment, including
severance for the Companys executive officers;
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establishing, administering and exercising authority under
annual bonus, long-term incentive compensation, stock option,
pension, equity incentive award plans, and other similar plans
and programs;
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determining our policy with regard to change of control or
parachute payments;
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reviewing and approving executive officer and director
indemnification and insurance matters; and
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reviewing the Companys Compensation Discussion and
Analysis to consider whether to recommend to the board that it
be included in the proxy statement and other filings with the
SEC.
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11
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 otherwise participate in compensation committee
meetings. In addition, the compensation committee meets
regularly in executive session. The Companys chief
executive officer does not participate in, and is not present
during any deliberations or determinations of the committee
relating to his compensation. 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. In
particular, the compensation committee has the authority to
retain compensation consultants to assist in its evaluation of
executive and director compensation, including the authority to
approve the consultants reasonable fees and other
retention terms. In December 2007, the compensation committee
engaged Remedy Compensation Consulting 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.
Historically, the compensation committee has made most
significant adjustments to annual compensation, determined bonus
and equity awards and established new performance objectives at
one or more meetings held during the first quarter of the year.
However, the compensation committee also considers matters
related to individual compensation, such as compensation for new
executive hires, compensation adjustments as a result of
promotions, as well as high-level strategic issues, such as the
efficacy of the Companys compensation strategy, potential
modifications to that strategy and new trends, plans or
approaches to compensation, at various meetings throughout the
year. Generally, the compensation committees process for
setting executive compensation comprises two related elements:
the determination of compensation levels and the establishment
of performance objectives for the current year. For executives
other than the chief executive officer, the compensation
committee solicits and considers evaluations and recommendations
submitted to the committee by the chief executive officer. In
the case of the chief executive officer, the evaluation of his
performance is conducted by the compensation committee, which
determines any adjustments to his compensation as well as awards
to be granted.
The specific determinations of the compensation committee with
respect to executive compensation for fiscal 2007 are also
described in greater detail in the Compensation Discussion and
Analysis section of this proxy statement.
Nominating &
Corporate Governance Committee
In 2007, the nominating & corporate governance
committee was composed of the following three directors:
Messrs. Phillips and Benjamin and 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 nine
times during fiscal year 2007. 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 the nominating & corporate governance
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) or to fill
vacancies of our board of directors;
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conducting an annual review process to assess the performance of
the board of directors and the board committees, as well as to
assess the level and quality of the interactions between the
chief executive officer and the board of directors;
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making recommendations to the board regarding committee
membership; and
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developing and reviewing our corporate governance guidelines and
principles, and if appropriate, recommending changes to such
guidelines to our board of directors.
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Director
Qualifications
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. 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. In evaluating candidates for membership on the board
of directors, the nominating & corporate governance
committee considers, among other factors, the appropriate size
of our board of directors, personal and professional integrity,
ethics and values, experience in corporate management, such as
serving as an officer or former officer of a publicly held
company, experience in our industry, experience as a board
member of another publicly-held company, diversity of expertise
and experience in substantive matters pertaining to the
Companys business relative to other board members,
practical and mature business judgment, and experience with
relevant social policy concerns. The nominating &
corporate governance committee retains the right to modify these
qualifications from time to time.
Director
Nomination Process
When recommending candidates to the board of directors to be
proposed for election at the annual meeting of stockholders, the
nominating & corporate governance committee identifies
nominees for director by first evaluating the current members of
our board of directors who are willing to continue to serve on
our board. Current members with qualifications and skills that
are consistent with the committees criteria for service on
our board 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 directors with that of
obtaining a new perspective. The nominating &
corporate governance committee also reviews these incumbent
directors overall service to the Company during their
terms, including the number of meetings attended, level of
participation, quality of performance, and any other
relationships and transactions that might impair the
directors independence. If a director does not wish to
continue serving on our board or if our board decides not to
re-nominate a director for re-election, the committee would
identify the desired skills and experience of a new nominee in
light of the criteria discussed above. The committee generally
polls our board and members of management for their
recommendations. The 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. In the
case of new director candidates, the nominating &
corporate governance committee also determines whether the
nominee is independent for NASDAQ purposes, which determination
is based upon applicable NASDAQ listing standards, applicable
SEC rules and regulations and the advice of counsel, if
necessary. The committee reviews the qualifications, experience
and background of the candidates. The candidates who the
committee considers recommending to the board for election or
appointment 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 and the operating requirements of the Company, with the
objective of assembling a group that can best help perpetuate
the success of our company and represent the long-term interests
of stockholders through the exercise of sound business judgment.
In conducting this assessment, the nominating &
corporate governance committee considers diversity, age, skills,
and such other factors as it deems appropriate given the current
needs of the Company, to maintain a balance of knowledge,
experience and capability. 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 search firms to identify
director candidates. The nominating & corporate
governance committee may in the future choose to do so in those
situations where it believes that particular qualifications are
required or that a search firm may be best able to identify
appropriate candidates.
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
13
recommend a candidate for the position as a member of the
Companys board of directors must 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 educational
experience and business experience for at least the previous
five years;
e. information regarding each of the qualifications listed
above, other than regarding board 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 the
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 these requirements to
the chairman of the nominating & corporate governance
committee. The nominating & corporate governance
committee will evaluate any recommendations from stockholders
that meet the requirements 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 2008 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, on an
intermittent basis, 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 a 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, an updated version of the Code of Ethics will be
published on the Companys website. Any waivers of
provisions of the Code in favor of any executive officer or
director will also be disclosed on
Form 8-K
in accordance with the Companys disclosure obligations
under applicable laws and regulations.
14
Proposal No. 2
Ratification
of Selection of Independent Auditors
The audit committee of the board of directors has selected
Ernst & Young LLP as the Companys independent
auditors for the fiscal year ending December 31, 2008 and
has further directed that management submit the selection of
independent auditors for ratification by the stockholders at the
annual meeting. Ernst & Young LLPs German
affiliate Ernst & Young AG WPG has audited the
Companys financial statements since the merger of Micromet
AG and CancerVax Corporation in May 2006 and Ernst &
Young LLP audited the financial statements of CancerVax
Corporation from June 1998 through the year ended
December 31, 2005. Representatives of Ernst &
Young LLP 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 the
Companys independent auditors. However, the audit
committee of the Board is submitting the selection of
Ernst & Young LLP 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 LLP. 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
The following table represents aggregate fees for services
provided for the fiscal years ended December 31, 2006 and
December 31, 2007 by Ernst & Young AG WPG, the
Companys principal accountant in fiscal years 2006 and
2007. All fees set forth below were approved by the audit
committee.
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Fiscal Year Ended
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2006
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2007
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(In thousands)
|
|
|
Audit Fees(1)
|
|
$
|
724
|
|
|
$
|
663
|
|
Tax Fees(2)
|
|
|
14
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
Total Fees
|
|
$
|
738
|
|
|
$
|
671
|
|
|
|
|
(1) |
|
Includes fees for the integrated audits of the Companys
annual financial statements for 2006 and 2007 included in its
Annual Reports on
Form 10-K,
including the effectiveness of internal control over financial
reporting, the reviews of the Companys interim period
financial statements for 2006 and 2007 included in its quarterly
reports on
Form 10-Q
and related services that are normally provided in connection
with regulatory filings or engagements. |
|
(2) |
|
Consists of fees in for preparation of 2006 and 2007 tax returns
for Tarcanta Limited, a subsidiary of the Company located in
Ireland. |
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
15
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.
