SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Under §240.14a-12
OSI Pharmaceuticals, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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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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May 6,
2009
Dear Stockholders:
It is a pleasure to invite you to the annual meeting of
stockholders of OSI Pharmaceuticals, Inc., which will be held at
our corporate headquarters at 41 Pinelawn Road, Melville, New
York 11747, on Wednesday, June 17, 2009, at
10:00 a.m. EDT. Information about the matters to be
voted upon at the meeting is in the attached Notice of Annual
Meeting of Stockholders and Proxy Statement.
In addition to the matters to be voted upon at the meeting,
there will be a presentation on our companys product
portfolio and recent business developments. Specific directions
to the annual meeting may be obtained by calling or writing
Ms. Kathy Galante, Senior Director, Investor and Public
Relations, at OSI Pharmaceuticals, Inc., 41 Pinelawn Road,
Melville, New York 11747, telephone number
(631) 962-2000
or by visiting our website at
www.osip.com.
In order to assure that a quorum is present at the meeting, you
are urged to sign and mail the enclosed proxy card at once, even
though you may plan to attend in person. You may revoke the
proxy granted in the proxy card at any time prior to its being
voted by filing with our Secretary either an instrument of
revocation or a duly executed proxy card bearing a later date.
If you attend the meeting, you may elect to revoke the proxy and
vote your shares in person.
Our Annual Report to Stockholders for the fiscal year ended
December 31, 2008 is being distributed to you with the
attached Proxy Statement.
Sincerely,
COLIN GODDARD, Ph.D.
Chief Executive Officer
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OSI
Pharmaceuticals, Inc.
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41
Pinelawn Road
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Melville,
New York 11747
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phone
631.962.2000
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facsimile
631.752.3880
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OSI
PHARMACEUTICALS, INC.
41 Pinelawn Road
Melville, New York 11747
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
Our annual meeting of stockholders will be held at our corporate
headquarters at 41 Pinelawn Road, Melville, New York 11747, on
Wednesday, June 17, 2009 at 10:00 a.m. EDT, for
the following purposes:
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(1)
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to elect 10 directors;
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(2)
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to ratify the appointment of KPMG LLP as the independent
registered public accounting firm to audit our consolidated
financial statements for the fiscal year ending
December 31, 2009; and
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(3)
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to transact such other business as may properly come before the
annual meeting or any adjournment or adjournments thereof.
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The Board of Directors has fixed the close of business on
April 22, 2009 as the record date for determining
stockholders entitled to notice of and to vote at the annual
meeting. For at least 10 days prior to the annual meeting
date, a complete list of stockholders entitled to vote at the
annual meeting will be open to examination by stockholders for
any purpose germane to the annual meeting during normal business
hours at our corporate headquarters at 41 Pinelawn Road,
Melville, New York 11747. This list will also be available at
and for the duration of the annual meeting on June 17, 2009.
By Order of the Board of Directors,
BARBARA A. WOOD
Secretary
May 6, 2009
IMPORTANT
Whether or not you plan to attend the meeting, please sign
and date the enclosed proxy and return it in the postage-paid
envelope enclosed for your convenience. Returning a proxy will
not deprive you of your right to attend the annual meeting and
vote your shares in person.
TABLE OF CONTENTS
OSI
PHARMACEUTICALS, INC.
41 Pinelawn Road
Melville, New York 11747
This Proxy Statement is furnished to the stockholders of OSI
Pharmaceuticals, Inc., a Delaware corporation, in connection
with the solicitation of proxies by the Board of Directors for
use at the annual meeting of stockholders to be held on
June 17, 2009, and any adjournment or adjournments thereof.
A copy of the Notice of Annual Meeting of Stockholders
accompanies this Proxy Statement. It is anticipated that the
mailing of this Proxy Statement will commence on or about
May 7, 2009.
Only holders of record of our common stock at the close of
business on April 22, 2009, the record date for the
meeting, will be entitled to notice of and to vote at the
meeting. On the record date, we had issued and outstanding
57,997,336 shares of common stock, which are the only
securities that are entitled to vote at the meeting. Each share
of common stock is entitled to one vote.
The presence at the meeting, in person or by proxy, of the
holders of a majority of the issued and outstanding shares of
common stock entitled to vote at the meeting will be necessary
to constitute a quorum. If a broker that is a record holder of
common stock does not return a signed proxy, the shares of
common stock held by such broker will not be considered present
at the meeting and will not be counted toward establishing a
quorum. If a broker that is a record holder of common stock
returns a signed proxy, the shares of common stock held by such
broker will be considered present at the meeting and will be
counted toward establishing a quorum. If a signed proxy is
received from a broker that does not have discretionary
authority to vote on one or more matters, the proxy will be
considered a broker non-vote for that matter and
will have the effects described in the following paragraph.
Assuming a quorum is present, the affirmative vote of a majority
of the shares present, in person or by proxy, and entitled to
vote on the matter will be required for (i) the election of
directors and (ii) the ratification of the appointment of
the independent registered public accounting firm for the
current fiscal year. With respect to the election of directors,
votes withheld from one or more nominees will have the effect of
a no vote. Abstentions will have the effect of a
no vote with respect to the ratification of the
appointment of the independent registered public accounting
firm. Broker non-votes will have no effect on the outcome of the
election of directors and the ratification of the appointment of
the independent registered public accounting firm.
Stockholders who execute proxies may revoke them by giving
written notice to our Secretary at any time before such proxies
are voted. Attendance at the meeting will not have the effect of
revoking a proxy unless the stockholder attending the meeting
notifies the Secretary, in writing, of the revocation of the
proxy at any time prior to the voting of the proxy.
The Board of Directors does not know of any matter other than
the election of directors and the ratification of the
appointment of the independent registered public accounting firm
for the current fiscal year that is expected to be presented for
consideration at the meeting. However, if other matters properly
come before the meeting, the persons named in the accompanying
proxy intend to vote thereon in accordance with their judgment.
All proxies received pursuant to this solicitation will be
voted, except as to matters where authority to vote is
specifically withheld, and where a choice is specified as to the
proposal, in accordance with such specification. If no
instructions are given, the persons named in the proxy solicited
by the Board of Directors intend to vote (i) FOR the
nominees for election as our directors named in this Proxy
Statement under the caption Election of Directors
and (ii) FOR the ratification of the appointment of KPMG
LLP as the independent registered public accounting firm to
audit our consolidated financial statements for the fiscal year
ending December 31, 2009.
We will bear the cost of the meeting and the cost of soliciting
proxies, including the cost of mailing the proxy materials. In
addition to solicitation by mail, our directors, officers and
regular employees (who will not be specifically compensated for
such services) may solicit proxies by telephone. We have also
engaged MacKenzie Partners, Inc. to assist in the solicitation
of proxies from stockholders. The cost of such services is
expected to be approximately $5,000, plus reimbursement of
reasonable out-of-pocket expenses.
Important Notice Regarding the Availability of Proxy
Materials for the Shareholder Meeting to Be Held on
June 17, 2009. The Proxy Statement and annual report to
security holders are available at
www.proxydocs.com/osip.
Specific directions to the annual meeting may be obtained by
calling or writing Ms. Kathy Galante, Senior Director,
Corporate Communications, at OSI Pharmaceuticals, Inc., 41
Pinelawn Road, Melville, New York 11747, telephone number
(631) 962-2000
or by visiting our website at
www.osip.com.
VOTING
SECURITIES AND PRINCIPAL STOCKHOLDERS
The following table sets forth certain information as of
April 1, 2009 (except where otherwise noted) regarding the
beneficial ownership of our common stock by (i) all persons
who, to our knowledge, own more than 5% of the outstanding
shares of common stock, (ii) each director and nominee for
director, (iii) each named executive officer+, and
(iv) all current directors and executive officers as a
group. Unless otherwise indicated, the persons named in the
table below have sole voting and investment power with respect
to all shares of common stock shown as beneficially owned by
them.
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No. of Shares
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Percent of
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Name and Address
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of Common Stock
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Class(1)
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Wellington Management Company, LLP
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7,437,120
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(2)
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12.83
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%
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75 State Street
Boston, Massachusetts 02109
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FMR LLC
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5,764,688
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(3)
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9.94
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%
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82 Devonshire Street
Boston, Massachusetts
02109-6995
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Federated Investors, Inc.
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4,227,840
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(4)
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7.29
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%
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Federated Investors Tower
Pittsburgh, PA
15222-3779
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Westfield Capital Management Co., LLC
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3,688,347
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(5)
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6.36
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%
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One Financial Center, 24th Floor
Boston, Massachusetts 02111
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Vanguard Specialized Funds
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3,480,000
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(6)
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6.00
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%
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100 Vanguard Boulevard
Malvern, PA 19355
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Lord, Abbett & Co. LLC
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3,288,148
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(7)
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5.67
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90 Hudson Street
Jersey City, New Jersey 07302
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Michael G. Atieh+
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173,389
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(8)
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*
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Santo J. Costa
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24,750
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(9)
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*
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Colin Goddard, Ph.D.+
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495,561
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(10)
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*
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Daryl K. Granner, M.D.
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63,787
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(11)
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*
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Robert A. Ingram
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79,136
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(12)
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Joseph Klein, III
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8,875
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Kenneth B. Lee, Jr.
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8,375
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(13)
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Pierre Legault+
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0
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Gabriel Leung+
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159,494
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(14)
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Anker Lundemose, M.D., Ph.D., D.Sc.+
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119,003
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(15)
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Viren Mehta
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135,145
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(16)
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David W. Niemiec
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32,125
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(17)
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Herbert M. Pinedo, M.D., Ph.D.
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64,092
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(18)
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Robert L. Simon+
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144,213
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(19)
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Katharine B. Stevenson
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61,240
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(20)
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John P. White
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56,573
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(21)
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*
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All current directors and executive officers as a group
(17 persons)
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1,612,558
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(22)
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2.78
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%
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+
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The named executive officers consist of our Chief Executive
Officer, our current Chief Financial Officer, our former Chief
Financial Officer and our three most highly compensated
executive officers other than the Chief Executive Officer, Chief
Financial Officer and the former Chief Financial Officer.
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2
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*
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Represents ownership that does not exceed 1% of the outstanding
shares of our common stock.
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(1)
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Based on the number of shares of our common stock issued and
outstanding on April 1, 2009. Beneficial ownership is
determined in accordance with the rules of the Securities and
Exchange Commission, or the SEC, and generally includes voting
or investment power with respect to securities. Shares of common
stock subject to stock options currently exercisable, or
exercisable within 60 days, are deemed beneficially owned
by the person holding such options. The percent of the
outstanding shares of our common stock for any person or group
who, as of April 1, 2009, beneficially owned any shares
pursuant to options which are exercisable within 60 days of
April 1, 2009, is calculated assuming all such options have
been exercised in full and adding the number of shares subject
to such options to the total number of shares issued and
outstanding on April 1, 2009. The beneficial ownership
totals in this table also include shares of our common stock
issued upon the vesting of deferred stock units that are subject
to delivery at a later date pursuant to the deferral election of
the deferred stock unit holder. We have also included vested and
unvested restricted stock granted to a person. Such restricted
stock has voting rights, irrespective of vesting.
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(2)
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The number of shares is based on information provided in a
Schedule 13G/A filed by Wellington Management Company, LLP
with the SEC on March 10, 2009. Wellington Management
Company, LLP has shared dispositive power with respect to all of
the shares and shared voting power with respect to
3,116,690 shares in its capacity as investment advisor to
the clients of Wellington Management LLC.
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(3)
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The number of shares is based on information provided in a
Schedule 13G/A filed jointly by FMR LLC (f/k/a FMR Corp.)
and Edward C. Johnson 3d with the SEC on February 17, 2009.
FMR LLC indirectly holds the shares on behalf of its direct and
indirect subsidiaries, consisting of Fidelity
Management & Research Company, Strategic Advisers,
Inc., Pyramis Global Advisors, LLC, Fidelity Magellan Fund and
FIL Limited. FMR LLC and Mr. Johnson have sole dispositive
power with respect to all of the shares and sole voting power
with respect to 956,688 shares.
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(4)
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The number of shares is based on information provided in a
Schedule 13G filed jointly by Federated Investors, Inc.,
Voting Shares Irrevocable Trust, John F. Donahue, Rhodora J.
Donahue and J. Christopher Donahue with the SEC on
February 17, 2009. Federated Investors, Inc. is the parent
holding company of Federated Equity Management Company of
Pennsylvania and Federated Global Investment Management Corp.,
which act as investment advisers to various registered
investment companies and separate accounts that own shares of
our common stock. All of the outstanding voting stock of
Federated Investors, Inc. is held in the Voting Shares
Irrevocable Trust for which John F. Donahue, Rhodora J. Donahue,
and J. Christopher Donahue act as trustees. Federated Investors,
Inc. has sole voting and dispositive power with respect to all
of the shares.
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(5)
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The number of shares is based on information provided in a
Schedule 13G/A filed by Westfield Capital Management
Company, LLC with the SEC on February 4, 2009. Westfield
Capital Management Company, LLC has sole dispositive power with
respect to all of the shares and sole voting power with respect
to 2,777,197 shares.
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(6)
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The number of shares is based on information provided in a
Schedule 13G/A filed by Vanguard Specialized Funds with the
SEC on February 13, 2009. Vanguard Specialized Funds has
sole voting power with respect to all of the shares.
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(7)
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The number of shares is based on information provided in a
Schedule 13G filed by Lord, Abbett & Co. LLC with
the SEC on February 13, 2009. Lord, Abbett & Co.
LLC has sole dispositive power with respect to all of the shares
and sole voting power with respect to 3,066,120 shares.
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(8)
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Includes 159,385 shares that may be acquired at or within
60 days of April 1, 2009, pursuant to the exercise of
outstanding options.
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(9)
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Includes 13,250 shares that may be acquired at or within
60 days of April 1, 2009, pursuant to the exercise of
outstanding options.
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(10)
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Includes 412,486 shares that may be acquired at or within
60 days of April 1, 2009, pursuant to the exercise of
outstanding options.
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(11)
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Includes 47,250 shares that may be acquired at or within
60 days of April 1, 2009, pursuant to the exercise of
outstanding options.
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(12)
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Includes 59,500 shares that may be acquired at or within
60 days of April 1, 2009, pursuant to the exercise of
outstanding options.
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(13)
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Includes 6,250 shares that may be acquired at or within
60 days of April 1, 2009, pursuant to the exercise of
outstanding options.
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(14)
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Includes 140,604 shares that may be acquired at or within
60 days of April 1, 2009, pursuant to the exercise of
outstanding options.
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(15)
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Includes 108,074 shares that may be acquired at or within
60 days of April 1, 2009, pursuant to the exercise of
outstanding options.
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(16)
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Includes 55,019 shares that may be acquired at or within
60 days of April 1, 2009, pursuant to the exercise of
outstanding options.
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(17)
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Includes 13,250 shares that may be acquired at or within
60 days of April 1, 2009, pursuant to the exercise of
outstanding options.
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(18)
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Includes 59,750 shares that may be acquired at or within
60 days of April 1, 2009, pursuant to the exercise of
outstanding options.
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(19)
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Includes 127,119 shares that may be acquired at or within
60 days of April 1, 2009, pursuant to the exercise of
outstanding options.
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(20)
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Includes 52,250 shares that may be acquired at or within
60 days of April 1, 2009, pursuant to the exercise of
outstanding options.
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(21)
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Includes 40,750 shares that may be acquired at or within
60 days of April 1, 2009, pursuant to the exercise of
outstanding options.
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(22)
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Includes 1,281,758 shares that may be acquired at or within
60 days of April 1, 2009, pursuant to the exercise of
outstanding options.
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ELECTION
OF DIRECTORS
At our annual meeting, 10 directors are to be elected, each
to hold office until the next annual meeting of stockholders or
until his or her respective successor has been elected and
qualified, or until his or her earlier resignation or removal.