Change
in Independent Accountants
Former
Independent Accountants
In March 2008, the Company notified Ernst & Young AG
WPG that its audit committee had resolved to dismiss
Ernst & Young AG WPG as the Companys independent
registered public accounting firm, effective as of
March 27, 2008.
The reports of Ernst & Young AG WPG on the
Companys financial statements for the fiscal years ended
December 31, 2006 and 2007 did not contain an adverse
opinion or a disclaimer of opinion and were not qualified or
modified as to uncertainty, audit scope or accounting
principles. In connection with its audits of the Companys
financial statements for the two most recent fiscal years and in
the subsequent interim period through March 27, 2008, there
were no disagreements (as defined in Item 304(a)(1)(iv) of
Regulation S-K
under the Securities Act of 1933, as amended) with
Ernst & Young AG WPG on any matter of accounting
principles or practices, financial statement disclosure or
auditing scope or procedures, which disagreements, if not
resolved to the satisfaction of Ernst & Young AG WPG,
would have caused Ernst & Young AG WPG to make
reference to such disagreements in its reports.
During the Companys two most recent fiscal years and in
the subsequent interim period through March 27, 2008, there
were no reportable events (as defined in Item 304(a)(1)(v)
of
Regulation S-K),
except that Ernst & Young AG WPGs report on the
Companys internal control over financial reporting
contained an adverse opinion on the effectiveness of the
Companys internal control over financial reporting due to
the material weaknesses that existed in the Companys
internal controls increasing the risk of a financial statement
misstatement. In 2006, the material weaknesses related to the
estimation and analyses processes for accruals, the analysis and
recording of revenue transactions with unusual terms, and the
financial statement close and reporting process. In 2007, the
material weaknesses related to transaction level controls over
the Companys process for determining accruals for research
and development expenses, and an insufficient number of
accounting and finance personnel with the knowledge and
experience required to properly apply and evaluate the
accounting for new, significant
and/or
infrequent transactions and to ensure an appropriate level of
review of financial statement accounts.
Ernst & Young AG WPG reviewed the Companys
disclosures made in a Current Report on
Form 8-K
filed with the SEC on March 31, 2008 and furnished the
Company with a letter stating that it agreed with the
disclosures made in that report. This letter was filed as an
exhibit to the Current Report on
Form 8-K
filed on March 31, 2008.
New
Independent Accountants
In 2008, the audit committee engaged Ernst & Young LLP
as the Companys independent registered public accounting
firm, commencing with the fiscal year ending December 31,
2008. During the two most recent fiscal years and through
March 27, 2008, neither the Company, nor anyone acting on
its behalf, consulted with Ernst & Young LLP with
respect to any accounting or auditing issues involving the
Company. In particular, there was no discussion with the Company
regarding the type of audit opinion that might be rendered on
its financial statements, the application of accounting
principles applied to a specified transaction or any matter that
was the subject of a disagreement as defined in
Item 304(a)(1)(iv) of
Regulation S-K
or a reportable event as described in Item 304(a)(1)(v) of
Regulation S-K.
16
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 28, 2008.
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Position
|
|
Christian Itin, Ph.D.
|
|
|
43
|
|
|
President and Chief Executive Officer
|
Patrick Baeuerle, Ph.D.
|
|
|
50
|
|
|
Senior Vice President, Chief Scientific Officer
|
Carsten Reinhardt, M.D., Ph.D.
|
|
|
41
|
|
|
Senior Vice President, Chief Medical Officer
|
Mark Reisenauer
|
|
|
42
|
|
|
Senior Vice President, Chief Commercial Officer
|
Jens Hennecke, Ph.D.
|
|
|
40
|
|
|
Vice President Business Development
|
Donald Zelm, CPA
|
|
|
52
|
|
|
Executive Director of Finance and Interim Chief Financial Officer
|
Matthias Alder
|
|
|
43
|
|
|
Senior Vice President, General Counsel and Secretary
|
Christian Itin, Ph.D. has served as our Chief
Executive Officer and as a director since the merger of Micromet
AG and CancerVax Corporation in May 2006. Dr. Itin has also
served in the following capacities with our subsidiary Micromet
AG prior to the merger: Chief Executive Officer from March 2004
to May 2006, 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.
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 childrens
books on biology. In addition, Dr. Baeuerle is the first
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 Chief Medical Officer since June 2007. He has served as
Senior Vice President, Clinical Development since May 2006 and
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) from 2000 to
September 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.
17
Mark Reisenauer has served as our Chief Commercial
Officer since September 2007. He joined Micromet from Abbott,
where he was the General Manager of the Oncology Franchise from
2002 to 2006 and most recently Divisional Vice President and
General Manager of the Neuroscience franchise from 2006 to
September 2007. Before joining Abbott, Mr. Reisenauer was
the Director of Marketing for Breast Cancer (Portfolio Lead) and
the Director of Breast Cancer Products at Pharmacia from 1999 to
2002. From 1997 to 1999 he was the Associate Director of
Oncology Global Marketing at Bristol-Myers Squibb and from 1988
to 1997 held various positions in sales and oncology marketing
at Zeneca. Mr. Reisenauer holds a B.A. degree in Political
Science from the University of Wisconsin.
Jens Hennecke, Ph.D. has served as our Vice
President Business Development since May 2006, and has
previously served in the same role at our subsidiary, Micromet
AG, from 2004 until the merger with CancerVax Corporation in May
2006. He joined the company in October 2001 and performed
various business development functions at Micromet until his
promotion in 2004. Dr. Hennecke is responsible for the in-
and out-licensing of intellectual property, for the partnering
of our product candidates and for the alliance management around
our existing collaborations. He studied biology at the
University of Göttingen, Germany, and performed his Ph.D.
thesis at the Institute of Molecular Biology and Biophysics at
the ETH Zürich, Switzerland, for which he was awarded the
Silver Medal of the ETH. He also performed post-doctoral
research in x-ray crystallography with Don Wiley at the
Department of Molecular and Cellular Biology of Harvard
University.
Donald A. Zelm, CPA has served as our Interim Chief
Financial Officer since December 2007 and as Executive Director
Finance since December 2006. From November 2001 to November
2006, Mr. Zelm was at Panacos Pharmaceuticals, Inc., where
he served most recently as Vice President of Finance. Prior to
joining Panacos, Mr. Zelm spent over ten years with
Sigma-Tau Pharmaceuticals, ultimately as Vice President of
Finance. Mr. Zelm also held various accounting positions at
DuPont and at American Critical Care, a division of American
Hospital Supply, and was a senior auditor at Arthur
Andersen & Co. Mr. Zelm holds a B.S. degree in
Accountancy from the University of Illinois, and an M.B.A.
degree from DePaul University, and is a Certified Public
Accountant.
Matthias Alder, lic. iur., LL.M. has served as our Senior
Vice President, General Counsel and Secretary since July 2006.