The nominees for election to the Board of Directors are named in
the table below. If any nominee listed in the table below should
become unavailable for any reason, which management does not
anticipate, proxies returned by the stockholders will be voted
for any substitute nominee selected by the Corporate Governance
and Nominating Committee prior to or at the meeting, or for a
motion to reduce the membership of the Board to the number of
nominees available. Each of the nominees named below was elected
as our director at the annual meeting of stockholders held on
June 11, 2008. Since June 13, 2007, our Board of
Directors has consisted of 11 members. In December 2008,
pursuant to our Board retirement age policy, Dr. Daryl K.
Granner submitted a letter of resignation to the Board. The
Board did not accept the resignation of Dr. Granner at that
time and requested that he serve until the 2009 Annual Meeting
of Stockholders. Dr. Granner is not standing for
re-election. In April 2009, the Board of Directors, based
upon a recommendation of the Corporate Governance and Nominating
Committee, decreased the size of the Board to 10 directors
and set the slate for such 10 director nominees. This slate
of directors recommended by the Corporate Governance and
Nominating Committee and approved by the Board was determined
following an assessment by the Corporate Governance and
Nominating Committee of the skill set and experience of such
persons and the determination that a smaller Board would be to
the benefit of our
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stockholders. The proxies cannot be voted for a greater number
of persons than the number of nominees named which is 10
nominees.
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Name
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Age
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Position(s) with the Corporation
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Robert A. Ingram
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66
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Chairman of the Board
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Colin Goddard, Ph.D.
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49
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Director and CEO
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Santo J. Costa
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63
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Director
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Joseph Klein, III
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48
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Director
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Kenneth B. Lee, Jr.
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61
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Director
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Viren Mehta
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59
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Director
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David W. Niemiec
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59
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Director
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Herbert M. Pinedo, M.D., Ph.D.
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65
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Director
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Katharine B. Stevenson
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46
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Director
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John P. White
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62
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Director
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Biographical
Information
Robert A. Ingram
was appointed Chairman of our
Board in January 2003 and is Chairman of our Executive Committee
and Corporate Governance and Nominating Committee.
Mr. Ingram serves as Vice Chairman Pharmaceuticals at
GlaxoSmithKline (plc), and previously served as the Chief
Operating Officer and President of Pharmaceutical Operations. He
began his career in the pharmaceutical industry as a sales
representative for the company that would later become Merrell
Dow Pharmaceuticals, Inc. He advanced rapidly through sales
management at Merrell Dow and into government and public
affairs. He left Merrell Dow in 1985 as Vice President of
Public Affairs to become Vice President of Government Affairs at
Merck & Co., Inc. In 1988, he was promoted to
President of Merck Frosst Canada, Ltd. In 1990, Mr. Ingram
left Merck to join Glaxo Inc., Glaxo plcs
U.S. subsidiary, as Executive Vice President of
Administrative and Regulatory Affairs and assumed a series of
increasingly responsible positions, including Group Vice
President. He was named Executive Vice President in January
1993, President and Chief Operating Officer in June 1993,
President and CEO in March 1994, and Chairman in January 1999.
As an Executive Director of Glaxo Wellcome plc, Mr. Ingram
had responsibility for operations in North America and Latin
America. He was appointed to the global companys board in
May 1995. In October 1997, he became Chief Executive Officer of
Glaxo Wellcome with responsibility for worldwide business
operations, and added the position of Chairman to his
responsibilities. Mr. Ingram graduated from Eastern
Illinois University with a B.S. degree in Business
Administration. He serves on the board of directors of Cree,
Inc., Lowes Companies, Inc., Edwards Lifesciences
Corporation, Allergan, Inc. and Valeant Pharmaceuticals
International. Mr. Ingram is currently a General Partner
with Hatteras Venture Partners, LLC (formerly, BioVista Capital,
LLC), a position he has held since 2007. In addition to his
professional responsibilities, Mr. Ingram was asked by
former U.S. President George H. Bush to form and chair the
CEO Roundtable on Cancer. He was formerly Chairman of the board
of trustees of the American Cancer Society Foundation, and is a
member of numerous other civic and professional organizations.
Mr. Ingram is also a frequent speaker at industry, pharmacy
and government seminars. Mr. Ingram has been a director
since January 2003.
Colin Goddard, Ph.D.
, was appointed our Chief
Executive Officer in October 1998. He also served as Chairman of
our Board from August 2000 to January 2003. He served as our
President from September 1997 to September 2000; Executive Vice
President and Chief Operating Officer from September 1996 to
September 1997; Vice President, Research Operations from April
1995 to September 1996; Vice President, Research Operations,
Pharmaceutical Division from December 1993 to April 1995;
Director, Pharmaceutical Operations from April 1993 to December
1993; Director, Drug Discovery from April 1992 to April 1993;
and Program Manager, Drug Discovery from April 1991 to April
1992. Dr. Goddard joined us as a scientist in January 1989.
Dr. Goddard was instrumental in the development of our
oncology and diabetes and obesity franchises and has led our
corporate development, acquisition and financing efforts over
the last decade. Before joining us, Dr. Goddard spent four
years at the National Cancer Institute in Bethesda, Maryland.
Dr. Goddard serves on the board of directors of Zelos
Therapeutics, Inc., BIO (the Biotechnology Industry
Organization), Gildas Club of New York, a cancer
charitable organization, and Abilities!, a New York based
charitable organization for the disabled. Dr. Goddard is a
member of
5
the CEO Roundtable on Cancer and the American Association for
Cancer Research. Dr. Goddard trained as a cancer
pharmacologist in Birmingham, U.K. receiving his Ph.D. from the
University of Aston, Birmingham, U.K. in September 1985 and was
honored as a D.Sc. from the State University of New York in 2003
and Hofstra University in 2005. Dr. Goddard has been our
director since October 1998.
Santo J. Costa
has been Of Counsel in the life
sciences practice at the law firm Smith, Anderson, Blount,
Dorsett, Mitchell & Jernigan, LLP since August 2007.
Prior to joining Smith Anderson, he was Of Counsel at the law
firm Williams Mullen Maupin Taylor, P.A. from June 2001 to
August 2007. Prior to joining Williams Mullen, Mr. Costa
served as President and Chief Operating Officer of Quintiles
Transnational Corporation from April 1994 to November 1999. He
served as Vice Chairman of Quintiles from December 1999 to May
2001 and as a consultant through December 2001. As President and
Chief Operating Officer of Quintiles, Mr. Costa had
responsibility for all operating divisions, as well as worldwide
business development. Prior to joining Quintiles, Mr. Costa
spent 23 years in the pharmaceutical industry.
Mr. Costa served as Senior Vice President, Administration
and General Counsel of Glaxo Inc. from 1986 to 1993. Prior to
joining Glaxo, Mr. Costa was U.S. area counsel for
Merrell Dow from 1977 to 1986. Mr. Costa sits on the board
of directors of one other publicly-traded company, Labopharm
Inc., where he is Chairman of the Board. Mr. Costa sits on
The Duke Cancer Patient Support Program Advisory Board, the Duke
University Medical Center Board of Visitors and the Duke Brain
Tumor Advisory Board. Mr. Costa received his B.S. in
pharmacy and his J.D. from St. Johns University.
Mr. Costa has been a member of our Board of Directors since
June 2006 and Chairman of our Compensation Committee since
November 2006.
Joseph Klein, III
, is currently Managing
Director of Gauss Capital Advisors, LLC, a financial consulting
and investment advisory firm focused on biopharmaceuticals,
which he founded in March 1998. From September 2003 to December
2008, Mr. Klein also served as a Venture Partner of Red
Abbey Venture Partners, LP, a life sciences private equity fund.
From September 2001 to September 2002, Mr. Klein was a
Venture Partner of MPM Capital, a healthcare venture capital
firm. From June 1999 to September 2000 when it merged with WebMD
Corporation, Mr. Klein served as Vice President, Strategy,
for Medical Manager Corporation, a leading developer of
physician office management information systems. For over nine
years, from 1989 to 1998, Mr. Klein was a health care
investment analyst at T. Rowe Price Associates, Inc., where he
was the founding portfolio manager of T. Rowe Price Health
Sciences Fund, Inc. Mr. Klein serves on the board of
directors of four other publicly-traded biotechnology companies:
BioMarin Pharmaceutical Inc.; Isis Pharmaceuticals, Inc.; PDL
BioPharma, Inc. and Savient Pharmaceuticals, Inc. Mr. Klein
serves on the board of directors of The Prospector Funds, Inc.,
an SEC registered investment company that manages two no-load
mutual funds. Mr. Klein also serves on the boards of
several private and non-profit entities. Mr. Klein received
a B.A., summa cum laude, in economics from Yale University and
an M.B.A. from the Graduate School of Business at Stanford
University. Mr. Klein has been a member of our Board of
Directors since June 2006.
Kenneth B. Lee, Jr.
has over 30 years of
experience with technology-based companies. He is a former
Ernst & Young partner, where he was employed for
29 years, and was instrumental in the founding and
development of the Ernst & Young life science practice
in the San Francisco Bay Area. While at Ernst &
Young, Mr. Lee served as head of its U.S. Life
Sciences Practice and Health Sciences Investment Banking Group,
as a Transaction Advisor for its Center for Strategic
Transactions, and as Co-Chairman of its International Life
Sciences Practice. Mr. Lee is currently a General Partner
with Hatteras Venture Partners, LLC (formerly, BioVista Capital,
LLC), which he joined in 2003. Prior to that, Mr. Lee
served as President of A.M. Pappas & Associates,
an international life sciences venture development company.
Mr. Lee currently serves on the boards of two other
publicly-traded companies: Inspire Pharmaceuticals, Inc. and
Pozen, Inc. Mr. Lee also serves as a member of the
executive committee of the Board of the North Carolina
Biotechnology Industry Organization. Mr. Lee received a
B.A. degree from Lenoir-Rhyne College and an M.B.A. from the
University of North Carolina at Chapel Hill. Mr. Lee has
been a member of our Board of Directors since June 2007.
Viren Mehta
is the founder and managing member of
Mehta Partners, LLC, providing investment, and strategic and
financial advice to the global pharmaceutical and biotechnology
industries since January 1998. Mehta Partners, and its
predecessor Mehta and Isaly, were strategic and financial
advisors to us from April 1995 to December 2002. Dr. Mehta
was a partner of Mehta and Isaly from July 1989 to December
1997. He was also a part of the strategic planning team of the
International Division of Merck. Dr. Mehta obtained his
Doctor of Pharmacy from the University of Southern California
and his M.B.A in International Finance and Marketing from UCLA.
6
Dr. Mehta advises investors and senior managers in the
pharmaceutical and biotechnology industry. Dr. Mehta became
our director in November 1999.
David W. Niemiec
is a private equity investor and,
since 2001, has been an Advisor to Saratoga Partners, LP, a
middle market private equity firm. Mr. Niemiec was a
Managing Director of Saratoga Partners from 1998 to 2001. He
also held various positions at Dillon, Read & Co. Inc.
and its successor firm, SBC Warburg Dillon Read, from 1974 to
1998, including Vice Chairman, Chief Administrative Officer and
Chief Financial Officer. From 1989 to 1992, Mr. Niemiec was
a member of the board of directors of the National Securities
Clearing Corporation. Currently, he is a member of the board of
directors of Emeritus Corporation, as well as a director and
trustee of 23 portfolios of the Templeton Fund complex,
which are internationally oriented mutual funds of the Franklin
Templeton Investments group. Mr. Niemiec received his A.B.
from Harvard College and his M.B.A. from Harvard Business
School. Mr. Niemiec became our director in June 2006.
Herbert M. Pinedo, M.D., Ph.D.
, has been
a Professor of Medical Oncology at the VU Medical Center,
Amsterdam, The Netherlands, since May 1979. From January 2003 to
September 2005, he was President of the Cancer Center, and since
September 2005, he has been its honorary Chairman.
Dr. Pinedos work focuses on translational research,
in particular, drug resistance, angiogenesis and immunology. The
Cancer Center has a formal collaboration with the Johns Hopkins
Oncology Center, School of Medicine. Dr. Pinedo has
received numerous international awards including the prestigious
Josef Steiner award. He currently serves on the scientific
advisory boards of a number of pharmaceutical companies. He is
also Vice Chairman of the Netherlands Organization for Health
Research and Development (ZonMw). He is a member of the British
Royal Society of Medicine and The Royal Netherlands Academy of
Science and Arts, where he was chairman of the board of the
Medical Division from July 2003 to July 2005. Dr. Pinedo is
founder and past director of the New Drug Development
Organization-Oncology (NDDO-Oncology) which is located in
Amsterdam. He was the first President of the Federation of
European Cancer Societies, and past President to the European
Society of Medical Oncology. Dr. Pinedo is the co-founder
of the
Annals of Oncology
and
The Oncologist
and
is the Co-Editor of
Current Opinion in Anticancer Drugs.
He serves on numerous editorial boards including Clinical Cancer
Research. Dr. Pinedo has authored 630 peer reviewed
international publications and more than 120 chapters, invited
papers or proceedings. Dr. Pinedo has been decorated by the
Netherlands Queen with the prestigious Knight of the Order of
the Netherlands Lion in 1995 and in 2008 by the Commander of the
Order of Orange. Dr. Pinedo serves on the board of
directors of OncoMethylome Sciences SA, a molecular diagnostics
company which shares are traded on the Euronext, and PamGene
International B.V., a privately held company. Dr. Pinedo
has been our director since June 2004.
Katharine B. Stevenson
served as Treasurer of
Nortel Networks Corporation until August 2007. She was
responsible for all treasury activity for the corporation
including treasury operations, corporate and structured finance,
credit, risk management, and pension fund management. Her
responsibilities included the management of the
corporations global banking, insurance, and rating agency
relationships. She was previously responsible for business
development at Nortel, including mergers and acquisitions, from
August 2002 to July 2005. Prior to joining Nortel,
Ms. Stevenson was Vice President, Corporation Finance of
JPMorgan Chase & Co. (formerly
J.P. Morgan & Co.), a global financial services
firm, based primarily in New York. She had responsibilities in
the financial advisory, risk management, bank financing, and
corporate finance groups. She is a graduate of Harvard
University. She serves as a director and member of the audit
committee of two public companies, CAE Inc., a global provider
of simulation technologies and aviation training, and Open Text
Corporation, a provider of Enterprise Content Management (ECM)
solutions. She is Chair of the Board of Governors of The Bishop
Strachan School, a leading independent day and boarding school
for girls, located in Toronto, Canada. She formerly served as
Chair, Vice Chair, Treasurer, and Trustee of the Financial
Executives International (FEI) Research Foundation. She became
our director in May 2005 and has been Chair of our Audit
Committee since May 2005.
John P. White
is a Senior Partner of the law firm
of Cooper & Dunham LLP in New York. His practice
primarily focuses on the areas of pharmaceuticals, biotechnology
and medical devices, and he has represented companies,
start-up
ventures and university research centers in patent prosecution,
licensing and litigation matters. Mr. White attended the
Columbia University School of Engineering, where he earned a
B.S. in chemical engineering, the Columbia University School of
Graduate Faculties, where he earned an M.A. in chemical biology
and a M.Ph. in biophysical chemistry and Fordham University,
where he earned his J.D. degree. He is a member of the New York
State Bar and is admitted to practice before the
U.S. District Courts for the Southern and
7
Eastern Districts of New York, the U.S. Court of Appeals
for the Federal Circuit, and the United States Supreme Court. He
also is registered to practice before the U.S. Patent and
Trademark Office. Mr. White is a member of the Association
of the Bar of the City of New York (member, Patent Committee),
the American Bar Association, the New York and New Jersey
Intellectual Property Law Associations, the American
Intellectual Property Law Association, the Federal Bar Council,
the Connor Intellectual Property Inn of Court, Southern District
of New York, the Rockefeller University Council and the
Licensing Executives Society, and has written and lectured
extensively on strategies for optimizing patent protection.