Previously, he was a partner with Cooley Godward LLP, a
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 States 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.
18
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 31, 2008 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
|
|
|
|
|
|
|
|
|
|
Options or Warrants
|
|
|
|
|
|
|
Number of
|
|
|
Exercisable
|
|
|
Percent of
|
|
Name and Address of Beneficial Owner
|
|
Shares
|
|
|
Within 60 Days
|
|
|
Total
|
|
|
5% Stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
Omega Fund I, L.P.
c/o 13-15
Victoria Road,
St. Peter Port,
Guernsey GY1 3ZD,
Channel Islands, UK
|
|
|
4,892,813
|
(2)
|
|
|
817,439
|
(2)
|
|
|
13.7
|
%
|
Entities affiliated with Advent Venture Partners
25 Buckingham Gate,
London SW1E 6LD, UK
|
|
|
3,892,181
|
(3)
|
|
|
181,653
|
(3)
|
|
|
9.9
|
%
|
Entities affiliated with NGN Capital(4)
369 Lexington Avenue,
17th Floor, New York,
New York 10017
|
|
|
3,130,487
|
(4)
|
|
|
1,044,827
|
(4)
|
|
|
10.0
|
%
|
3i Group plc
91 Waterloo Road,
London SE1 8XP, UK
|
|
|
2,603,535
|
|
|
|
|
|
|
|
6.4
|
%
|
Merlin BioMed Private Equity Advisors
230 Park Ave.,
Suite 928, New York,
New York 10169
|
|
|
2,138,018
|
|
|
|
544,958
|
|
|
|
6.5
|
%
|
Named Executive Officers and Directors:
|
|
|
|
|
|
|
|
|
|
|
|
|
Christian Itin, Ph.D.
|
|
|
2,885
|
|
|
|
574,104
|
|
|
|
1.4
|
%
|
David F. Hale (5)(6)
|
|
|
236,348
|
(5)
|
|
|
553,283
|
(6)
|
|
|
1.9
|
%
|
Patrick A. Baeuerle, Ph.D.
|
|
|
22,563
|
|
|
|
366,696
|
|
|
|
*
|
|
Carsten Reinhardt, M.D., Ph.D.
|
|
|
|
|
|
|
193,085
|
|
|
|
*
|
|
Michael G. Carter, M.B., Ch.B., F.R.C.P.
|
|
|
757
|
|
|
|
70,691
|
|
|
|
*
|
|
Barclay A. Phillips(7)
|
|
|
335,589
|
(7)
|
|
|
48,540
|
(7)
|
|
|
*
|
|
Phillip M. Schneider
|
|
|
|
|
|
|
68,276
|
|
|
|
*
|
|
Joseph P. Slattery
|
|
|
|
|
|
|
5,833
|
|
|
|
*
|
|
Jerry C. Benjamin(3)
|
|
|
3,892,181
|
|
|
|
228,319
|
|
|
|
10.0
|
%
|
John E. Berriman
|
|
|
|
|
|
|
55,238
|
|
|
|
*
|
|
Otello Stampacchia, Ph.D.(2)
|
|
|
4,892,813
|
|
|
|
854,822
|
|
|
|
13.8
|
%
|
Peter Johann, Ph.D.(4)
|
|
|
3,130,487
|
|
|
|
1,044,827
|
|
|
|
10.0
|
%
|
All currently serving executive officers and directors as a
group (15 persons)
|
|
|
12,513,623
|
|
|
|
4,248,065
|
|
|
|
37.2
|
%
|
|
|
|
* |
|
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
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 40,795,133 shares outstanding on
March 31, 2008, adjusted as required by rules promulgated
by the SEC. |
|
(2) |
|
Consists of 3,257,936 shares held of record by Omega
Fund I, L.P.; 1,634,877 shares held of record by Omega
Fund III, L.P.; and immediately exercisable warrants to
purchase 817,439 shares by Omega Fund III,
L.P. 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, |
19
|
|
|
|
|
Ltd., and, indirectly, of Omega Fund III GP, L.P., which
are the general partners of Omega Fund I, L.P. and Omega
Fund III, L.P., respectively. Sharon Rose Alvarez-Masterson
and Connie Helyar are also directors of Omega Fund GP, Ltd.
and Omega Fund III G.P. Ltd., the general partner of Omega
Fund III GP, L.P. Accordingly, each of
Dr. Stampacchia, Ms. Alvarez-Masterson and Ms. Helyar
may be deemed to share voting and dispositive power with respect
to the securities held by Omega Fund I, L.P. and Omega
Fund III L.P. and each disclaims beneficial ownership of
the reported securities except to the extent of his or her
pecuniary interest therein. For Mr. Stampacchia only, his
total also includes 37,083 shares of common stock issuable
upon exercise of a stock option held by Mr. Stampacchia and
exercisable within sixty days of March 31, 2008. Pursuant
to the limited partnership agreements of Omega Fund I, L.P. and
Omega Fund III, L.P., Omega Fund I, L.P. and Omega Fund III,
L.P. are the beneficiaries of any remuneration, including stock
options, received by Mr. Stampacchia in connection with his
service as Director of the Company. Mr. Stampacchia
disclaims beneficial ownership of the stock options or such
shares that may be purchased upon exercise of the stock options,
except to the extent of his pecuniary interest therein. |
|
(3) |
|
Consists of 1,969,639 shares held of record and immediately
exercisable warrants to purchase 91,926 shares by Advent
Private Equity Fund III A Limited Partnership;
964,817 shares held of record and immediately exercisable
warrants to purchase 45,029 shares by Advent Private Equity
Fund III B Limited Partnership;
269,250 shares held of record and immediately exercisable
warrants to purchase 12,566 shares by Advent Private Equity
Fund III C Limited Partnership;
529,495 shares held of record and immediately exercisable
warrants to purchase 24,712 shares by Advent Private Equity
Fund III D Limited Partnership;
76,227 shares held of record and immediately exercisable
warrants to purchase 3,558 shares by Advent Private Equity
Fund III GmbH & Co. KG; 63,077 shares held
of record and immediately exercisable warrants to purchase
2,944 shares by Advent Private Equity Fund III
Affiliates Limited Partnership; and 19,676 shares held of
record and immediately exercisable warrants to purchase
918 shares by Advent Management III Limited
Partnership. Jerry C. 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 securities held
by these entities and disclaims beneficial ownership of the
securities in which he has no pecuniary interest. For
Mr. Benjamin only, his total also includes
46,666 shares of common stock issuable upon exercise of a
stock option held by Mr. Benjamin and exercisable within
sixty days of March 31, 2008. |
|
(4) |
|
Consists of 1,816,512 shares held of record and immediately
exercisable warrants to purchase 586,024 shares by NGN
Biomed Opportunity I, L.P. and 1,313,975 shares held
of record and immediately exercisable warrants to purchase
423,665 shares 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
securities beneficially held by these entities and disclaims
beneficial ownership of the reported securities except to the
extent of his pecuniary interest therein. Also includes
35,138 shares of common stock issuable upon exercise of a
stock option held by NGN Capital LLC and exercisable within
sixty days of March 31, 2008. |
|
(5) |
|
Consists of 2,606 shares of common stock held of record by
Mr. Hale, 215,577 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 18,165 shares of
common stock held of record by Hale BioPharma Ventures. |
|
(6) |
|
Mr. Hale also holds options to purchase an aggregate of
544,200 shares that are exercisable within sixty days of
March 31, 2008. Also consists of immediately exercisable
warrants to purchase 9,083 shares held of record by
Mr. Hale. |
|
(7) |
|
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 |
20
|
|
|
|
|
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 and 166 shares
held of record by Mr. Phillips. Also includes
48,540 shares of common stock issuable upon exercise of a
stock option held by Mr. Phillips and exercisable within
sixty days of March 31, 2008. |
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, 2007, 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 (1) in connection with the annual
stock option grants to non-employee directors, which in
accordance with our Director Compensation Policy took effect
automatically on the date of the Annual Meeting of Stockholders
on June 28, 2007, the reports of each of Mr. Hale,
Dr. Carter, Mr. Phillips, Mr. Schneider,
Mr. Benjamin, Mr. Berriman, Mr. Stampacchia and
Dr. Johann were filed late, each reporting one transaction,
and (2) in connection with stock option grants to our
executive officers approved by the compensation committee in
February 2007 but which did not take effect until the automatic
increase in the number of shares reserved for issuance under our
2003 Equity Incentive Plan, which occurred automatically on
June 10, 2007 in accordance with the 2003 Equity Incentive
Plan, the reports of each of Dr. Itin, Dr. Baeuerle,
Dr. Reinhardt, Mr. Alder and Christopher Schnittker,
our former chief financial officer, were filed three days late,
each reporting one transaction.
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 is
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 and the
officers objectives and performance.
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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21
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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. 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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Role of
Our Compensation Committee
Our compensation committee has the primary authority to
determine the 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 of 1986, or the
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. During
fiscal 2007, our compensation committee was comprised of
Messrs. Benjamin and Berriman and Drs. Carter, Johann
and Stampacchia. Mr. Benjamin serves as the
committees chairman.
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.
In February 2007 our compensation committee approved a
management incentive compensation plan for 2007, which was
designed to reward our executive officers for the achievement of
corporate and personal objectives for 2007. In March 2008, the
compensation committee awarded bonuses under the management
incentive compensation plan for 2007 and adopted a similar plan
for 2008.
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
December 2007, the committee engaged the services of Remedy
Compensation Consulting, or Remedy, an independent compensation
consulting firm. With the assistance of Remedy, the
22
compensation committee developed a list of comparable
biopharmaceutical companies that the committee determined were
similar to the 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, 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 Remedy, also benchmarked the
total cash-based compensation paid to our executive officers
(including target bonuses 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 of the named executive
officers were provided by Remedy 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. However, 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 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 executive officer, taking into account seniority,
experience, position and functional role, level of
responsibility and
23
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.
In this Compensation Discussion and Analysis, where we have
converted Euros to U.S. Dollars, we have used an exchange
rate of $1.4729 per Euro, which was the published rate from the
OANDA Corporation currency database as of December 31,
2007. Our named executive officers for fiscal year 2007 are all
domiciled in Germany and are paid in Euros.
During fiscal 2007 the base salaries for our named executive
officers were:
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2007 Base Salary
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2007 Base Salary
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Named Executive Officer
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($)
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()
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Christian Itin
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412,412
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280,000
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Patrick Baeuerle
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365,279
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248,000
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Carsten Reinhardt
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344,905
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234,167
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These base salaries were established by the compensation
committee and the board of directors of the Company in February
2007. Dr. Reinhardts base salary was increased from
230,000 to 240,000 effective August 1, 2007 in
connection with his promotion to chief medical officer in June
2007. For 2008, the chief executive officer recommended that
none of the named executive officers receive an increase in
their 2007 year-end base salary, which recommendation was
followed by the compensation committee.
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 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 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 or stock options, at the discretion of the compensation
committee. For 2007, all such payments were made in cash. In
March 2008, the compensation committee adopted a similar
management incentive compensation plan for 2008.
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 plan, then develops a list of key
individual objectives for each of these executive officers.
Before making his recommendations to the compensation committee
with respect to the achievement of the individual objectives by
each executive officer, the chief executive officer provides
each executive officer an opportunity to provide input in
assessing whether and to what extent the officers
individual objectives have been achieved. Under the plan, a
target bonus amount is expressed as a percentage of the year-end
base salary of the executive officer. If an executive is not
employed for the full year, his or her incentive compensation
will be prorated.
For 2007, the target bonus percentage for Dr. Itin, our
chief executive officer, was 50% of his base salary, and for
each of Dr. Baeuerle and Dr. Reinhardt, the other
named executive officers, the target bonus was 35% of the
24
annual base salary. The 2008 plan includes the same target bonus
percentages for the chief executive officer and the other named
executive officers.
The bonus to be paid to our chief executive officer is entirely
dependent upon the achievement of our corporate goals. The
corporate goals for 2007 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
corporate goals were generally designed to be achievable given
effective performance of the executive officers and the Company,
but also included a target amount for revenues to be generated
from research and development collaborations with third parties
that required extraordinary efforts and a confluence of
favorable circumstances in order to be achieved. The 2008
corporate goals contain the same elements as described above for
the 2007 corporate goals, and they are generally designed to be
achievable given the effective performance of the executive
officers and the Company. In addition, the 2008 goals 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 the 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 2007, the incentive
bonus for each of our named 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 2008, the plan approved by the compensation committee
provides for the same weighting of corporate and individual
goals.
When establishing the corporate goals for a particular year, the
compensation committee assigns a certain weight to each goal,
expressed as percentages adding up to one hundred percent (100%)
in the aggregate. When evaluating level of achievement for the
corporate goals, the compensation committee determines the
percentage of achievement with respect to each corporate goal,
which percentage is then multiplied by the percentage weighting
originally assigned to such goal. The sum of the resulting
percentages represents the total achievement of the corporate
goals, and is used to calculate that portion of the bonus of the
executive officer that is based on the achievement of the
corporate goals. The compensation committee may also consider
additional corporate goals that have been set by the board of
directors during the course of the plan year, and may adjust the
corporate goals achievement percentage based on the achievement
of such additional corporate goals.
When evaluating the achievement of 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 based on the achievement of the
individual goals, except in the case of the chief executive
officer whose bonus is based solely on the achievement of the
corporate goals. The compensation committee has discretion with
respect to the actual multiplier to apply in each case. For 2007
and 2008, 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 2007.