Mr. White also serves on the board of directors of
Thioltech, Inc., a privately held specialty pharmaceutical
company. Mr. White has been our director since May 1985 and
is also a director of the OSI Pharmaceuticals Foundation.
Other
Information Regarding Directors
Ms. Stevenson served as Treasurer of Nortel Networks
Corporation until August 2007. In January 2009, Nortel Networks
Corporation and subsidiary companies filed voluntary petitions
seeking relief from creditors under bankruptcy laws in the
United States, Canada and Europe.
The Board of Directors recommends a vote FOR the
election of each of the nominees for election to the Board of
Directors named above.
CORPORATE
GOVERNANCE
The
Code of Conduct and Corporate Governance Policies
We have adopted a Code of Conduct which, along with our Amended
and Restated Certificate of Incorporation, Amended and Restated
Bylaws and the charters of our Board committees, provides a
framework for the governance of our company. The Boards
Corporate Governance and Nominating Committee is responsible for
periodically reviewing our governance practices and principles.
Our Code of Conduct sets forth the standards of business conduct
and ethics for all of our employees, directors and consultants.
The Code of Conduct covers topics including, but not limited to,
conflicts of interest, confidentiality of information, fair
dealing with customers, suppliers and competitors, and
compliance with laws, rules, regulations and company policies.
The purpose of the Code of Conduct is to ensure that our
business is conducted in a legal and ethical manner. Employees
may submit concerns or complaints regarding ethical issues on a
confidential basis by means of a toll-free telephone call to our
ethics line, or to any member of our Compliance Committee. All
concerns and complaints are investigated by our Compliance
Committee, which is comprised of members of senior management,
or, in the case of financial, accounting or auditing
improprieties, the Audit Committee of the Board of Directors.
Any amendments to, or waivers from, a provision of the Code of
Conduct that apply to our directors and executive officers must
be approved by the Board of Directors. We will publicly disclose
any such waivers or amendments pursuant to the requirements of
the SEC and The Nasdaq Stock Market, Inc., or Nasdaq.
The Code of Conduct as well as the charters of our Audit
Committee, Compensation Committee, Corporate Governance and
Nominating Committee and Investment Committee are available,
without charge, on our website at
www.osip.com
or by
requesting them from our Secretary at OSI Pharmaceuticals, Inc.,
41 Pinelawn Road, Melville, New York 11747 or by calling
(631) 962-2000.
Director
Independence
An independent director is a director who meets the
criteria for independence as required by Nasdaqs listing
standards and applicable SEC rules and regulations, which
includes an affirmative determination of independence by the
Board. The Board has determined that each of the current
directors of our company is independent, with the exception of
Dr. Goddard, our Chief Executive Officer.
Certain of our directors are, or have been, affiliated with
organizations with which our company has, or has had in the
past, business relationships. Until August 2007, Mr. Costa
was Of Counsel at Williams Mullen, a law firm through which
Mr. Costa provided consulting guidance to our General
Counsel, Barbara Wood, prior to Mr. Costa
8
becoming a director of our company. Dr. Granner is Chairman
of Prosidions Scientific Advisory Board and receives a
consulting fee for this service. Dr. Granner is also a
director of Vanderbilt Diabetes Center at Vanderbilt University,
with which Prosidion had a collaboration agreement that entitles
Vanderbilt to milestone and royalty payments upon the occurrence
of certain events related to one of Prosidions clinical
candidates that is exclusively outlicensed to Eli
Lilly & Co. In addition, the company is a party to
certain research and clinical trial agreements with Vanderbilt
University. Our company had a consulting agreement with Mehta
Partners LLC, a entity in which Dr. Mehta is the
controlling member, pursuant to which Mehta Partners received a
consulting fee for services rendered from October 2008 to March
2009. This consulting arrangement was for a short term project,
and Dr. Mehta no longer provides consulting services to our
company or receives any consulting fees. Our company also has a
consulting agreement with Dr. Pinedo, pursuant to which he
provides advisory services related to our oncology clinical
development programs. Dr. Pinedo receives an hourly fee and
reimbursement for reasonable travel time and expenses for these
services. Mr. White is a partner at Cooper &
Dunham LLP, a law firm that provides legal services to us. Our
company made a charitable contribution in the last three years
to an organization with which Dr. Pinedo has a
relationship. The Board has evaluated the relationships of
Messrs. Costa and White and Drs. Granner, Mehta and
Pinedo described above and has concluded that each relationship
does not interfere with their respective exercise of independent
judgment as directors and thereby complies with all applicable
SEC and Nasdaq rules and regulations concerning independence.
Additionally, each of the Audit, Compensation and Corporate
Governance and Nominating Committees are made up solely of
independent directors under the SEC and Nasdaq rules. In
accordance with SEC rules and regulations and Nasdaq listing
standards, all Audit Committee members meet additional
applicable independence standards.
Board
of Directors and Standing Committees
The Board of Directors held ten meetings during 2008. None of
our directors attended fewer than 75% of the aggregate of:
(i) the total number of meetings of the Board of Directors
held during the period he or she was a director; and
(ii) the total number of meetings held by all committees of
the Board on which he or she served during the periods that he
or she served.
The Board of Directors conducts its business through meetings of
the Board and the following standing committees: Executive
Committee, Audit Committee, Corporate Governance and Nominating
Committee, Compensation Committee, Investment Committee,
Oncology Committee and Prosidion Committee. The standing
committees regularly report on their activities and actions to
the full Board.
The table below sets forth the current members of our Board and
Board committees.
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Corporate
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Governance and
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Board
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Executive
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Audit
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Nominating
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Compensation
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Investment
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Oncology
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Prosidion
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Robert A. Ingram
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Chair
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Chair
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Chair
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Colin Goddard, Ph.D.
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Member
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Santo J. Costa
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Member
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Chair
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Daryl K. Granner, M.D.
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Member
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Chair
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Joseph Klein, III
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Member
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Kenneth B. Lee, Jr.
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Member
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Viren Mehta
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Member
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David W. Niemiec
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Member
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Chair
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Herbert M. Pinedo, M.D., Ph.D.
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Member
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Chair
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Katharine B. Stevenson
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Chair
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John P. White
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Executive
Committee
The Board of Directors has an Executive Committee, which
currently consists of Mr. Ingram, as Chair,
Dr. Goddard, Ms. Stevenson and Messrs. White and
Costa. The principal function of the Executive Committee is to
exercise all the power and authority of the Board of Directors
between meetings of the Board of Directors. No meetings of the
Executive Committee were held in 2008.
9
Audit
Committee
The Board of Directors has a separately designated standing
Audit Committee established in accordance with the rules of the
SEC, in particular the rules under Section 3(a)(58)(A) of
the Securities Exchange Act of 1934, as amended, and Nasdaq. The
Audit Committee currently consists of Ms. Stevenson, as
Chair, and Messrs. Klein, Lee, and Niemiec. The Board of
Directors has determined that Ms. Stevenson, the Chair of
the Audit Committee, possesses the attributes of an audit
committee financial expert under the rules of the SEC and
Nasdaq. The Audit Committee held 12 meetings during the last
fiscal year.
The Board of Directors amended its Audit Committee charter in
April 2009. A copy of the Audit Committee charter, as amended,
is included as
Appendix A
to this Proxy Statement
and is currently available to security holders on our website at
www.osip.com.
The primary function of the Audit Committee is to assist the
Board of Directors in fulfilling its fiduciary responsibilities
to the stockholders, potential stockholders and investment
community by overseeing the integrity of our financial
statements, including the financial reporting processes,
internal accounting and financial controls. In so doing, it is
the responsibility of the Audit Committee to foster free and
open means of communication among the directors, the independent
registered public accounting firm and our financial management.
The Audit Committee has the sole authority to, among other
things, (i) appoint and dismiss our independent registered
public accounting firm, and (ii) approve the amount of fees
and other terms of any engagement by us of the independent
registered public accounting firm. The Audit Committees
responsibilities include (i) pre-approving all audit and
permitted non-audit services to be performed by the independent
registered public accounting firm subject to such procedures as
are established by the Audit Committee, (ii) obtaining and
reviewing, at least annually, a report by the independent
registered public accounting firm describing the firms
internal quality-control procedures and any material issues
raised by the most recent internal quality control or peer
review of the firm, (iii) actively engaging in a dialogue
with the independent registered public accounting firm with
respect to any disclosed relationships or services that may
impact the objectivity and independence of the independent
registered public accounting firm, and (iv) reviewing and
approving policies of hiring employees or former employees of
the independent registered public accounting firm. The Audit
Committee also oversees the annual and quarterly financial
reporting processes by reviewing annual reports on
Form 10-K
and quarterly reports on
Form 10-Q,
and discussing with management earnings press releases. The
Audit Committee also has responsibilities with respect to
compliance matters such as a review of our Code of Conduct,
establishment of procedures regarding complaints of accounting,
internal accounting controls, or auditing improprieties and
investigations of such complaints.
Under our Audit Committee Charter, an Audit Committee member may
serve on only three additional public company audit committees
in addition to his or her service on our Audit Committee. In
2008, Mr. Klein informed the Audit Committee Chair that he
was serving on the audit committee of four public companies, in
addition to serving on our Audit Committee. Based on its
assessment of his ability to dedicate the necessary time and
effort and the valuable contribution that Mr. Klein makes
to our Audit Committee, which in part results from the
perspective that he gains from serving on multiple audit
committees in the biopharmaceutical industry, the Corporate
Governance and Nominating Committee recommended, and the Board
of Directors approved, the waiver of the provision limiting the
number of audit committees of public companies on which an Audit
Committee member may serve such that Mr. Klein may continue
to serve on our Audit Committee as well as four additional audit
committees. On April 25, 2009, Mr. Klein resigned as a
member and chair of the audit committee of PDL BioPharma.
Corporate
Governance and Nominating Committee
The Board of Directors has a Corporate Governance and Nominating
Committee, which currently consists of Mr. Ingram, as
Chair, Mr. Costa, Dr. Mehta and Ms. Stevenson.
The Corporate Governance and Nominating Committee held three
meetings during the last fiscal year. The Board of Directors
amended its Corporate Governance and Nominating Committee
charter in April 2009. A copy of the Corporate Governance and
Nominating Committee charter, as amended, is included as
Appendix B
to this Proxy Statement and is currently
available to security holders on our website at
www.osip.com.
10
The principal functions of the Corporate Governance and
Nominating Committee are to review and select candidates for
nomination to the Board of Directors as well as review and
oversee our corporate governance practices and affairs. With
respect to nominees to the Board of Directors, the Corporate
Governance and Nominating Committee will consider director
candidates recommended by our stockholders. To the extent
stockholders wish to nominate directors for inclusion in our
proxy statement, such nominations may be submitted by any
stockholder entitled to vote for the election of directors in
writing, received by the Secretary no earlier than 120 days
and no later than 90 days prior to the anniversary date of
the preceding years annual meeting. Such recommendations
or notices of nomination must set forth (i) all information
relating to each nominee 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 and in accordance with Section 14(a) of the
Securities Exchange Act of 1934, as amended and the rules and
regulations promulgated thereunder. With respect to nominations,
notices of nominations must include the written consent of each
nominee to being named in the proxy statement as a nominee and
to serving as a director if elected. In addition, stockholders
submitting nominations must provide certain information
pertinent to them. In making recommendations or nominations,
stockholders must adhere to all of the required procedures set
forth in our Amended and Restated Bylaws, a copy of which has
been filed with the SEC and is currently available to security
holders on our website at
www.osip.com.
Stockholders
should also consider the minimum qualifications determined by
our Board of Directors for board members as noted in the
following paragraph.
Our Board of Directors has also established certain minimum
qualifications for board members, including being at least
21 years old and possessing (1) the ability to read
and understand corporate financial statements, (2) relevant
business experience and professional skills, (3) high moral
character and personal and professional integrity, and
(4) the willingness to commit sufficient time to attend to
his or her duties and responsibilities as a director of a public
corporation. In addition, the Corporate Governance and
Nominating Committee may consider a variety of other qualities
and skills, including (i) expertise in drug research,
development
and/or
commercialization, (ii) the ability to exercise independent
decision-making, (iii) the absence of conflicts of
interest, (iv) diversity of gender, ethnic background,
country of citizenship and experience, and (v) the ability
to work effectively with other directors in collectively serving
the long-term interests of all stockholders. Nominees must also
meet any applicable requirements of SEC regulations, state law,
and our charter and bylaws.
The Corporate Governance and Nominating Committee has
established a process for identifying and evaluating nominees
for director. The Corporate Governance and Nominating Committee
will annually assess the qualifications, expertise, performance
and willingness to serve of existing directors. If at this time
or at any other time during the year the Board of Directors
determines a need to add a new director with specific
qualifications or to fill a vacancy on the Board, the Chair of
the Corporate Governance and Nominating Committee will then
initiate the search, working with staff support and seeking
input from other directors and senior management, considering
nominees previously submitted by stockholders, and, if deemed
necessary or appropriate, hiring a search firm. An initial slate
of candidates satisfying the specific qualifications, if any,
and otherwise qualifying for membership on the Board, will then
be identified and presented to the Corporate Governance and
Nominating Committee by the Committee Chairman. The Corporate
Governance and Nominating Committee will then prioritize the
candidates and determine if the Corporate Governance and
Nominating Committee members, other directors or senior
management have relationships with the preferred candidates and
can initiate contacts. If not, contact would be initiated by a
search firm. To the extent feasible, all of the members of the
Corporate Governance and Nominating Committee and the Chief
Executive Officer will interview the prospective candidate(s).
Evaluations and recommendations of the interviewers will be
submitted to the Corporate Governance and Nominating Committee
for final evaluation. The Corporate Governance and Nominating
Committee will meet to consider such recommendations and to
approve the final candidate. The Corporate Governance and
Nominating Committee will evaluate all nominees for director,
including nominees recommended by a stockholder, on the same
basis.
With respect to the review and oversight of corporate governance
practices and affairs, the Corporate Governance and Nominating
Committee has, among others, the following responsibilities and
duties: (i) develop and periodically review our corporate
governance practices and principles; (ii) evaluate the
effectiveness of the Board and make recommendations relating to
practices, policies and performance of the Board;
(iii) periodically review and assess the structure of the
Board and committee functions and composition,
11
including recommending committee assignments for directors and
Chairs of committees and overseeing annual self-evaluations of
the Board and the committees; (iv) review directorships in
other public companies by or offered to directors;
(v) review and revise policies for director tenure and
retirement; (vi) review, analyze and report to the Board
all relationships of the directors with our company that could
impair their independence as defined by applicable SEC and
Nasdaq rules and regulations in order to assist the Board with
its responsibility to make an affirmative determination
regarding the independence of directors; (vii) review and
consider conflicts of interests regarding Board members and
executive officers and approve related person transactions; and
(viii) establish and monitor, as appropriate, director
orientation and recommend and monitor continuing education
programs for members of the Board.
Compensation
Committee
The Board of Directors has a Compensation Committee, which
currently consists of Mr. Costa, as Chair,
Dr. Granner, Mr. Ingram, and Dr. Mehta. The
Compensation Committee held three meetings during the last
fiscal year. The Board of Directors amended its Compensation
Committee charter in April 2009. A copy of the Compensation
Committee charter, as amended, is included as
Appendix C
to this Proxy Statement and is currently
available to security holders on our website at
www.osip.com.
Under the charter, the Compensation Committee is authorized to
exercise all power and authority of the Board of Directors with
respect to the compensation of employees, including our
executive officers, and non-employee directors. The Compensation
Committee also administers our stock and other incentive equity
plans. The Compensation Committee has the authority to delegate
any or all of its powers and authority to one or more
subcommittees. The Charter also allows the committee to delegate
administrative responsibilities to executive officers.
The Compensation Committees approval of executive
compensation is based on a report prepared by our Chief
Executive Officer and our Senior Vice President of Human
Resources, which consists of a detailed analysis, evaluation and
recommendation for the compensation of the executive officers
(other than the Chief Executive Officer). Compensation decisions
are then made by the Compensation Committee after reviewing the
report and after discussing the recommendations with our Chief
Executive Officer. For a more detailed discussion of this
process, please see the discussion in our Compensation
Discussion and Analysis section below.
In addition, as part of the Compensation Committees
oversight of executive compensation, the Compensation Committee
has the authority, to the extent it deems necessary or
appropriate, to retain independent compensation consultants and
other professional advisors to assist it in carrying out its
responsibilities. The Compensation Committee continued in 2008
to engage Radford, a division of Aon Consulting, Inc., as an
independent compensation consultant to advise the Committee on
matters related to the compensation of our non-employee
directors, executive officers and other employees. Radford
reports and is directly accountable to the Compensation
Committee and acts upon the Compensation Committees
directions and instructions. For a more detailed discussion of
this relationship, please see the discussion in our
Compensation Discussion and Analysis section below.
Investment
Committee
The Board of Directors has an Investment Committee, which
currently consists of Mr. Niemiec, as Chair, Mr. Klein
and Dr. Mehta. The Investment Committee held two meetings
during the last fiscal year.
In addition to its Investment Policy Statement, which is updated
from time to time, in June 2008, the Board of Directors adopted
a charter for its Investment Committee. A copy of the Investment
Committee charter is currently available on our website at
www.osip.com. Under the charter, the Investment Committee is
authorized to exercise all power and authority of the Board of
Directors with respect to the oversight of managements
investment of the Companys cash and short term investments
pending deployment of such cash and short term investments in
the operation of the business of the Company. The Investment
Committee has the authority to retain special legal, accounting
or other consultants for advice, may request any other director,
officer or employee of the Company or the Companys outside
counsel to attend meetings of the committee or to meet with any
members of, or consultants
12
to, the committee and may form and delegate any or all of its
powers and authority to subcommittees when appropriate.
Scientific
Advisory Committees
The Board of Directors has two standing scientific advisory
committees in the areas of oncology and diabetes and
obesity the Oncology Committee and the Prosidion
Committee. The Oncology Committee currently consists of
Dr. Pinedo, as Chair, Dr. Goddard, and
Messrs. Klein, Lee and White, and the Prosidion Committee
currently consists of Dr. Granner, as Chair,
Drs. Goddard, Pinedo and Mehta, and Messrs. Klein and
White. These committees assist the Board of Directors in
fulfilling its fiduciary responsibilities by providing technical
and scientific oversight of our oncology and diabetes and
obesity businesses, respectively, through access to detailed
briefings from our senior management.
Review,
Approval or Ratification of Transactions with Directors and
Related Persons
We have written policies and procedures to address potential or
actual conflicts of interest and the appearance that decisions
are based on considerations other than the best interests of our
company that may arise in connection with transactions with
certain persons or entities. Our Policies and Procedures with
Respect to Agreements and Arrangements between Directors and the
Company and Related Person Transactions operates in conjunction
with our Code of Conduct and is applicable to agreements,
transactions and other arrangements between the company and
directors of the company and Related Person Transactions.
A Director Agreement is any transaction, agreement or
arrangement between the company and a person who is a current
director of the company or a nominee to become a director of the
company or any firm, corporation or other entity in which the
director or director nominee is employed by or is a partner or
principal or in a similar position in or in which such person
has a 10% or greater beneficial ownership interest, which
provides a direct or indirect financial benefit to such director
or director nominee. All Director Agreements are considered by
the Corporate Governance and Nominating Committee. The Corporate
Governance and Nominating Committee may then recommend the
Director Agreement to the full Board of Directors for approval.
A Related Person Transaction is a transaction, arrangement or
relationship in which (a) the company is a participant;
(b) the amount involved exceeds $120,000 and (c) any
Related Person has or will have a direct or indirect interest. A
Related Person includes (i) any person who is or was at the
beginning of the fiscal year, a director, director nominee or
executive officer of our company; (ii) any person who is
known to be the beneficial owner of more than 5% of our voting
securities; (iii) any immediate family member (as defined
in the SEC rules and regulations) of the foregoing; or
(iv) any firm, corporation or other entity in which any of
the foregoing persons is employed or is a partner or principal
or in a similar position or in which such person has a 10% or
greater beneficial ownership interest.
All Related Person Transactions are subject to review and
approval or ratification by the Corporate Governance and
Nominating Committee. Our legal department prepares and
maintains schedules of Related Persons and requests and reviews
information from directors, director nominees and executive
officers regarding relationships that may potentially fall
within the definition of Related Person Transactions. In
addition, our legal department reviews all agreements into which
our company enters against the Related Persons schedules to
determine whether further review of the agreement is warranted
by the General Counsel who will then determine whether the
transaction should be reviewed by the Corporate Governance and
Nominating Committee or under certain circumstances, as
determined by the General Counsel in consultation with the Chief
Executive Officer or the Chief Financial Officer, by the Chair
of the Corporate Governance and Nominating Committee.
As part of the review process, the General Counsel and the
Corporate Governance and Nominating Committee will take into
account, among other factors deemed appropriate, the Related
Persons relationship to our company and interest in and
the value of the transaction; the benefits of the transaction to
our company; the availability of other sources of comparable
products or services; and whether the transaction is on terms
that are comparable to the terms available to an unrelated third
party or to employees generally. The Corporate Governance and
Nominating Committee, or the Chair, will approve only those
Related Person Transactions that are in, or not inconsistent
with, the best interests of our company and our stockholders.
13
Our General Counsel, in consultation with our Chief Executive
Officer or Chief Financial Officer, is charged with presenting
for ratification to the Corporate Governance and Nominating
Committee, or the Chair, any Related Person Transaction that has
not been previously approved or ratified. Transactions involving
ongoing relationships with Related Persons are reviewed and
assessed annually by the Corporate Governance and Nominating
Committee to determine if they are in the best interests of our
company and our stockholders to continue, modify or terminate
the Related Person Transactions. In addition, other than
non-discretionary contributions, all proposed charitable
contributions or pledges of charitable contributions by our
company in which a related person has an interest are subject to
review and approval or ratification by the Corporate Governance
and Nominating Committee. The Corporate Governance and
Nominating Committees activities with respect to the
review and approval or ratification of all Related Person
Transactions are reported periodically to the Board of Directors.
For the fiscal year ended December 31, 2008, there was one
Related Person Transaction. On August 1, 2008, we completed
the sale of the remaining assets of our eye disease business to
Eyetech Inc., a newly formed corporation whose shareholders
consist primarily of members of the Macugen sales team. Michael
G. Atieh, our former Executive Vice President, Chief Financial
Officer and Treasurer, participated in the design of Eyetech
Inc. and joined Eyetech Inc. in a part-time executive chairman
role upon his retirement from OSI. During his employment with
OSI, Mr. Atieh from time to time provided advice to the
management of Eyetech Inc., but did not have any decision-making
authority for Eyetech Inc., and did not participate in any
matters and decisions of OSI which related to Eyetech Inc. At
such time of employment, Mr. Atieh held stock in Eyetech
Inc. which became voting and participating with respect to
dividends and distributions upon his retirement from OSI.
Director
Policies
Policy Regarding Attendance at Annual
Meetings.
We encourage, but do not require, our
Board members to attend the annual meeting of stockholders. All
of our directors attended our 2008 Annual Meeting of
Stockholders.
Retirement Age Policy for Members of the Board of
Directors.
The Board of Directors approved a
retirement age policy for members of the Board effective as of
January 1, 2007. Upon reaching the age of 72, a director is
required to submit a letter of resignation to the Chairman of
the Board. Upon receipt of a letter of resignation, the Chairman
of the Board will refer the letter to the Corporate Governance
and Nominating Committee of the Board for consideration. If the
Corporate Governance and Nominating Committee, in its
discretion, believes that there are circumstances which would
justify waiver by the Board of the normal retirement age, it
will so recommend to the Board, and the Board will promptly
consider such recommendation. If the Board, following a
recommendation by the Corporate Governance and Nominating
Committee, decides to waive the normal retirement age for a
director, such directors letter of resignation will be
deemed to have been withdrawn, and such director shall continue
to serve until the next annual meeting of stockholders, assuming
that such director is so willing to serve. If the Board fails to
act within 30 days following receipt by the Chairman of the
Board of the letter of resignation, the letter of resignation
shall be deemed to have been accepted as of the 30th day
following such receipt. In accordance with the policy,
Dr. Granner submitted a letter of resignation to the Board
in December 2008. The Board did not accept the resignation of
Dr. Granner and requested that he serve until the 2009
Annual Meeting of Stockholders. Dr. Granner is not standing
for re-election.
Security
Holder Communications with the Board of Directors
We have established procedures for security holders to
communicate directly with the Board of Directors on a
confidential basis. Security holders who wish to communicate
with the Board or with a particular director may send a letter
to the Secretary at OSI Pharmaceuticals, Inc., 41 Pinelawn Road,
Melville, New York 11747. The mailing envelope must contain a
clear notation indicating that the enclosed letter is a
Security Holder-Board Communication or
Security
Holder-Director
Communication. All such letters must identify the author
as a security holder and clearly state whether the intended
recipients are all members of the Board or just certain
specified individual directors. The Secretary will make copies
of all such letters and circulate them to the directors
addressed.
14
If a security holder wishes the communication to be
confidential, such security holder must clearly indicate on the
envelope that the communication is confidential. The
Secretary will then forward such communication, unopened, to the
Chairman of the Board of Directors.
OUR
EXECUTIVE OFFICERS
The names and ages of our current executive officers and their
positions are as follows:
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Name
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Age
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Position(s)
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Colin Goddard, Ph.D.
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49
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Chief Executive Officer since October 1998; Board member since
October 1998; Chairman of the Board from August 2000 to January
2003; President from September 1997 to September 2000; Executive
Vice President and Chief Operating Officer from September 1996
to September 1997; Vice President, Research Operations from
April 1995 to September 1996; Vice President, Research
Operations, Pharmaceutical Division from December 1993 to April
1995; Director, Pharmaceutical Operations from April 1993 to
December 1993; Director, Drug Discovery from April 1992 to April
1993; Program Manager, Drug Discovery from April 1991 to April
1992; Staff Scientist from January 1989 to March 1991.
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Linda E. Amper, Ph.D.
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52
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Senior Vice President, Human Resources since October 2007; Vice
President, Business Administration and Human Resources from
March 2002 to October 2007; Vice President, Human Resources and
Administration from April 2001 to March 2002.
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Pierre Legault
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48
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Executive Vice President, Chief Financial Officer and Treasurer
since December 2008.
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Gabriel Leung
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47
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President, (OSI) Oncology since April 2005; Executive Vice
President since May 2003.
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Anker Lundemose, M.D., Ph.D., D.Sc.
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47
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Executive Vice President and President of (OSI) Prosidion since
April 2005; CEO of Prosidion since February 2003.
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Robert L. Simon
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64
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Executive Vice President, Pharmaceutical Development and
Manufacturing since June 2007; Executive Vice President,
Chemistry, Development and Manufacturing from December 2006 to
June 2007; Executive Vice President, Core Development and
Manufacturing from April 2005 to December 2006; Vice President,
Global Regulatory Affairs and CMC from January 2002 to April
2005.
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Barbara A. Wood, Esq.
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47
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Senior Vice President since October 2007; Vice President from
April 2001 to October 2007; General Counsel since April 2001;
Secretary since January 2004.
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Set forth below is a biographical description of each executive
officer based on information supplied by such executive officer:
Colin Goddard, Ph.D.
, see Election of
Directors.
Linda E. Amper, Ph.D.,
was named our Senior
Vice President, Human Resources in October 2007. Dr. Amper
joined us in April 2001 as our Vice President, Business
Administration and Human Resources. Prior to joining OSI,
Dr. Amper served at the New York Blood Center for
23 years, where she was most recently Executive Director
and
15
Vice President of Long Island Blood Services, a division of the
New York Blood Center from 1998 to 2001, and Vice President
Human Resources for the New York Blood Center from 1995 to 1998.
Dr. Amper began her career at the New York Blood Center in
March 1978, holding various other positions in the organization.
Dr. Amper received a B.S. Degree in Medical Biology from CW
Post College; a Master of Public Administration with a
specialization in Health Care, also from CW Post College; and a
Ph.D. in Philosophy/Health Administration from Columbia
Southern. Dr. Amper is an active member on a number of Long
Island area boards, including The Long Island Works Coalition,
where she is also a Vice President, The Long Island Association,
where she is the Secretary, The Farmingdale BioScience Park, The
Long Island Philharmonic and Friends of Karen. Dr. Amper
also serves as an Adjunct Professor in the Business Department
of Farmingdale State College.
Pierre Legault,
joined us as Executive Vice
President, Chief Financial Officer and Treasurer in December
2008. Prior to joining us, Mr. Legault was Senior Executive
Vice President and Chief Administrative Officer of Rite Aid
Corporation. From January 2006 to June 2007, Mr. Legault
served as Executive Vice President of The Jean Coutu Group (PJC)
Inc., with overall management responsibilities for the Brooks
Eckerd operations in the United States. Prior to his
employment with The Jean Coutu Group, Mr. Legault held
several senior positions with Sanofi-Aventis and predecessor
companies over a period of 16 years, last serving as
Worldwide President of Sanofi-Aventis Dermatology/Dermik. Such
prior positions also included: Senior Vice President and Chief
Financial Officer of Aventis Pharmaceutical North America from
2000 to 2003; Global Senior Vice-President Finance and Treasury
of Hoechst Marion Roussel, Inc. from 1998 to 2000;
Vice-President and Chief Financial Officer, North America
Finance, Information Services and Administration of Marion
Merrell Dow, Inc. from 1997 to 1998; and Vice-President and
Chief Financial Officer (Finance, Information Systems and
Administration) of Marion Merrell Dow Pharmaceutical Canada from
1990 to 1996. Mr. Legault belongs to several professional
associations, including the Finance Executive Institute and the
Canadian Institute of Chartered Accountants.
Gabriel Leung
was named President of (OSI)
Oncology in April 2005. Mr. Leung joined us in May 2003 as
our Executive Vice President and President, Oncology Business.
Prior to joining us, Mr. Leung was Group Vice President of
Global Prescription Business at Pharmacia Corporation where he
was employed from February 1999 to May 2003 and was a member of
the CEOs Operating Committee from May 2001 to April 2003.
He headed Pharmacias Global Oncology Franchise where his
responsibilities included medical affairs, marketing and sales
worldwide in over 80 countries. Mr. Leung also co-chaired
the Oncology Development Committee, which oversaw all oncology
research and development projects and portfolio strategies.
Prior to his employment with Pharmacia, Mr. Leung was at
Bristol-Myers Squibb Company where he led the growth of
Taxol
®
and
Paraplatin
®
into the then first and second best-selling chemotherapeutic
agents in the United States. Mr. Leung is a pharmacist and
trained at the University of Texas at Austin where he earned his
B.S. degree with High Honors. He attended graduate school at the
University of Wisconsin-Madison where he earned his M.S. degree
in Pharmacy, with concentration in pharmaceutical marketing.
Mr. Leung is an active member of C-Change, a national
initiative chaired by former U.S. President George H. Bush
and Mrs. Barbara Bush with the goal of reducing cancer
mortality and incidence in the United States. Mr. Leung is
also a member of the CEO Roundtable on Cancer, under which he
serves as Vice-Chair of its Life Sciences Consortium. In January
2007, Mr. Leung was appointed by the directors of the
National Cancer Institute as a member of the NCI Clinical Trial
Advisory Committee. Mr. Leung is currently a member of the
board of directors of NanoMed, Inc., a privately-held company.