In March 2008, the compensation committee awarded bonuses to our
named executive officers based on the achievement of corporate
and individual goals established for 2007. The committee
concluded that 58% of the Companys corporate goals for
2007 had been achieved, and that percentage was used as the
multiplier for the
25
portion of each named executive officers target bonus that
is based on the achievement of corporate goals. Total payments
under the plan were calculated as set forth in the following
table:
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Portion of Target
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Portion of Target
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Target Bonus
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Bonus based on
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Bonus based on
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Percentage of 2007
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Percentage of 2007
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in % of
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Target Bonus
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Achievement of
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Achievement of
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Corporate Goals
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Individual Goals
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Total Award
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Name
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Base Salary
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($)
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Corporate Goals
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Individual Goals
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Achieved
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Achieved
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(1)($)
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Christian Itin
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50
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%
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206,206
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100
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%
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N/A
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58
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%
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N/A
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125,197
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Patrick Baeuerle
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35
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%
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127,848
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75
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%
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25
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%
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58
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%
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96.5
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%
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86,901
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Carsten Reinhardt
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35
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%
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118,569
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75
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%
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25
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%
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58
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%
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95.5
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%
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83,955
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(1) |
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The targets for and the awards to the named executive officers
were determined and paid in Euros. In determining the total
award for Dr. Itin, the compensation committee rounded up
the award to the nearest 5,000. In determining the total
awards for Drs. Baeuerle and Reinhardt, the compensation
committee rounded up the award to the nearest 1,000. |
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 plans. 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.
At present, our long-term compensation consists solely of stock
options. Our Amended and Restated 2003 Equity Incentive Award
Plan, or 2003 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 further
align interests between the executive and our stockholders, and
maintain competitive levels of total compensation by providing
an opportunity for increased equity ownership.
The executive officers, along with all of the Companys
other employees, are eligible to participate in the
Companys 2003 Plan. Stock option grant levels are
determined by the compensation committee based on data from a
comparable group of companies gathered and recommendations made
by Remedy. 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. Options granted to
existing employees vest on a monthly basis in equal installments
over a three-year period from the date of grant. Stock options
generally have a term of ten years from the date of grant, and
prior to
26
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.
According to the grant guidelines established by our
compensation committee, option grants to employees of the
Company 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 being 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 non-public
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 table below entitled
Outstanding Equity Awards at December 31, 2007
summarizes the stock option holdings of our named executive
officers as of December 31, 2007.
In connection with the executive compensation review in February
2007, the compensation committee approved option grants of
750,000 shares for Dr. Itin, 300,000 shares for
Dr. Baeuerle, and 100,000 shares for
Dr. Reinhardt. The option grants took effect in June 2007
following the scheduled increase in the number of shares
authorized for issuance under our 2003 Plan. In addition,
Dr. Reinhardt was granted an option to purchase
50,000 shares in connection with his promotion to Chief
Medical Officer in June 2007. The exercise price of all of these
grants was 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 from the date of grant in
equal monthly installments.
In determining the stock option grants to our named executive
officers in 2008, the compensation committee evaluated each
named executives current stock option holdings and
potential ownership percentage of the Company on an as-exercised
basis, and approved new grants of stock options that, when added
to the executives existing option holdings, result in
total holdings near the median for our peer group. The share
amounts approved for option grants were 150,000 shares for
Dr. Itin, and 100,000 shares each for
Dr. Baeuerle and Dr. Reinhardt. In addition, the
compensation committee granted performance-based options that
vest upon the achievement of certain performance criteria
specified by the compensation committee, or lapse if those
criteria have not been achieved by December 31, 2008. The
share amounts approved for performance-based option grants were
100,000 shares for Dr. Itin, and 75,000 shares
each for Dr. Baeuerle and Dr. Reinhardt.
Other
Benefits
Our named executive officers received cash payments in amounts
comparable to those that our German subsidiary 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.
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
27
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 named 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 named 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;
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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);
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costs associated with the continuation of the payments based on
the amounts Micromet AG is paying under government-mandated
social security and health insurance benefits programs for its
employees in Germany;
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life insurance benefits coverage to the extent the executive was
receiving such benefits prior to the date of termination (or
eighteen months upon termination in connection with a change of
control); and
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costs for outplacement services up to 15,000.
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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 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.
28
For purposes of the employment agreements with our executive
officers, 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 with our executive
officers, 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 the
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.
Total
Compensation
We intend to continue our strategy of compensating our 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 2007, the total compensation paid to the
named executive officers fell 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 paid to our named
executive officers was reasonable.
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 2008 base salaries and target
bonus levels of our named executive officers remained unchanged.
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.
29
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
will continue to evolve in parallel 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, 2007, 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 bonuses so that they are taxable to our executive officers
at the time they are 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 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 2007 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 2008 will exceed that
limit. In addition, our 2003 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.
30
Summary
Compensation Table
The following table shows for the fiscal years ended
December 31, 2007 and 2006, compensation awarded to or paid
to, or earned by the Companys principal executive officer
and its two other most highly compensated executive officers
during the year ended December 31, 2007. For amounts paid
in Euros, we have used an exchange rate of $1.3335 per Euro for
the fiscal year ended December 31, 2006 and $1.4729 per
Euro for the fiscal year ended December 31, 2007, which
were the published rates from the OANDA Corporation currency
database as of March 30, 2007 and December 31, 2007,
respectively.
Summary
Compensation Table for Fiscal 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
All Other
|
|
|
|
|
Name and Principal Position
|
|
Year
|
|
|
Salary(1)($)
|
|
|
Awards(3)($)
|
|
|
Compensation(4)($)
|
|
|
Compensation(5)($)
|
|
|
Total(6)($)
|
|
|
Christian Itin
|
|
|
2007
|
|
|
|
412,412
|
|
|
|
523,838
|
|
|
|
125,197
|
|
|
|
24,902
|
|
|
|
1,086,349
|
|
President and Chief Executive Officer(2)
|
|
|
2006
|
|
|
|
357,378
|
|
|
|
754,964
|
|
|
|
130,000
|
|
|
|
16,888
|
|
|
|
1,259,230
|
|
Patrick A. Baeuerle
|
|
|
2007
|
|
|
|
365,279
|
|
|
|
321,685
|
|
|
|
86,901
|
|
|
|
24,645
|
|
|
|
798,510
|
|
Senior Vice President and Chief Scientific Officer(2)
|
|
|
2006
|
|
|
|
316,040
|
|
|
|
603,165
|
|
|
|
85,000
|
|
|
|
16,724
|
|
|
|
1,020,929
|
|
Carsten Reinhardt
|
|
|
2007
|
|
|
|
344,905
|
|
|
|
188,315
|
|
|
|
83,955
|
|
|
|
22,382
|
|
|
|
639,558
|
|
Senior Vice President and Chief Medical Officer(2)
|
|
|
2006
|
|
|
|
293,370
|
|
|
|
196,382
|
|
|
|
70,000
|
|
|
|
11,873
|
|
|
|
571,625
|
|
|
|
|
(1) |
|
Amounts in this column reflect base salary for each of the named
executive officers earned in 2007 and 2006. |
|
(2) |
|
For information concerning these individuals base salaries
for 2007 and 2008, see the Compensation Discussion and Analysis
section of this proxy statement. |
|
(3) |
|
Amounts in this column represent the compensation costs incurred
by the Company during 2007 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 14 to the
Companys consolidated financial statements for the year
ended December 31, 2007. |
|
(4) |
|
Amounts in this column consist of the total performance-based
compensation earned by the named executive officers under the
Companys 2007 and 2006 Management Incentive Compensation
Plans for service rendered in fiscal year 2007 and 2006,
respectively, which amounts were awarded in March 2008 and
February 2007, respectively. A discussion of the methodology by
which the awards under the 2007 Management Incentive
Compensation Plan were determined is set forth in the
Compensation Discussion and Analysis section of this
proxy statement. |
|
(5) |
|
Amounts in this column consist of payments to the named
executive officer in lieu of payments on the officers
behalf into the German state pension, unemployment and health
insurance system. |
|
(6) |
|
The dollar values in this column for each named executive
officer represent the sum of all compensation referenced in the
preceding columns. |
31
Securities
authorized for Issuance under Equity Compensation
Plans
The following table provides certain information with respect to
all of our equity compensation plans in effect as of
December 31, 2007.