Anker Lundemose, M.D., Ph.D., D.Sc. (Medicine),
was named our Executive Vice President and President of
(OSI) Prosidion, our diabetes and obesity business, in April
2005. Since February 2003, he has been the CEO of Prosidion, our
wholly-owned U.K.-based subsidiary through which our diabetes
and obesity business operates. Dr. Lundemose is co-founder
of several companies including Symphogen A/S. He has broad and
extensive experience within medical sciences and business
obtained from his positions held in both academia and the
biotechnology and pharmaceutical industries. Previous positions
include CEO of Pantheco A/S from December 1998 to January 2003;
Associate Director, Business Development, Novo Nordisk from
October 1997 to November 1998; Manager, Business Development,
Novo Nordisk from January 1996 to September 1997; and Head of
Diabetes Biology, Novo Nordisk from June 1994 to December 1995.
He received an M.D. in 1988 from the University of Aarhus,
Denmark and from 1988 to 1992, under sponsorship from The
Wellcome Trust, studied a Post Doctorate at the University of
Birmingham, England. He obtained a Ph.D. degree (Molecular
Microbiology) in 1990 and a Doctor of Science degree in 1994,
both from the University of Aarhus, Denmark. Dr. Lundemose
holds a
16
Diploma in Management of Drug and Device Development
from the Scandinavian International Management Institute.
Dr. Lundemose is a member of the American Diabetes
Association and the Oxfordshire Bioscience Network Advisory
Board. He is also a member of the board of directors of
Prosidion Limited and OSI Pharmaceuticals (UK) Limited.
Robert L. Simon
was named Executive Vice
President, Pharmaceutical Development and Manufacturing in June
2007. Prior to that, Mr. Simon served as Executive Vice
President, Chemistry, Manufacturing and Development. He was
named Executive Vice President, Core Development and
Manufacturing in April 2005. He joined us in January 2002 as our
Vice President of Global Regulatory Affairs and CMC.
Mr. Simon served with Gilead Sciences, Inc. as Vice
President Global Regulatory Affairs from July 2000 to December
2001. Prior to that, Mr. Simon served as Vice President
Worldwide Regulatory Affairs at Bristol-Myers Squibb Company
from November 1997 to July 2000. At Bristol-Myers Squibb, he was
responsible for all Chemistry, Manufacturing and Controls
(CMC) regulatory activities worldwide for both marketed
products and new drug registration. From January 1987 to October
1997, Mr. Simon held various other regulatory affairs
positions at Bristol-Myers Squibb. Mr. Simon holds a B.S.
degree in Chemistry from California State University and has had
Executive Management training from the Levinson Institute. He
also helped co-found the Regulatory Sciences Section of the
American Association of Pharmaceuticals Scientists.
Barbara A. Wood, Esq.,
was named Senior Vice
President, General Counsel and Secretary in October 2007. From
April 2001 to September 2007, Ms. Wood was our Vice
President and General Counsel and has served as our Secretary
since January 2004. Prior to joining us, Ms. Wood was a
partner at Squadron, Ellenoff, Plesent and Sheinfeld, LLP, a New
York law firm which is now part of Hogan & Hartson
LLP, where she commenced her legal career in September 1987.
While at Squadron, Ms. Wood specialized in mergers and
acquisitions, licensing and securities law matters. She holds a
B.A. degree in classics and economics from Connecticut College
and a law degree from Columbia Law School where she was a Harlan
Fiske Stone Scholar. She is a member of the board of directors
of the New York Biotechnology Association.
17
COMPENSATION
DISCUSSION AND ANALYSIS
The following discussion and analysis focuses on our executive
compensation policies and decisions related to our named
executive officers, or NEOs, for 2008. The NEOs are our Chief
Executive Officer, or CEO, our new Chief Financial Officer, or
CFO, who began his position with us effective December 29,
2008, our former CFO who retired as CFO and Treasurer effective
December 29, 2008 and as Executive Vice President effective
January 5, 2009, and the other three most highly
compensated executive officers for 2008, each identified later
in this Proxy Statement under the heading Summary
Compensation Table.
Executive
Compensation Policies
Our long-term success depends on our ability to discover,
develop and commercialize high quality, novel and differentiated
personalized medicines designed to extend life and improve the
quality of life for patients with cancer or diabetes and
obesity. In order to achieve these goals and build value for our
shareholders, we must continue to attract, motivate and retain
highly skilled and talented employees at all levels of our
company. We therefore are committed to providing a competitive
total compensation package to all employees, including our
executive officers, which rewards their performance and
contributions towards achieving corporate and individual goals,
and provides an appropriate mixture of current pay and long-term
incentive compensation.
Our compensation policies for executive officers, including our
NEOs, are based on the same principles that guide our
compensation programs for all employees:
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We promote a pay for performance culture by
providing a compensation structure which effectively
distinguishes between different levels of performance. Annual
performance-based and long-term incentive compensation together
comprise the majority of compensation paid to our executive
officers, including our NEOs.
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Compensation is based on the achievement of clearly defined
corporate and individual goals developed in support of the key
objectives and goals outlined in our annual business plan. The
corporate component of compensation is more heavily weighted for
executive officers, including our NEOs, as they have a greater
ability to influence our companys results.
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We strive to make our compensation decisions transparent by
communicating openly with our employees regarding our
compensation process, pay structure and performance objectives.
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We seek to offer levels of compensation that are competitive
with the compensation paid by our peer group of companies for
comparable responsibilities and positions.
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Our compensation policies provide our executive officers,
including our NEOs, with incentives to remain with the company
to meet our long-term goals and increase shareholder value.
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Oversight
of Our Executive Compensation Program
As previously discussed in this Proxy Statement, our Board of
Directors has established a Compensation Committee comprised of
independent directors, as determined under the rules and
regulations of NASDAQ, to approve all matters relating to the
compensation of our executive officers, including our NEOs, and
non-employee directors as well as certain matters for all
employees.
Our CEO, with the assistance of our Senior Vice President of
Human Resources, makes recommendations to the Compensation
Committee with respect to the compensation of all executive
officers, including the NEOs but excluding himself, following
our annual performance review process and analysis of the
competitive market data. The CEO does not make recommendations
to the Compensation Committee with respect to his own
compensation. Our CEO is not present when the Compensation
Committee independently discusses and determines his
compensation.
18
Independent
Compensation Consultant
For 2008, the Compensation Committee continued to engage
Radford, a division of Aon Consulting, Inc., as an independent
compensation consultant to advise the Compensation Committee on
matters related to the compensation of our non-employee
directors, executive officers, including our NEOs, and other
employees. Radford reports and is directly accountable to the
Compensation Committee and acts upon the Compensation
Committees directions and instructions.
As directed by the Compensation Committee, Radford provides the
Committee with information regarding director compensation and,
with the knowledge and consent of the Compensation Committee,
provides information and advice to our management with regard to
the compensation programs and policies for all our employees.
Radford does not provide other consulting services to our
company.
In December 2008, Radford prepared and presented to the
Compensation Committee an extensive review and analysis of our
executive compensation program, including a market analysis of
each of the three main components of compensation
base salary, annual bonus and annual equity awards. While
Radford makes recommendations to the Compensation Committee and
management, it has no authority to make compensation decisions
on behalf of our company.
The Compensation Committee has asked Radford to work with
management during 2009 to review our executive compensation
practices with respect to industry best practices and to make
recommendations for changes in our practices as appropriate. We
believe that the design of our executive compensation programs,
with its emphasis on reward for achievement of the key goals
that make up our annual and long-term business plan, does not
create incentives for our executives to take excessive or
unnecessary risks that could threaten the value of the company.
However, given the current economic environment, this review
will include a risk assessment of our executive compensation
practices.
Review of
Total Compensation for Peer Group
At the end of each year, we review our executive compensation
program against trends in the market and the compensation
practices of our peer group. Companies selected for our peer
group consist of publicly traded biotechnology companies with
similar market capitalization, revenues, number of employees
and/or
business models.
With the assistance of Radford, we periodically review and
update our list of peer companies for conformity with these
measures. We undertook such a review in August 2008, and as a
result, the Compensation Committee revised our peer group list
to eliminate four companies that no longer conformed to our peer
group profile due to acquisitions or changes in their
strategies. The companies eliminated from our prior peer group
list were MGI Pharma, Inc., Millennium Pharmaceuticals,
Inc., PDL BioPharma, Inc. and Pharmion Corporation. At the same
time, three new companies with more comparable profiles,
Affymetrix, Inc., Alexion Pharmaceuticals, Inc. and BioMarin
Pharmaceuticals, Inc., were added to our peer group list.
The peer group used for Radfords analysis consisted of the
following companies:
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Affymetrix, Inc.
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Alexion Pharmaceuticals, Inc.
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Alkermes, Inc.
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Amylin Pharmaceuticals, Inc.
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BioMarin Pharmaceutical Inc.
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Celgene Corporation
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Cubist Pharmaceuticals, Inc.
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CV Therapeutics, Inc.
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Human Genome Sciences, Inc.
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19
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ImClone Systems Incorporated
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The Medicines Company
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Onyx Pharmaceuticals, Inc.
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Regeneron Pharmaceuticals, Inc.
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Theravance, Inc.
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Vertex Pharmaceuticals Incorporated
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At the end of 2008, we reviewed the compensation of our
executive officers against the Radford Global Life Sciences
survey, a comprehensive survey consisting of data for larger
biotechnology companies (500 to 2,000 employees), which is
commonly used in our industry, as well as executive compensation
data for our revised peer group. The Compensation Committee and
management reviewed the market data for each of the main
components of our compensation program (base salary, annual
bonus and annual equity grants) individually, and for total
annual cash compensation (base salary and annual bonus), in the
aggregate. This survey data, along with data from our peer group
and the individuals personal performance against his or
her goals, were considered by the Compensation Committee in
making annual base salary adjustments for 2009 and in reviewing
bonus awards and in determining equity awards to reward
performance for 2008.
Elements
of Executive Compensation Program for 2008
Our compensation program for executive officers, including our
NEOs, consists of the following elements:
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annual base salary;
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annual performance bonus payable in cash;
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long-term incentives provided in the form of annual equity
awards; and
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benefits and perquisites.
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The following discussion describes how each of these elements of
compensation fits into our overall compensation objectives and
describes how and why compensation decisions for 2008 were made
with respect to each element based on our year-end analysis of
competitive market data and our annual review of corporate and
individual performance.
Base
Salary
The principal objective of base salary is to provide our
executive officers, including our NEOs, with a current and
guaranteed level of income that is competitive with our industry
and our identified peer group of companies. While the principal
objective is to attract and retain highly talented executives,
base salary is also used to incentivize individual performance
such that an executives individual performance is
typically a factor used in making annual base salary
adjustments, along with market considerations.
The market data reviewed by us at the end of 2008 indicated that
the base salaries of each of our NEOs (other than the CEO) for
2008 were within the 60th to 75th percentile. Annual
salary increases for all our employees for 2009 were made to
reflect a competitive rate increase in the
biotechnology/pharmaceutical sector of approximately 4%,
adjusted upward or downward based on individual merit and
achievement relative to individual performance goals. For the
NEOs other than the CEO, annual increases were granted in the
range of 3.81% to 5.52%, maintaining their salaries at very
competitive levels.
The annual base salary of our CEO for 2008 was below the
50th percentile of the market data. In light of the
uncertainty in the economy at large and the Compensation
Committees firm belief in aligning the CEOs
compensation with the shared long-term interest of our
shareholders, a philosophy fully embraced and advocated by the
CEO, the Compensation Committee decided to maintain the
CEOs base salary for 2009 at its current level in favor of
grants of additional equity awards as discussed below.
20
Annual
Performance Bonus
The purpose of our discretionary, annual cash bonus program is
to provide an incentive for our executive officers, including
our NEOs, to achieve the annual corporate and individual
performance objectives developed from our annual business plan
and enhanced during the course of the years operations.
Our annual cash bonus program represents the principal element
of annual performance compensation for our executive officers,
including our NEOs. The annual bonus program also helps us to
compete for highly talented executives in that it is structured
to provide competitive bonus opportunities to our executives.
Because of their high level of responsibility within the
company, the determination of annual bonuses for our executive
officers, including our NEOs, is heavily weighted on our
corporate performance. The table below sets forth the bonus
targets (as a percentage of base salary) for each of our NEOs
for 2008, as well as the proportion of their bonus target that
is based on the achievement of corporate and individual
performance, other than for our CFO, Pierre Legault, who
commenced employment on December 29, 2008 and hence was
ineligible for a bonus for 2008.
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Proportion of
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Proportion of
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Target Based on
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Target Based on
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Bonus Target
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Corporate
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Individual
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Named Executive Officer
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(% of Base Salary)
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Performance
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Performance
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Colin Goddard, Ph.D.
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100
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%
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100
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%
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Michael G. Atieh
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50
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%(1)
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80
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%
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20
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%
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Gabriel Leung
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50
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%
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80
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%
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20
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%
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Anker Lundemose, M.D., Ph.D., D.Sc.
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50
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%
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80
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%
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20
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%
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Robert L. Simon
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50
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%
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80
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%
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20
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%
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(1)
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Mr. Atiehs employment agreement provided that he was
eligible for an annual incentive target bonus between $200,000
and $300,000 for each fiscal year. Mr. Atieh retired as CFO
and Treasurer effective December 29, 2008 and Executive
Vice President effective January 5, 2009.
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Previously, we paid bonuses to all employees in December.
Beginning with the 2008 calendar year, the Compensation
Committee approved that annual bonuses be awarded in February
following the fiscal year end. The purpose of this change was to
more closely tie the corporate component of the bonus award with
an analysis of performance against the achievement of certain
year end financial goals. The Compensation Committee considered
and approved the individual performance component of the annual
bonus in December 2008, which is aligned with the timing of the
annual individual performance review process, and the corporate
performance component of the annual bonus in February 2009. Both
the individual and corporate components of the bonus were paid
out at the end of February 2009.
Corporate Performance Goals.
We measure our
annual corporate performance against our achievement of the key
objectives and goals set forth in our annual business plan,
rather than only by the achievement of specified financial
measures, such as earnings per share or revenue growth targets,
although such measures are increasing in importance as a result
of the growth and maturity of our company and our emergence as a
sustainably profitable business. In evaluating the performance
of our company, the Compensation Committee takes into account
our strategic focus, which is to turn the promise of innovative,
personalized medicines into practice. This strategy is anchored
around the continued growth of, and reinvestment in, Tarceva and
seeks to appropriately balance our financial performance with
disciplined, focused and selective investments in our research
and development pipeline and technology platforms which are
designed to realize long-term growth for our company. In line
with this strategic focus, the key material objectives and goals
of our annual business plan for 2008 included the following:
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Together with our partners for Tarceva, Genentech and Roche,
achieve global sales and U.S. sales targets for Tarceva;
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Deliver $2.00 or better 2008 earnings per share from continuing
operations;
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Drive Tarceva growth commercially and through the development of
additional label expansion opportunities;
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Execute a convertible debt financing raising approximately
$150 million of net proceeds and manage a year-end balance
sheet cash /short-term investment position of $500 million;
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Prepare for regulatory submission of the data from the SATURN
study, a double-blind randomized Phase III study to
evaluate the efficacy of Tarceva as a maintenance therapy, and
provide support for submission of the data from the BETA study,
a randomized Phase III study evaluating
Avastin
®
(bevacizumab) in combination with Tarceva in patients with
advanced non-small cell lung cancer;
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Seek revenues from supplementary partnering and outlicensing
activities and survey potential acquisition opportunities;
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Complete the divestiture of our eye disease business;
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Advance a comprehensive and integrated research and development
program focused on OSI-906 (an insulin-like growth factor 1
receptor, or IGF-1R, inhibitor) development;
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Design and initiate a comprehensive and integrated program
focused on OSI-027 (a next generation inhibitor of mammalian
target of rapamycin kinase, or mTOR, signaling) development;
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Deliver an investigational new drug track candidate with an
epithelial-to-mesenchymal transition, or EMT, focus;
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Advance PSN821 (a small molecule drug with potential
anti-diabetic and appetite suppressing effects) and PSN602 (a
novel dual serotonin and noradrenaline reuptake inhibitor) to
first-in-man
Phase 1 clinical study and generate initial data; and
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Advance key diabetes and obesity research projects.
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Our corporate goals for 2008 included other key objectives
regarding confidential research and development,
commercialization, licensing, partnering and other strategies.
These key objectives were considered in determining compensation
in 2008 but are not disclosed in this Proxy Statement as
disclosure would likely cause substantial competitive harm in
that it would identify our R&D and business priorities to
our competitors and, in certain circumstances, affect our
bargaining leverage.
We score corporate performance for the purpose of compensation
determinations based on a target level of performance (a score
of 100%) that is presumed to reflect a solid year in which most
of the annual objectives and particularly high
priority objectives are met. With regard to the
likelihood of achieving target performance, for compensation
purposes, target performance is set at a level reasonably
expected to be achieved with a good level of performance. The
Compensation Committee exercises discretion in weighting the
relative importance of the key annual goals and considers the
specific recommendation of the CEO.
For 2008, the CEO recommended a corporate performance score of
105% to 110% for the purpose of calculating the corporate
component of the annual performance bonus for the NEOs. The low
end of this range reflects an assessment of overall achievement
of the corporate goals outlined in the 2008 annual business plan
at a level modestly above target performance. The high end of
the range reflects the CEOs recommendation that the
Compensation Committee also recognize the achievement of
additional goals arising during the year, including the
comprehensive refinement of the companys long-term
strategic plan, in scoring corporate performance. For reference,
we note that the Compensation Committee scored our corporate
performance at 120% for 2007 (the year we became profitable),
100% for 2006, 80% in 2005 and 150% in 2004 (the year Tarceva
was approved). To the extent that disclosure is not likely to
cause substantial competitive harm, factors considered by the
Compensation Committee in scoring our corporate performance in
2008 were as follows:
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We exceeded our $2.00 earnings per share goal from continuing
operations for 2008.
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Global sales of Tarceva for 2008 were $1.122 billion, 99%
of our target global sales goal, although the sales of Tarceva
in the United States fell short of our target.
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A convertible debt financing was completed with approximately
$200 million in proceeds.
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Our cash, cash equivalents and investment securities on our
balance sheet at year-end were in excess of $500 million.
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We filed a supplemental new drug application for a first-line
maintenance indication for Tarceva based on the results of our
SATURN study.
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We completed the acquisition of certain technology assets from
7TM Pharma A/S.
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We completed the divestiture of the remaining assets of our eye
disease business.
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Solid progress was made on all our key pipeline programs and
development plans including initiation and continuation of Phase
I programs for OSI-906, OSI-027 and our clinical diabetes and
obesity assets, PSN821 and PSN602.
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We achieved our key EMT target selection goals.
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Other goals and objectives that were achieved throughout the
year which were not outlined in our initial business plan
included: (i) re-focusing our company around a cohesive
long-term strategy in personalized medicine; (ii) the
continued development and implementation of an intellectual
property protection strategy for Tarceva; (iii) focusing
our diabetes and obesity research efforts around neuroendocrine
control of body weight and hyperglycemia; and (iv) the
successful hire of our new CFO.
Upon review and consideration of these and other factors,
including our companys strong performance during the
financial crisis, the Compensation Committee approved a
corporate performance score of 110%.
Individual Performance Goals.
The individual
performance goals of each NEO for 2008 consisted primarily of
the key objectives and goals from our annual business plan that
relate to the functional area or business unit for which the NEO
is responsible. In the case of our CEO, his individual
performance goals for 2008 were coextensive with the key
objectives and goals of the company as a whole, and also
included the goals of working with the Board and management team
on refining the companys long-term strategy. As is the
case for corporate performance, target individual performance is
set at a level that is reasonably likely to be achieved with a
good level of performance.
While achievement against the applicable key objectives and
goals of our business plan is given substantial weight in
scoring the individual performance of our named executive
officers, consideration is also given to an evaluation of the
NEOs individual performance based on the following
subjective criteria: (i) leadership, (ii) management,
(iii) judgment and decision making skills,
(iv) results orientation and (v) communication.
The individual performance of each NEO is assigned a performance
rating in accordance with a performance scale under which target
performance is scored at 100%. The performance rating for each
NEO other than the CEO is recommended to the Compensation
Committee for its consideration by the CEO. The Compensation
Committee is responsible for the evaluation of the CEOs
individual performance.
Calculation of Annual Performance Bonus
Amounts.
For 2008, the corporate performance
component for determining the annual bonus of our NEOs other
than our CEO was given a weight of 80% and the individual
performance component was given a weight of 20%. An individual
performance factor was assigned to each NEO (other than the CEO)
based on his individual performance for the year. Given that the
2008 corporate performance was scored at 110%, as an example, an
NEO (other than the CEO) who was assigned an individual
performance rating of 120% to reflect above target level
performance would be awarded an annual bonus of 112% of his
target bonus amount (80% x 110% = 88%) + (20% x 120% = 24%). The
annual performance bonus for our CEO was structured for 2008 so
that 100% of his bonus would be based on our annual corporate
performance score.
The amount of the annual performance payment made to each of our
NEOs for 2008 is set forth in the Summary Compensation
Table presented later in this Proxy Statement. In the case
of the NEOs (including the CEO), the actual total annual cash
compensation (salary plus actual bonus) provided ranged from the
60th to above the 75th percentile of the target total
annual cash market data that we reviewed at the end of 2008.
Equity
Awards
We make annual equity award grants to our executive officers,
including our NEOs, under our Amended and Restated Stock
Incentive Plan, or the Plan. Annual equity awards serve the
principal objective of aligning the long-term financial
interests of our executive officers with those of our
shareholders. To encourage retention and focus
23
our executives on building long-term value for our shareholders,
we structure our annual equity awards so that the
executives interest in the award will become vested over a
service period of multiple years. We also use annual equity
grants to reward individual performance for the year as the size
of an executives award will depend in part on his or her
annual performance review and achievement of individual goals
for the year. Our practice is to grant equity awards at the end
of the year following our annual performance review; there is no
relationship between the timing of our equity grants and the
release of non-public material information.
Radfords review of our executive compensation practices
highlighted that the equity awards we have provided over the
last several years have resulted in a relatively lower ownership
level of our company stock by our NEOs versus our peer group.
The Radford analysis indicates that our NEOs are at a level of
potential stock ownership which approximates the
25
th
percentile
of the market data for executive officers in our peer group. We
have historically used the Black Scholes methodology to value
our equity awards; however, given the results of the Radford
analysis, we have determined that potential stock ownership is a
better measure for our assessment of equity compensation. Since
equity ownership is the principal long-term incentive part of
our compensation structure and that which best aligns with the
long-term interests of shareholders, we have made significant
increases to the grants.
We also increased the grants to address the significant lag
behind our peers in terms of executive potential stock
ownership, which we believe undermines the retentive value of
equity awards, the Compensation Committee, after reviewing the
market data for equity awards, determined to increase the target
value of our annual equity grants made at the end of 2008 to our
NEOs and members of our executive management team. This increase
in value, and the potential for increased stock ownership, was
provided in the form of additional option grants to ensure that
additional value would inure to our executives only if the value
of our shares to our shareholders increased. In addition, to
further enhance their retentive value, all option awards
provided to our NEOs were structured with an extended vesting
period so that option awards will vest one-third on each of the
third, fourth and fifth anniversaries of the grant date. The
four year ratable vesting schedule was retained for 2008 awards
of restricted stock units.
Equity awards for 2008 were made as a mix of stock options and
restricted stock units, with 66.67% of the awards consisting of
stock options and 33.33% of the awards consisting of restricted
stock units. As in prior years, the value of our equity awards
and those of our peers were estimated by Radford (for example,
under the Black-Scholes valuation method in the case of
options). Radford provided recommendations for target level
awards, which in the case of options, were increased in
accordance with our decision to provide additional value, and a
range of plus or minus 20% of the targeted award level as a
guide to reward each NEOs individual performance.
The actual option and restricted stock awards granted to our
NEOs in 2008 are set forth in the Grants of Plan-Based
Awards table presented later in this Proxy Statement.
Equity grants made to our NEOs were within the recommended
+/-20% range of target, except that as noted above, awards above
the 20% guideline were made to our CEO in lieu of increased cash
compensation. Also, awards above the 20% guideline were made to
Mr. Simon to recognize his exceptional individual
performance during 2008.
As noted above, Mr. Atieh retired from his position as our
CFO and Treasurer effective December 29, 2008 and as our
Executive Vice President effective January 5, 2009. In
connection with his retirement, the Compensation Committee
approved the following: (i) all of Mr. Atiehs
unvested options as of January 5, 2009 continued to vest
through April 5, 2009 and those vesting during this period
remain exercisable through the remaining contractual life of the
grant; and (ii) the exercise period for all of
Mr. Atiehs vested options, as of January 5,
2009, not otherwise extended under the retirement provision of
our Plan, was extended for an additional three months (i.e.
expiring on July 5, 2009).
Benefits
and Perquisites
We maintain medical, dental, vision, accidental death,
disability, life insurance, a 401(k) plan and other customary
benefits for all of our employees, as well as customary
vacation, leave of absence and similar policies. Our executive
officers, including our NEOs, are entitled to participate in
these programs on the same basis as our other employees. In
2007, we adopted a nonqualified deferred compensation plan for
our executive officers and other senior level employees which
allows participants to elect to defer the payment of a portion
of their salary
and/or
bonus
on a tax-deferred basis. None of our NEOs elected to participate
in the arrangement for 2008.
24
We provide very few perquisites to our executive officers. The
specific perquisites provided to our NEOs in 2008 are set forth
below in our Summary Compensation Table.
Employment
Agreement of Pierre Legault
Effective December 16, 2008, we entered into an employment
agreement with Mr. Legault in connection with
Mr. Legault becoming our CFO. We appointed Mr. Legault
as our CFO after conducting an extensive search of potential
candidates. We believe that Mr. Legault is a compelling
choice for our company, given his extensive experience leading
finance and business teams throughout the healthcare industry
ranging from large pharmaceutical companies to a major retail
pharmacy chain. One of the obstacles we faced in successfully
retaining Mr. Legault was that his total compensation
package with his prior employer was significantly in excess of
the compensation package provided to CFOs in our peer group,
including Mr. Atieh, our then-current CFO.
Mr. Legaults employment agreement was heavily
negotiated over the last calendar quarter of 2008, during which
time Mr. Legault made a number of significant concessions,
including his agreement to accept a base salary and target bonus
that was appreciably below that provided by his prior employer.
Given Mr. Legaults credentials however, we determined
that it was appropriate to provide Mr. Legault with a level
of cash and equity compensation that would place him in
approximately the 75th percentile of our peer companies,
and provide him with severance and change of control protections
that were consistent with his prior employment arrangements.
The compensation package for Mr. Legault consists of the
following: (i) a base salary of $450,000, (ii) an
annual discretionary incentive target bonus of 55% of his base
salary based on a combination of personal and corporate
performance measures, (iii) options to purchase
125,000 shares of our common stock (vesting one-third on
each of the third, fourth and fifth anniversaries of the date of
grant) as well as 12,500 restricted stock units that vest at
twenty-five percent per year over a period of four years from
their grant date, (iii) customary fringe benefits generally
available to our executive officers, and (iv) a relocation
package.
Severance
Benefits
Each of our NEOs has entered into an agreement with us which
provide severance payments and other benefits in the event of
change of control of our company. We believe that the occurrence
or potential occurrence of a change of control transaction could
create uncertainty regarding the continued employment of our
NEOs. This uncertainty results from the fact that many change of
control transactions result in significant organizational
changes, particularly at the senior executive level. In order to
encourage our NEOs to remain employed with us during an
important time when their prospects for continued employment
following the transaction are often uncertain, we provide our
NEOs with severance benefits if the executives employment
terminates in connection with a change of control. The payment
of change of control protection benefits (other than vesting of
equity awards) is only triggered by a termination of employment.
The change of control protection benefits provided historically
to Dr. Goddard under his employment agreement include
reimbursement for the full amount of any excise taxes imposed on
his severance payments and any other payments and benefits under
Section 4999 of the Internal Revenue Code.
Mr. Legaults change of control protection benefits
also include reimbursement under certain circumstances for the
full amount of any excise taxes imposed under Section 4999
of the Internal Revenue Code. However, this excise tax
gross-up
will not be made if the total amount of his change of control
protection benefits exceeds the threshold by which such excise
tax is triggered by less than 10%. Under these circumstances,
Mr. Legaults change of control benefits will be
reduced to the extent necessary to avoid excise tax triggers. In
providing this protection to Mr. Legault, we carefully
considered the significant concessions made by Mr. Legault
in his employment agreement negotiations, the fact that his
prior employment agreement contained a comparable tax
gross-up
provision and the fact that two-thirds of our peer companies
provide
tax-gross
up
protections following a change of control to one or more of
their NEOs.
The specific terms of the severance and change of control
agreements for all our NEOs were developed through individual
negotiations with each of these executives which were influenced
by competitive market practices. The Compensation Committee
believes that the terms of these agreements are consistent with
market practices. The specific severance benefits payable to our
named executive officers are set forth below under
Potential Payments Upon Termination or Change of
Control.
25
Compensation
Committee Policy Regarding Change of Control Severance
Payments
Effective April 2009, our Compensation Committee adopted a
policy that restricts our company from entering into any future
agreement that provides an executive officer with a severance
payment following a change of control of our company, except in
the case of a double trigger termination event. In addition, the
policy also restricts our company from entering into any future
agreement that provides an executive officer with the right to
receive excise tax
gross-ups
following a change of control, except in unusual circumstances
where the Compensation Committee believes that accommodations
have to be made to recruit a new executive officer to our
company. In those circumstances, the excise tax
gross-up
will be limited to a double trigger termination event and will
be subject to a three-year sunset provision.
Other
Matters
Share
Retention Guidelines; Prohibition on Hedging or Pledging Stock
Ownership
Our Compensation Committee adopted share ownership guidelines
for our executive officers, which encourage our NEOs to hold
10,000 shares of our common stock. In addition, our CEO
agreed to hold at least 30,000 shares of our common stock.
As of April 1, 2009, Messrs. Leung and Simon held in
excess of 15,000 shares and 14,000 shares of our
common stock, respectively; Dr. Lundemose held
approximately 7,750 shares of our common stock; and
Dr. Goddard held in excess of 74,000 shares of our
common stock. Mr. Legault does not hold any shares of our
common stock.
Our executive officers are not permitted to hedge their economic
exposure to our common stock or to pledge their ownership
interests in our common stock to secure a loan.
Deductibility
Cap on Executive Compensation
U.S. federal income tax law prohibits the company from
taking a tax deduction for certain compensation paid in excess
of $1,000,000 to certain of our named executive officers.
However, performance-based compensation, as defined in the tax
law, is fully deductible if the programs are approved by
stockholders and meet other requirements. To the extent feasible
and consistent with our overall compensation goals and
objectives, we hope to qualify our incentive compensation
programs for full corporate deductibility.
COMPENSATION
COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis included in this Proxy
Statement with management. Based upon this review and
discussion, the Compensation Committee recommended to the Board
of Directors that the Compensation Discussion and Analysis be
included in this Proxy Statement.
Santo J. Costa, Chair of the Compensation Committee
Robert A. Ingram
Daryl K. Granner, M.D.
Viren Mehta
26
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The following table sets forth the compensation earned or
received, or recognized as compensation expense under Statement
of Financial Accounting Standard No. 123 (revised 2004),
Share-Based Payment, or SFAS 123(R), during
2008, 2007 and 2006 by each of our NEOs (as determined pursuant
to the SECs disclosure requirements for executive
compensation in Item 402 of
Regulation S-K).
Summary
Compensation Table
for the Years Ended December 31, 2008, 2007 and
2006
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Stock
|
|
|
Option
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|
|
All Other
|
|
|
|
|
Name and
|
|
|
|
|
Salary
|
|
|
Bonus
|
|
|
Awards
|
|
|
Awards
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|
|
Compensation
|
|
|
Total
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|
Principal Position
|
|
Year
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|
|
($)
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|
|
($)(a)
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|
|
($)(b)
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|
|
($)(c)
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|
|
($)
|
|
|
($)
|
|
|
Colin Goddard, Ph.D.