Equity
Compensation Plan Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
Number of
|
|
|
|
|
|
Securities
|
|
|
|
Securities to be
|
|
|
|
|
|
Remaining Available
|
|
|
|
Issued Upon
|
|
|
Weighted-Average
|
|
|
for Issuance Under
|
|
|
|
Exercise of
|
|
|
Exercise Price of
|
|
|
Equity Compensation
|
|
|
|
Outstanding
|
|
|
Outstanding
|
|
|
Plans (Excluding
|
|
|
|
Options, Warrants
|
|
|
Options, Warrants
|
|
|
Securities
|
|
|
|
and Rights
|
|
|
and Rights
|
|
|
Reflected in Column
|
|
Plan Category
|
|
(a)
|
|
|
(b)
|
|
|
(a))(c)
|
|
|
Equity compensation plans approved by security holders(1)
|
|
|
4,388,723
|
|
|
$
|
3.84
|
|
|
|
669,434
|
|
Equity compensation plans not approved by security holders(2)
|
|
|
1,659,983
|
|
|
$
|
2.48
|
|
|
|
208,789
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
6,048,706
|
|
|
$
|
3.41
|
|
|
|
878,223
|
|
|
|
|
(1) |
|
Includes the 2003 Amended and Restated Equity Incentive Plan and
the Employee Stock Purchase Plan. No shares are currently
outstanding under the Employee Stock Purchase Plan and
114,459 shares remain available under that plan. |
|
(2) |
|
Consists of the 2006 Equity Incentive Award Plan and the Third
Amended and Restated 2000 Stock Incentive Award Plan. |
Descriptions of our equity incentive plans that were not
approved by our stockholders, are contained in Note 14 to
the Consolidated Financial Statements contained in our Annual
Report on
Form 10-K
for the fiscal year ended December 31, 2007.
Outstanding
Equity Awards at December 31, 2007
The following table shows, as of December 31, 2007, certain
information regarding outstanding equity awards for the named
executive officers, all of which are unexercised stock options.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
(#)
|
|
|
(#)
|
|
|
($)
|
|
|
($)(5)
|
|
|
Date
|
|
|
Christian Itin
|
|
|
312,374
|
|
|
|
28,398
|
(1)
|
|
|
1.66
|
|
|
|
6.51
|
(6)
|
|
|
5/5/16
|
|
|
|
|
125,000
|
|
|
|
625,000
|
(4)
|
|
|
2.56
|
|
|
|
2.56
|
|
|
|
6/10/17
|
|
Patrick Baeuerle
|
|
|
249,565
|
|
|
|
22,688
|
(2)
|
|
|
1.66
|
|
|
|
6.51
|
(6)
|
|
|
5/5/16
|
|
|
|
|
50,000
|
|
|
|
250,000
|
(4)
|
|
|
2.56
|
|
|
|
2.56
|
|
|
|
6/10/17
|
|
Carsten Reinhardt
|
|
|
73,274
|
|
|
|
6,662
|
(2)
|
|
|
1.66
|
|
|
|
6.51
|
(6)
|
|
|
5/5/16
|
|
|
|
|
49,602
|
|
|
|
120,462
|
(3)
|
|
|
2.62
|
|
|
|
2.62
|
|
|
|
10/3/16
|
|
|
|
|
16,666
|
|
|
|
83,334
|
(4)
|
|
|
2.56
|
|
|
|
2.56
|
|
|
|
6/10/17
|
|
|
|
|
5,555
|
|
|
|
44,445
|
(4)
|
|
|
2.38
|
|
|
|
2.31
|
|
|
|
8/1/17
|
|
|
|
|
(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. As of the date of this
proxy statement, all of the shares are vested. |
|
(2) |
|
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. As of the date of this
proxy statement, all of the shares are vested. |
32
|
|
|
(3) |
|
Twenty-five percent of the shares underlying this option vested
on October 3, 2007, with the remainder vesting in 36 equal
monthly installments through October 3, 2010. |
|
(4) |
|
The shares underlying these grants vest over a three year period
from the date of grant in equal monthly installments. |
|
(5) |
|
This column lists the closing price of the Companys common
stock on the date of grant. |
|
(6) |
|
These options were granted by our subsidiary Micromet Holdings,
Inc. prior to the merger with CancerVax Corporation at a time
when that companys shares were not publicly traded. The
options were assumed by the Company upon the closing of the
merger 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 to a
1-for-3
reverse stock split of the Companys common stock on that
date. |
Option
Exercises and Stock Vested
None of the named executive officers exercised any stock options
during 2007, and no awards of shares of the Companys
common stock vested during 2007. Accordingly, the Options
Exercised and Stock Vested table is not presented.
Pension
Benefits
None of our named executive officers participates in or has
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 participates in or has
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, the Company has entered into employment
agreements with the Companys 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 named executive officer 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. The Companys compensation committee
believes that such provisions are instrumental in attracting
qualified personnel to serve as executives of the Company, and
that they also help to align the interests of our senior
management with those of the Companys stockholders.
In the event of termination for permanent disability or death,
termination without cause or termination for good reason, each
named executive officer (or in the event of death, his 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;
|
33
|
|
|
|
|
twelve months of base salary (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;
|
|
|
|
continuation of the payments based on the amounts Micromet AG is
paying under government-mandated social security and health
insurance benefits programs for its employees in Germany for
twelve months (or eighteen months 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 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.
|
In addition to the foregoing benefits, if the executive
officers employment is terminated by the Company 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 the Company 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 the
Company that cause has occurred, the Company 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, except for
required travel on Company business; any material breach by the
Company of the executives employment after written notice
of such breach and failure by the Company to cure the breach
within fifteen business days after receipt of such notice; any
purported termination of the executives
34
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.
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, 2007, the estimated maximum benefits that each
would have received under their employment agreements are set
forth in the table below. For amounts payable in Euros, we have
used an exchange rate of $1.4729 per Euro, which was the
published rate from the OANDA Corporation currency database as
of December 31, 2007.