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|
|
2008
|
|
|
|
652,214
|
|
|
|
705,000
|
|
|
|
503,174
|
|
|
|
922,842
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|
|
|
11,576
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(d)
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|
|
2,794,806
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|
Chief Executive Officer and Director
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|
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2007
|
|
|
|
623,077
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|
|
|
900,000
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|
|
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259,110
|
|
|
|
846,841
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|
|
|
17,950
|
(e)
|
|
|
2,646,978
|
|
|
|
|
2006
|
|
|
|
611,538
|
|
|
|
|
(f)
|
|
|
73,976
|
|
|
|
1,085,512
|
|
|
|
134,451
|
(g)
|
|
|
1,905,477
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael G. Atieh(h)
|
|
|
2008
|
|
|
|
435,000
|
|
|
|
233,000
|
|
|
|
224,372
|
|
|
|
956,415
|
(i)
|
|
|
22,574
|
(j)
|
|
|
1,871,361
|
|
Former Executive Vice President,
|
|
|
2007
|
|
|
|
432,885
|
|
|
|
260,151
|
|
|
|
214,902
|
|
|
|
821,017
|
|
|
|
122,812
|
(k)
|
|
|
1,851,767
|
|
Chief Financial Officer and Treasurer
|
|
|
2006
|
|
|
|
411,309
|
|
|
|
205,000
|
|
|
|
140,859
|
|
|
|
1,002,616
|
|
|
|
306,460
|
(l)
|
|
|
2,066,244
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anker Lundemose, M.D., Ph.D., D.Sc.(m)
|
|
|
2008
|
|
|
|
415,903
|
|
|
|
240,942
|
|
|
|
204,009
|
|
|
|
497,277
|
|
|
|
52,393
|
(n)
|
|
|
1,410,524
|
|
Executive Vice President and President,
|
|
|
2007
|
|
|
|
411,456
|
|
|
|
242,859
|
|
|
|
118,132
|
|
|
|
680,413
|
|
|
|
88,352
|
(o)
|
|
|
1,541,212
|
|
(OSI) Prosidion
|
|
|
2006
|
|
|
|
360,750
|
|
|
|
185,000
|
|
|
|
30,996
|
|
|
|
641,669
|
|
|
|
82,892
|
(p)
|
|
|
1,301,307
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gabriel Leung
|
|
|
2008
|
|
|
|
438,300
|
|
|
|
235,000
|
|
|
|
188,250
|
|
|
|
440,491
|
|
|
|
11,687
|
(q)
|
|
|
1,313,728
|
|
Executive Vice President and President,
|
|
|
2007
|
|
|
|
427,692
|
|
|
|
235,000
|
|
|
|
118,294
|
|
|
|
476,246
|
|
|
|
21,596
|
(r)
|
|
|
1,278,828
|
|
(OSI) Oncology
|
|
|
2006
|
|
|
|
400,000
|
|
|
|
204,000
|
|
|
|
30,996
|
|
|
|
825,068
|
|
|
|
68,766
|
(s)
|
|
|
1,528,830
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert L. Simon
|
|
|
2008
|
|
|
|
393,300
|
|
|
|
223,000
|
|
|
|
163,864
|
|
|
|
339,325
|
|
|
|
85,760
|
(t)
|
|
|
1,205,249
|
|
Executive Vice President,
|
|
|
2007
|
|
|
|
375,823
|
|
|
|
221,500
|
|
|
|
78,207
|
|
|
|
303,161
|
|
|
|
111,871
|
(u)
|
|
|
1,090,562
|
|
Pharmaceutical Development and Manufacturing
|
|
|
2006
|
|
|
|
347,750
|
|
|
|
142,434
|
|
|
|
22,148
|
|
|
|
401,633
|
|
|
|
113,175
|
(v)
|
|
|
1,027,140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pierre Legault(w)
|
|
|
2008
|
|
|
|
5,192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
144,574
|
(x)
|
|
|
149,766
|
|
Executive Vice President, Chief Financial Officer and Treasurer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
For the 2007 and 2006 calendar years, we paid annual bonuses to
all employees in December. Starting with the 2008 calendar year,
we changed the timing of our annual bonus payments to February
of the following year. See the Compensation Discussion and
Analysis section for a discussion of how the bonus amounts
were determined.
|
|
(b)
|
|
Stock awards consist of grants of restricted stock and
restricted stock units. The amounts reflected in this column
represent compensation expense recorded in the income statement
for the related fiscal year 2008, 2007 and 2006 pursuant to
SFAS 123(R) without regard to an estimate of forfeitures.
|
|
(c)
|
|
The amounts reflected in this column represent compensation
expense recorded in the income statement for the related fiscal
year pursuant to SFAS 123(R) without regard to an estimate
of forfeitures. Executive compensation disclosure rules provide
that compensation to an NEO resulting from stock option grants
is determined by the compensation expense that we record in our
financial statements with respect to such grants. Under
SFAS 123(R), we recognized compensation expense based on
the value of that portion of stock option grant that relates to
the services provided by the grant recipient. To determine the
value of stock option awards, we use a Black Scholes pricing
model to value stock options at the time of their grant. This
model requires us to estimate the future value of our stock
price based in part on the historic price volatility of our
stock. See Note 16 to our consolidated financial statements
included in our Annual Report on Form
10-K
for our
fiscal year ended December 31, 2008 for details as to the
assumptions used to determine the fair value of equity awards.
Given the significant volatility in our stock price, the
volatility factor used to value our stock option grants has
ranged in recent years from 78% in 2004 to 50% in 2008. Higher
volatility factors result in higher potential future values
assigned to the stock option grants. These values are not
necessarily reflective, however, of the value that the option
holder may actually realize upon the exercise of the stock
option. For example, the Summary
|
27
|
|
|
|
|
Compensation Table reflects a 2007 and 2006 compensation expense
of $249,371 and $598,491, respectively, related to a 2004 grant
of 50,000 stock options to Dr. Goddard with an exercise
price of $67.63. This exercise price is significantly above the
highest sale price reported in 2008, 2007 and 2006 for our
common stock on the Nasdaq Global Select Market of $53.71,
$52.00 and $43.17, respectively.
|
|
(d)
|
|
Represents a 401(k) plan match.
|
|
(e)
|
|
Consists of a car allowance of $5,830, a 401(k) plan match of
$11,357 and expenses of $763 to repair a home security system.
|
|
(f)
|
|
Given the market performance of
Macugen
®
(pegaptanib sodium injection), and our resulting decision to
exit the eye disease business we acquired through our
acquisition of Eyetech Pharmaceuticals, Inc. in November 2005,
Dr. Goddard declined the 2006 bonus recommended by the
Compensation Committee and did not receive a merit increase to
his 2007 base salary.
|
|
(g)
|
|
Consists of a car allowance of $6,351, a 401(k) plan match of
$6,601, a one-time expense of $86,697 relating to installation
of a home security system and legal services of $34,802 related
to the preparation of Dr. Goddards employment
agreement.
|
|
(h)
|
|
Mr. Atieh retired from his position as our CFO and
Treasurer effective December 29, 2008, and as our Executive
Vice President effective January 5, 2009.
|
|
(i)
|
|
Mr. Atieh retired from the Company on January 5, 2009
and did not receive any new grants during 2008. In connection
with his retirement, the Compensation Committee approved the
following changes to his outstanding options: (i) all of
Mr. Atiehs unvested options as of January 5,
2009 continued to vest through April 5, 2009 and those
vesting during this period remain exercisable through the
remaining contractual life of the grant and (ii) the
exercise period for all of Mr. Atiehs vested options,
as of January 5, 2009, not otherwise extended under the
retirement provision of our Plan, was extended for an additional
three months (i.e. expiring on July 5, 2009). As a result,
we recognized $120,000 of additional equity compensation expense
in 2008 relating to this modification in accordance with
SFAS 123(R).
|
|
(j)
|
|
Consists of a 401(k) plan match of $11,657 and a reimbursement
of relocation and temporary living expenses of $10,917
(including a
$1,301 gross-up
for taxes).
|
|
(k)
|
|
Consists of a 401(k) plan match of $11,335 and a reimbursement
of relocation and temporary living expenses of $111,477
(including a
$37,005 gross-up
for taxes).
|
|
(l)
|
|
Consists of a 401(k) plan match of $6,662 and a reimbursement of
relocation and temporary living expenses of $299,798 (including
a
$66,355 gross-up
for taxes).
|
|
(m)
|
|
Compensation amounts have been converted from British Pounds
Sterling to U.S. dollars using the average exchange rate for the
year ended December 31, 2008, 2007 and 2006 of U.S. $1.85,
$2.07 and $1.85 per £1, respectively.
|
|
(n)
|
|
Consists of a retirement plan contribution of $49,907, tax
services of $980 and telephone expenses of $1,506.
|
|
(o)
|
|
Consists of a car allowance of $28,902, a retirement plan
contribution of $49,375, tax services of $8,016 and telephone
expenses of $2,059.
|
|
(p)
|
|
Consists of a car allowance of $26,640, a retirement plan
contribution of $43,290, tax services of $10,943 and telephone
expenses of $2,019.
|
|
|
|
(q)
|
|
Represents a 401(k) plan match.
|
|
|
|
(r)
|
|
Consists of a 401(k) plan match of $10,210 and a car allowance
of $11,386.
|
|
(s)
|
|
Consists of a 401(k) plan match of $6,617, a car allowance of
$8,120 and a reimbursement of relocation and temporary housing
expenses of $54,029 (including
$19,255 gross-up
for taxes).
|
|
(t)
|
|
Consists of a 401(k) plan match of $11,508, relocation expenses
of $74,051 (including
$26,810 gross-up
for taxes) and $201 of travel-related perquisites.
|
|
(u)
|
|
Consists of a 401(k) plan match of $11,350, a car allowance of
$5,867 and relocation expenses of $94,654 (including
$24,051 gross-up
for taxes).
|
|
(v)
|
|
Consists of a 401(k) plan match of $6,616, a car allowance of
$725 and a reimbursement of relocation and temporary housing
expenses of $105,834 (including
$37,587 gross-up
for taxes).
|
28
|
|
|
(w)
|
|
Mr. Legault commenced his employment as our Executive Vice
President, CFO and Treasurer effective December 29, 2008.
|
|
(x)
|
|
Represents reimbursement of relocation expenses of $134,615 and
legal expenses of $9,959.
|
Employment
Agreements with Named Executive Officers
The following is a summary of the material employment
arrangements with our named executive officers. Termination and
change of control rights under these arrangements are discussed
separately below under Potential Payments Upon Termination
or Change of Control.
Colin
Goddard, Ph.D.
We entered into an employment agreement, dated as of
June 14, 2006, as amended on June 21, 2006, with Colin
Goddard, Ph.D. We amended the agreement in December 2008 to
comply with the final regulations under Section 409A of the
U.S. Internal Revenue Code. Dr. Goddards
agreement has a fixed initial term of three years and provides
for automatic extensions for additional one-year terms. The
agreement provides for a minimum base salary of $600,000, which
may be increased at the discretion of the Board of Directors.
Dr. Goddards base salary is $640,000 for 2009. In
addition, Dr. Goddard is eligible for an annual
discretionary incentive bonus which is targeted at 100% of his
base salary and is entitled to receive other customary fringe
benefits generally available to our executive employees. The
agreement prohibits Dr. Goddard, during the term of his
employment and for a period of six months thereafter, from
engaging in any activity in which confidential information
obtained during the course of his employment would by necessity
be disclosed, or soliciting OSIs employees or customers.
Michael
G. Atieh
We entered into an employment agreement, dated as of
April 21, 2005, as amended and restated on May 31,
2005, with Michael G. Atieh, who retired from his position as
our CFO and Treasurer effective December 29, 2008, and as
our Executive Vice President effective January 5, 2009. We
amended the agreement in December 2008 to comply with the final
regulations under Section 409A of the U.S. Internal
Revenue Code. The employment agreement had a fixed term of three
years and provided for automatic extensions for additional
one-year terms. The agreement provided for a minimum base salary
of $410,000, which could be increased at the discretion of the
Compensation Committee. For 2008, Mr. Atiehs base
salary was $435,000. In addition, Mr. Atieh was eligible
for an annual incentive target bonus between $200,000 and
$300,000 and received other customary fringe benefits generally
available to our executive employees. Upon the execution of his
employment agreement, Mr. Atieh received options to
purchase 150,000 shares of our common stock, vesting
one-third after one year and the balance vesting monthly in
equal amounts over the ensuing four years, as well as
15,000 shares of restricted common stock which vest at
20 percent per year over a period of five years.
Mr. Atieh also received a relocation package. The agreement
prohibits Mr. Atieh, for a period of one year after the
termination of his employment, from engaging in any activity in
which confidential information obtained during the course of his
employment would by necessity be disclosed, or soliciting
OSIs employees or customers.
Pierre
Legault
We entered into an employment agreement, dated as of
December 16, 2008, with Pierre Legault. The agreement
provides for a minimum base salary of $450,000, which may be
increased at the discretion of the Compensation Committee. In
addition, Mr. Legault is eligible for an annual
discretionary incentive bonus which is targeted at 55% of his
base salary, 85% of which is based on corporate performance and
15% of which is based on individual performance.
Mr. Legault is also entitled to receive other customary
fringe benefits generally available to our executive employees.
In connection with his employment, on January 2, 2009,
Mr. Legault received options to purchase
125,000 shares of our common stock, having a term of seven
years and vesting ratably in three installments, on each of the
third, fourth and fifth anniversaries of the grant date, as well
as 12,500 restricted stock units, which vest at 25% per year
over a period of four years. Mr. Legault also received a
payment of $134,615 to assist in his relocation to New York,
which must be repaid to OSI in the event that he terminates his
employment without good reason on or before December 29,
2009. The agreement prohibits Mr. Legault, during the term
of his employment and for a period of one year thereafter, from
engaging in any activity in which confidential information
29
obtained during the course of his employment would by necessity
be disclosed, or soliciting OSIs employees or customers.
Gabriel
Leung
On May 16, 2003, we entered into an employment agreement
with Gabriel Leung which was amended, January 5, 2004. We
amended the agreement in December 2008 to comply with the final
regulations under Section 409A of the U.S. Internal
Revenue Code. Mr. Leungs agreement has a fixed term
of three years and provides for automatic extensions for
additional one-year terms. The agreement provides for a minimum
base salary of $350,000, which may be increased at the
discretion of the Compensation Committee. For 2009,
Mr. Leungs base salary is $455,000. In addition,
Mr. Leung is eligible for an annual discretionary incentive
bonus of up to 50% of his base salary and is entitled to receive
other customary fringe benefits generally available to our
executive employees. Mr. Leung also received a relocation
package. The agreement prohibits Mr. Leung, during the term
of his employment and for a period of one year thereafter, from
engaging in any activity in which confidential information
obtained during the course of his employment would by necessity
be disclosed, or soliciting OSIs employees or customers.
Anker
Lundemose, M.D., Ph.D., D.Sc.
On May 1, 2004, Prosidion entered into an employment
agreement with Anker Lundemose, M.D., Ph.D., D.Sc.
Such employment agreement was superseded in September 2005 with
a service contract. The service contract provides for a minimum
base salary of £175,000 per annum, which may be increased
at the discretion of the Compensation Committee. For 2009,
Dr. Lundemoses base salary is £236,000. In
addition, Dr. Lundemose is eligible for an annual
discretionary incentive bonus which is targeted based on his
grade level and is entitled to receive other customary fringe
benefits generally available to our executive employees. The
service contract also provides that Dr. Lundemose will
receive, on an annual basis, options to purchase a number of
shares of our common stock to be determined by our Compensation
Committee.
Robert L.