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|
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|
Payments Receivable upon Termination from Death, Permanent
Disability,
|
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|
Termination without Cause or Termination for Good Reason
|
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|
|
|
|
|
|
|
|
|
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|
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|
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|
Incremental
|
|
|
|
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|
|
|
|
|
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Payment Upon
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Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Termination
|
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|
Receivable
|
|
|
|
|
|
|
|
|
|
|
|
|
Intrinsic
|
|
|
|
|
|
for Disability,
|
|
|
due to
|
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|
|
|
|
|
|
|
|
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|
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Value of
|
|
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Total
|
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without Cause
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
Healthcare
|
|
|
Additional
|
|
|
Receivable
|
|
|
or with
|
|
|
for Disability,
|
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|
|
|
|
|
|
|
|
Benefits
|
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Vested
|
|
|
due to
|
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Good Reason
|
|
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without Cause
|
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|
Salary
|
|
|
|
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and Other
|
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|
Stock
|
|
|
Termination
|
|
|
(Outplacement
|
|
|
or for
|
|
|
|
Continuation
|
|
|
Bonus
|
|
|
Compensation
|
|
|
Options
|
|
|
from Death
|
|
|
Costs)
|
|
|
Good Reason
|
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Name
|
|
($)
|
|
|
($)
|
|
|
($)(2)
|
|
|
($)(1)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Christian Itin
|
|
|
412,412
|
|
|
|
147,290
|
|
|
|
24,902
|
|
|
|
11,359
|
|
|
|
595,963
|
|
|
|
22,094
|
|
|
|
618,057
|
|
Patrick Baeuerle
|
|
|
365,279
|
|
|
|
96,306
|
|
|
|
24,645
|
|
|
|
9,075
|
|
|
|
495,305
|
|
|
|
22,094
|
|
|
|
517,399
|
|
Carsten Reinhardt
|
|
|
353,496
|
|
|
|
79,310
|
|
|
|
22,382
|
|
|
|
2,665
|
|
|
|
457,453
|
|
|
|
22,094
|
|
|
|
479,547
|
|
|
|
|
(1) |
|
The intrinsic value of additional stock options shown above is
the difference between the closing stock price of $2.06 per
share on December 31, 2007 and the exercise price, times
the number of additional shares that would have vested upon
termination |
|
(2) |
|
Amounts in this column consist of payments to the named
executive officer in lieu of payments on the officers
behalf into the German state pension, unemployment and health
insurance system. |
If the Company had entered into a change of control transaction
on December 31, 2007, or if the employment of each of the
named executive officers had been terminated as of
December 31, 2007, 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
maximum benefits that each named executive officer would have
received under their employment agreements are set forth in the
following table. For amounts payable in Euros, we have used an
exchange rate of $1.4729 per Euro, which was the published rate
from the OANDA Corporation currency database as of
December 31, 2007.
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|
|
|
|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
Incremental Payments for Termination
|
|
|
|
|
|
|
Intrinsic
|
|
|
in Connection with Change of Control
|
|
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Total
|
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intrinsic
|
|
|
Receivable
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
|
due to
|
|
|
|
Vested
|
|
|
|
|
|
|
|
|
Healthcare
|
|
|
|
|
|
Additional
|
|
|
Termination
|
|
|
|
Stock Options
|
|
|
|
|
|
|
|
|
Benefits
|
|
|
Maximum
|
|
|
Vested Stock
|
|
|
in Connection
|
|
|
|
Upon Change
|
|
|
Salary
|
|
|
|
|
|
and Other
|
|
|
Outplacement
|
|
|
Options Upon
|
|
|
with Change
|
|
|
|
of Control
|
|
|
Continuation
|
|
|
Bonus
|
|
|
Compensation
|
|
|
Costs
|
|
|
Termination
|
|
|
of Control
|
|
Name
|
|
($)(1)
|
|
|
($)
|
|
|
($)
|
|
|
($)(2)
|
|
|
($)
|
|
|
($)(1)
|
|
|
($)
|
|
|
Christian Itin
|
|
|
5,680
|
|
|
|
618,618
|
|
|
|
147,290
|
|
|
|
37,353
|
|
|
|
22,094
|
|
|
|
5,680
|
|
|
|
836,715
|
|
Patrick Baeuerle
|
|
|
4,538
|
|
|
|
365,279
|
|
|
|
96,306
|
|
|
|
24,645
|
|
|
|
22,094
|
|
|
|
4,538
|
|
|
|
517,400
|
|
Carsten Reinhardt
|
|
|
1,332
|
|
|
|
353,496
|
|
|
|
79,310
|
|
|
|
23,382
|
|
|
|
22,094
|
|
|
|
1,332
|
|
|
|
480,946
|
|
|
|
|
(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 $2.06 per share
on December 31, 2007. In the event of a change of control
of the Company, on December 31, 2007, 50% of the unvested
stock options would have vested at the time of the ownership
change, with the remaining 50% vesting if the executive officer
is terminated within twelve months thereafter, except |
35
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that in the case of Dr. Itin only, any remaining unvested
stock awards will become vested and exercisable on the six-month
anniversary of the date of the change of control if he is
employed by the Company at that time. |
|
|
|
(2) |
|
Amounts in this column consist of payments to the named
executive officer in lieu of payments on the officers
behalf into the German state pension, unemployment and health
insurance system. |
Director
Compensation
The following table shows for the fiscal year ended
December 31, 2007 certain information with respect to the
compensation of all directors of the Company:
Director
Compensation for Fiscal Year 2007
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
Paid in Cash
|
|
|
Awards
|
|
|
|
|
|
Total
|
|
Name
|
|
($)(1)
|
|
|
($)(2)(3)
|
|
|
Other Compensation($)
|
|
|
($)
|
|
|
Jerry C. Benjamin
|
|
|
29,500
|
(4)
|
|
|
76,660
|
(15)
|
|
|
|
|
|
|
106,160
|
|
John E. Berriman
|
|
|
30,500
|
(5)
|
|
|
79,870
|
(16)
|
|
|
|
|
|
|
110,370
|
|
Michael G. Carter
|
|
|
29,500
|
(6)
|
|
|
90,512
|
(17)
|
|
|
|
|
|
|
120,012
|
|
David F. Hale
|
|
|
80,167
|
(7)
|
|
|
276,893
|
(18)
|
|
|
38,000
|
(8)
|
|
|
395,090
|
|
Christian Itin
|
|
|
|
(9)
|
|
|
|
(9)
|
|
|
|
(9)
|
|
|
|
(9)
|
Peter Johann
|
|
|
24,500
|
(10)
|
|
|
44,395
|
(19)
|
|
|
|
|
|
|
68,895
|
|
Barclay A. Phillips
|
|
|
32,500
|
(11)
|
|
|
70,776
|
(20)
|
|
|
|
|
|
|
103,276
|
|
Phillip M. Schneider
|
|
|
26,000
|
(12)
|
|
|
90,539
|
(21)
|
|
|
|
|
|
|
116,539
|
|
Joseph P. Slattery
|
|
|
3,500
|
(13)
|
|
|
1,706
|
(22)
|
|
|
|
|
|
|
5,206
|
|
Otello Stampacchia
|
|
|
26,500
|
(14)
|
|
|
64,892
|
(23)
|
|
|
|
|
|
|
91,392
|
|
|
|
|
(1) |
|
Pursuant to the Companys Director Compensation Policy,
non-employee 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) |
|
Pursuant to the Companys Director Compensation Policy,
each non-employee director, other than the chairman of the
board, received at the time of the merger with CancerVax
Corporation, or receives upon the initial appointment or
election to the board, a non-qualified stock option to purchase
35,000 shares of the Companys common stock. The
chairman received at the time of the merger with CancerVax
Corporation, or receives upon the initial appointment or
election, a non-qualified stock option to purchase
70,000 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 three years from the date of
grant, such that each stock option is 100% vested on the third
anniversary of its date of grant, subject to a directors
continuing service on the board through each vesting date. In
addition, on the date of each annual meeting of stockholders,
(i) the chairman of the audit committee receives a
non-qualified stock option to purchase 7,500 shares of the
Companys common stock, (ii) the chairman of the
compensation committee receives 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 receives 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 is 100% vested on
the first anniversary of the date of grant, subject to a
directors continuing service on the board through each
vesting date. In addition, on the date of each annual meeting of
stockholders, all non-employee directors, other than the
chairman of the board, receive a non-qualified stock option to
purchase 15,000 shares of the Companys common stock,
and the chairman receives a non-qualified stock option to
purchase 30,000 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 is 100% vested on the first
anniversary of the date of grant, subject to a directors |
36
|
|
|
|
|
continuing service on the board through each vesting date.
Pursuant to the Companys Director Compensation Policy, the
exercise price for each of the grants is the closing price on
the date of grant. |
|
(3) |
|
Amounts in this column represent the compensation costs incurred
by the Company during 2007 related to stock options held by the
director, rather than an amount paid to or realized by the
director. 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 14 to the Companys consolidated financial
statements for the year ended December 31, 2007. |
|
(4) |
|
Comprised of $16,000 in annual director retainer fees, $7,500 in
board meeting attendance fees and $6,000 in committee meeting
attendance fees. |
|
(5) |
|
Comprised of $16,000 in annual director retainer fees, $7,500 in
board meeting attendance fees and $7,000 in committee meeting
attendance fees. |
|
(6) |
|
Comprised of $16,000 in director retainer fees, $7,500 in board
meeting attendance fees and $6,000 in committee meeting
attendance fees. |
|
(7) |
|
Comprised of $72,667 in director retainer fees and $7,500 in
board meeting attendance. |
|
(8) |
|
Reimbursement of salary expenses incurred by Mr. Hale for
his administrative assistant. |
|
(9) |
|
Dr. Itin did not receive any compensation as a director of
the Company during 2007. Dr. Itins compensation in
his capacity as President and Chief Executive Officer of the
Company has been fully reflected in the Summary Compensation
Table. |
|
(10) |
|
Comprised of $16,000 in director retainer fees, $7,500 in board
meeting attendance fees and $1,000 in committee meeting
attendance fees. All fees were paid to NGN Capital LLC. |
|
(11) |
|
Comprised of $16,000 in director retainer fees, $7,500 in board
meeting attendance fees and $9,000 in committee meeting
attendance fees. |
|
(12) |
|
Comprised of $14,000 in director retainer fees, $6,000 in board
meeting attendance fees and $6,000 in committee meeting
attendance fees. |
|
(13) |
|
Comprised of $2,000 in director retainer fees and $1,500 in
board meeting attendance fees. |
|
(14) |
|
Comprised of $16,000 in director retainer fees, $7,500 in board
meeting attendance fees and $3,000 in committee meeting
attendance fees payable to Omega Fund I, L.P. and Omega III,
L.P. in proportion to their relative shareholdings in the
Company. |
|
(15) |
|
The aggregate number of option awards outstanding at
December 31, 2007 was 60,000 shares. |
|
(16) |
|
The aggregate number of option awards outstanding at
December 31, 2007 was 68,155 shares. |
|
(17) |
|
The aggregate number of option awards outstanding at
December 31, 2007 was 83,608 shares. |
|
(18) |
|
The aggregate number of option awards outstanding at
December 31, 2007 was 579,295 shares. |
|
(19) |
|
The aggregate number of option awards outstanding at
December 31, 2007 was 50,000 shares, which were held
in the name of NGN Capital LLC. |
|
(20) |
|
The aggregate number of option awards outstanding at
December 31, 2007 was 55,000 shares. |
|
(21) |
|
The aggregate number of option awards outstanding at
December 31, 2007 was 65,000 shares. |
|
(22) |
|
The aggregate number of option awards outstanding at
December 31, 2007 was 35,000 shares. |
|
(23) |
|
The aggregate number of option awards outstanding at
December 31, 2007 was 50,000 shares. Pursuant to the
limited partnership agreements of Omega Fund I, L.P. and Omega
Fund III, L.P., Omega Fund I, L.P. and Omega Fund III, L.P. are
the beneficiaries of any remuneration, including stock options,
received by Mr. Stampacchia in connection with his service
as Director of the Company. Mr. Stampacchia disclaims
beneficial ownership of the stock options or such shares that
may be purchased upon exercise of the stock options, except to
the extent of his pecuniary interest therein. |
37
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
April 29, 2008
A copy of the Companys Annual Report to the Securities
and Exchange Commission on
Form 10-K
for the fiscal year ended December 31, 2007 is available
without charge upon written request to: Corporate Secretary,
Micromet, Inc., 6707 Democracy Boulevard, Suite 505,
Bethesda, Maryland 20817.
38
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MICROMET, INC.
6707 DEMOCRACY BOULEVARD SUITE 505 BETHESDA, MD 20817
|
|
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for
electronic delivery of information up until 11:59 P.M. Eastern
Time on 6/26/08. Have your proxy card in hand when
you access the web site and follow the instructions to obtain your records
and to create an electronic voting instruction form.
|
|
|
ELECTRONIC DELIVERY OF FUTURE STOCKHOLDER COMMUNICATIONS
|
|
If you would like to reduce the costs incurred by Micromet, Inc. in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access stockholder communications electronically in future years.
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|
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 on 6/26/08. Have your proxy card in hand when you call and then follow the instructions.
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VOTE BY MAIL |
|
|
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Micromet, Inc., c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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MCROM1
|
|
KEEP THIS PORTION FOR YOUR RECORDS
|
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DETACH AND RETURN THIS PORTION ONLY
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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MICROMET, INC. |
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THE DIRECTORS RECOMMEND A VOTE FOR ITEMS 1 AND 2
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Vote on Directors
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1. |
Election of Directors Nominees:
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For All |
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Withhold All |
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For All Except |
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To withhold authority to vote for any individual
nominee(s), mark For All Exceptand write the
number(s) of the nominee(s) on the line below.
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(01) Christian Itin, Ph.D.
(02) Peter Johann, Ph.D.
(03) Joseph P. Slattery
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Vote on Proposals |
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For
Against Abstain |
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2. |
To ratify the selection by the
audit committee of the board of directors of Ernst & Young LLP as
independent auditors of the Company for its fiscal year ending
December 31, 2008. |
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3. |
To conduct any other business properly brought before the meeting. |
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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 and 2. 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.
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For address changes and/or comments, please check this box and write them on the back where indicated. |
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Yes No |
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Please indicate if you plan to attend this meeting. |
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MATERIALS ELECTION |
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As of July 1, 2007, SEC rules permit companies to send you a notice that proxy information is available on the Internet, instead of mailing you a complete
set of materials. Check the box to the right if you want to receive a complete set of future proxy materials by mail, at no cost to you. If you do not take action you may receive only a Notice. |
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint Owners)
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Date |
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Micromet, Inc.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS
JUNE 27, 2008
The stockholder(s) hereby appoint Mark Reisenauer and Matthias Alder, or either of them, 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 p.m., Eastern Time, on June 27, 2008, 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
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Address Changes/Comments: |
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(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) |