Simon
We entered into an employment letter, dated as of
November 15, 2001, as amended on September 20, 2005,
with Robert L. Simon, which provides for at-will employment,
meaning that either we or Mr. Simon may terminate the
agreement at any time for any reason. We amended the employment
letter in December 2008 to comply with the final regulations
under Section 409A of the U.S. Internal Revenue Code.
The letter provides for a minimum base salary of $257,145, which
may be increased at the discretion of the Compensation
Committee. For 2009, Mr. Simons base salary is
$415,000. In addition, Mr. Simon is eligible for an annual
incentive target bonus and is entitled to receive other
customary fringe benefits generally available to our executive
employees. Mr. Simon is also entitled to a $50,000, net
after-tax, relocation allowance per year through
October 22, 2010. The letter prohibits Mr. Simon,
during the term of his employment and for a period of one year
thereafter, from engaging in any activity in which confidential
information obtained during the course of his employment would
by necessity be disclosed, or soliciting OSIs employees or
customers.
30
Grant of
Plan-Based Awards
The following table sets forth information concerning grants of
equity incentive plan-based awards to each of the NEOs during
the fiscal year ended December 31, 2008. We do not have any
non-equity incentive plans.
Grant of
Plan-Based Awards
for the Year Ended December 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
All Other
|
|
Exercise or
|
|
Grant Date
|
|
|
|
|
Stock Awards:
|
|
Option Awards:
|
|
Base Price
|
|
Fair Value of
|
|
|
|
|
Number of Shares of
|
|
Number of Shares of
|
|
of Option
|
|
Stock and Option
|
Name
|
|
Grant Date
|
|
Stock or Units (#)
|
|
Stock or Units (#)
|
|
Awards ($/sh)(a)
|
|
Awards($) (b)
|
|
Colin Goddard, Ph.D.
|
|
|
12/16/2008
|
|
|
|
|
|
|
|
135,000
|
|
|
|
33.62
|
|
|
|
2,218,050
|
|
|
|
|
12/16/2008
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
840,500
|
|
Anker Lundemose, M.D., Ph.D., D.Sc.
|
|
|
12/16/2008
|
|
|
|
|
|
|
|
48,000
|
|
|
|
33.62
|
|
|
|
788,640
|
|
|
|
|
12/16/2008
|
|
|
|
7,800
|
|
|
|
|
|
|
|
|
|
|
|
262,236
|
|
Gabriel Leung
|
|
|
12/16/2008
|
|
|
|
|
|
|
|
48,000
|
|
|
|
33.62
|
|
|
|
788,640
|
|
|
|
|
12/16/2008
|
|
|
|
7,800
|
|
|
|
|
|
|
|
|
|
|
|
262,236
|
|
Robert L. Simon
|
|
|
12/16/2008
|
|
|
|
|
|
|
|
60,000
|
|
|
|
33.62
|
|
|
|
985,000
|
|
|
|
|
12/16/2008
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
336,200
|
|
Michael G. Atieh(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pierre Legault(d)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
The exercise price was determined by using the market price for
our common stock at the close of business on the grant date.
|
|
(b)
|
|
See Note 16 to the consolidated financial statements
included in our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008 for details as
to the assumptions used to determine the grant date fair value
of stock and option awards.
|
|
(c)
|
|
As discussed above, certain of Mr. Atiehs equity
rights were modified in connection with his retirement from our
company. As a result, we recognized $120,000 of additional
equity compensation expense in 2008 related to this modification
in accordance with SFAS 123(R).
|
|
(d)
|
|
As discussed above, Mr. Legault received his initial equity
grants on January 2, 2009.
|
Equity grants made in 2008 to our executive officers consisted
of awards of nonqualified stock options, or NQSOs, and
restricted stock units, or RSUs.
Each NQSO represents the right to purchase one share of our
common stock at a price equal to the fair market value of the
stock determined as of the date of grant. NQSOs granted in 2008
have a term of seven years and one-third of the total grant
vests on each of the third, fourth and fifth anniversaries of
the grant date. NQSOs terminate within 90 days of
termination of employment for any reason other than death or
retirement as defined under our equity plan. Upon termination of
employment because of death or retirement as defined under our
equity plan, the vested portion of any outstanding NQSO
continues to be exercisable for the remainder of its term.
Each RSU represents the right to receive one share of common
stock as of the date that such RSU vests. RSUs granted in 2008
vest in equal annual installments over a four year vesting
schedule. RSUs are not transferable and are forfeited in the
event of termination of employment for any reason prior to
vesting. The recipient of an RSU award has no voting, dividend,
tender offer or other rights of a stockholder with respect to an
RSU until shares of our common stock are issued upon vesting of
the RSU.
31
Outstanding
Equity Awards at Fiscal Year End
The following table shows the unexercised stock options and
unvested restricted stock and restricted stock units outstanding
on the last day of the fiscal year ended December 31, 2008
for each of our NEOs. We do not have any non-equity incentive
plans.
Outstanding
Equity Awards
for Fiscal Year Ended December 31, 2008
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Shares or
|
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Shares or
|
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|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
Units of
|
|
|
Units of
|
|
|
|
Options
|
|
|
Options
|
|
|
Exercise
|
|
|
Option
|
|
|
Stock That
|
|
|
Stock That
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Price
|
|
|
Expiration
|
|
|
Have Not
|
|
|
Have Not
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)
|
|
|
Date
|
|
|
Vested (#)
|
|
|
Vested ($)(a)
|
|
|
Colin Goddard, Ph.D.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,350
|
(b)
|
|
|
326,068
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,263
|
(c)
|
|
|
244,570
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,750
|
(d)
|
|
|
615,038
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
(e)
|
|
|
976,250
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
23.25
|
|
|
|
06/21/10
|
|
|
|
|
|
|
|
|
|
|
|
|
45,000
|
|
|
|
|
|
|
|
51.80
|
|
|
|
06/13/11
|
|
|
|
|
|
|
|
|
|
|
|
|
51,430
|
|
|
|
|
|
|
|
21.55
|
|
|
|
06/12/12
|
|
|
|
|
|
|
|
|
|
|
|
|
60,700
|
|
|
|
|
|
|
|
30.74
|
|
|
|
06/24/13
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
67.63
|
|
|
|
06/16/14
|
|
|
|
|
|
|
|
|
|
|
|
|
41,089
|
|
|
|
5,871
|
(f)
|
|
|
38.01
|
|
|
|
06/14/12
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
25,000
|
(g)
|
|
|
29.77
|
|
|
|
06/12/13
|
|
|
|
|
|
|
|
|
|
|
|
|
18,750
|
|
|
|
18,750
|
(h)
|
|
|
37.74
|
|
|
|
12/12/13
|
|
|
|
|
|
|
|
|
|
|
|
|
15,625
|
|
|
|
46,875
|
(i)
|
|
|
47.29
|
|
|
|
12/11/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
135,000
|
(j)
|
|
|
33.62
|
|
|
|
12/15/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael G. Atieh(k)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
(k)
|
|
|
234,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,350
|
(k)
|
|
|
130,818
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,513
|
(k)
|
|
|
98,133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,030
|
(k)
|
|
|
235,472
|
|
|
|
|
7,500
|
|
|
|
|
|
|
|
38.61
|
|
|
|
03/16/14
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
|
|
|
|
45.60
|
|
|
|
03/15/15
|
|
|
|
|
|
|
|
|
|
|
|
|
114,630
|
|
|
|
35,370
|
(k)
|
|
|
37.20
|
|
|
|
05/30/15
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
10,000
|
(k)
|
|
|
29.77
|
|
|
|
06/12/13
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
7,500
|
(k)
|
|
|
37.74
|
|
|
|
12/11/13
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
|
|
|
18,000
|
(k)
|
|
|
47.29
|
|
|
|
12/11/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anker Lundemose, M.D., Ph.D., D.Sc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,350
|
(b)
|
|
|
130,818
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,350
|
(c)
|
|
|
130,818
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,500
|
(d)
|
|
|
214,775
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,800
|
(e)
|
|
|
304,590
|
|
|
|
|
15,200
|
|
|
|
|
|
|
|
35.10
|
|
|
|
02/10/14
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
|
|
|
|
48.30
|
|
|
|
03/07/15
|
|
|
|
|
|
|
|
|
|
|
|
|
26,249
|
|
|
|
3,751
|
(f)
|
|
|
38.01
|
|
|
|
06/14/12
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
10,000
|
(g)
|
|
|
29.77
|
|
|
|
06/12/13
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
10,000
|
(h)
|
|
|
37.74
|
|
|
|
12/12/13
|
|
|
|
|
|
|
|
|
|
|
|
|
5,500
|
|
|
|
16,500
|
(i)
|
|
|
47.29
|
|
|
|
12/11/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,000
|
(j)
|
|
|
33.62
|
|
|
|
12/15/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gabriel Leung
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,350
|
(b)
|
|
|
130,818
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,350
|
(c)
|
|
|
130,818
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,500
|
(d)
|
|
|
175,725
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,800
|
(e)
|
|
|
304,590
|
|
|
|
|
25,761
|
|
|
|
|
|
|
|
23.85
|
|
|
|
05/20/13
|
|
|
|
|
|
|
|
|
|
|
|
|
28,472
|
|
|
|
|
|
|
|
30.74
|
|
|
|
06/24/13
|
|
|
|
|
|
|
|
|
|
|
|
|
26,200
|
|
|
|
|
|
|
|
67.63
|
|
|
|
06/16/14
|
|
|
|
|
|
|
|
|
|
|
|
|
31,876
|
|
|
|
4,554
|
(f)
|
|
|
38.01
|
|
|
|
06/14/12
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
10,000
|
(g)
|
|
|
29.77
|
|
|
|
06/12/13
|
|
|
|
|
|
|
|
|
|
32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Shares or
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
Units of
|
|
|
Units of
|
|
|
|
Options
|
|
|
Options
|
|
|
Exercise
|
|
|
Option
|
|
|
Stock That
|
|
|
Stock That
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Price
|
|
|
Expiration
|
|
|
Have Not
|
|
|
Have Not
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)
|
|
|
Date
|
|
|
Vested (#)
|
|
|
Vested ($)(a)
|
|
|
|
|
|
10,000
|
|
|
|
10,000
|
(h)
|
|
|
37.74
|
|
|
|
12/12/13
|
|
|
|
|
|
|
|
|
|
|
|
|
4,500
|
|
|
|
13,500
|
(i)
|
|
|
47.29
|
|
|
|
12/11/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,000
|
(j)
|
|
|
33.62
|
|
|
|
12/15/15
|
|
|
|
|
|
|
|
|
|
Robert L. Simon
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,500
|
(b)
|
|
|
97,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,875
|
(c)
|
|
|
73,219
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,500
|
(d)
|
|
|
214,775
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
(e)
|
|
|
390,500
|
|
|
|
|
44,000
|
|
|
|
|
|
|
|
45.01
|
|
|
|
01/02/12
|
|
|
|
|
|
|
|
|
|
|
|
|
5,750
|
|
|
|
|
|
|
|
21.55
|
|
|
|
06/12/12
|
|
|
|
|
|
|
|
|
|
|
|
|
23,600
|
|
|
|
|
|
|
|
30.74
|
|
|
|
06/24/13
|
|
|
|
|
|
|
|
|
|
|
|
|
17,200
|
|
|
|
|
|
|
|
67.63
|
|
|
|
06/16/14
|
|
|
|
|
|
|
|
|
|
|
|
|
19,118
|
|
|
|
2,732
|
(f)
|
|
|
38.01
|
|
|
|
06/14/12
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
7,500
|
(g)
|
|
|
29.77
|
|
|
|
06/12/13
|
|
|
|
|
|
|
|
|
|
|
|
|
5,625
|
|
|
|
5,625
|
(h)
|
|
|
37.74
|
|
|
|
12/12/13
|
|
|
|
|
|
|
|
|
|
|
|
|
5,500
|
|
|
|
16,500
|
(i)
|
|
|
47.29
|
|
|
|
12/11/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
(j)
|
|
|
33.62
|
|
|
|
12/15/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pierre Legault(l)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Based on the closing price of our common stock reported on the
Nasdaq Global Select Market on December 31, 2008 of $39.05.
|
|
(b)
|
|
Represents the unvested portion of restricted stock granted on
July 14, 2006. The unvested restricted stock vests at a
rate of 50% per year, with vesting dates of July 14, 2009
and 2010.
|
|
(c)
|
|
Represents the unvested portion of RSUs granted on
December 13, 2006. The unvested RSUs vest at a rate of 50%
per year, with vesting dates of December 13, 2009 and 2010.
|
|
(d)
|
|
Represents the unvested portion of RSUs granted on
December 12, 2007. The unvested RSUs vest at a rate of
one-third per year, with vesting dates of December 12,
2009, 2010 and 2011.
|
|
(e)
|
|
Represents the unvested portion of RSUs granted on
December 16, 2008. The unvested RSUs vest at a rate of 25%
per year, with vesting dates of December 16, 2009, 2010,
2011 and 2012.
|
|
(f)
|
|
These stock options vest monthly in equal amounts through
June 15, 2009.
|
|
(g)
|
|
These stock options vest at a rate of 50% per year, with vesting
dates of June 13, 2009 and 2010.
|
|
(h)
|
|
These stock options vest at a rate of 50% per year, with vesting
dates of December 13, 2009 and 2010.
|
|
(i)
|
|
These stock options vest at a rate of one-third per year, with
vesting dates of December 12, 2009, 2010 and 2011.
|
|
(j)
|
|
These stock options vest at a rate of one-third of the total
grant on each of the third, fourth and fifth anniversaries of
the grant date, with vesting dates of December 16, 2011,
2012, and 2013
|
|
(k)
|
|
As noted in footnote (i) of the Summary Compensation Table
above, certain of Mr. Atiehs equity rights were
modified in connection with his retirement from our company
effective January 5, 2009. As a result, we recognized
$120,000 of additional equity compensation expense in 2008
relating to this modification in accordance with
SFAS 123(R).
|
|
(l)
|
|
As discussed above, Mr. Legault received his initial equity
grants on January 2, 2009.
|
33
Option
Exercises and Stock Vested
The following table summarizes information with respect to stock
option awards exercised and restricted stock and restricted
stock units vested during 2008 for each of our NEOs.
Option
Exercises and Stock Vested
for Fiscal Year Ended December 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired on
|
|
|
Value Realized
|
|
|
Acquired on
|
|
|
Value Realized
|
|
|
|
|
|
|
|
|
|
Exercise
|
|
|
on Exercise
|
|
|
Vesting
|
|
|
on Vesting
|
|
|
|
|
|
|
|
Name
|
|
(#)
|
|
|
($)(a)
|
|
|
(#)
|
|
|
($)(b)
|
|
|
|
|
|
|
|
|
Colin Goddard, Ph.D.
|
|
|
|
|
|
|
|
|
|
|
12,556
|
|
|
|
466,548
|
|
|
|
|
|
|
|
|
|
Michael G. Atieh
|
|
|
50,000
|
|
|
|
1,015,000
|
|
|
|
7,941
|
|
|
|
289,858
|
|
|
|
|
|
|
|
|
|
Anker Lundemose, M.D., Ph.D., D.Sc.
|
|
|
|
|
|
|
|
|
|
|
5,183
|
|
|
|
192,038
|
|
|
|
|
|
|
|
|
|
Gabriel Leung
|
|
|
35,000
|
|
|
|
922,423
|
|
|
|
4,850
|
|
|
|
180,919
|
|
|
|
|
|
|
|
|
|
Robert L. Simon
|
|
|
8,050
|
|
|
|
187,968
|
|
|
|
4,021
|
|
|
|
148,424
|
|
|
|
|
|
|
|
|
|
Pierre Legault(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
The amounts shown in this column represent the difference
between the option exercise price and the market price on the
date of exercise and sale.
|
|
(b)
|
|
The value realized is calculated by multiplying the number of
vested shares or units times the closing price of our common
stock on the applicable vesting date.
|
|
(c)
|
|
As discussed above, Mr. Legault received his initial equity
grants on January 2, 2009.
|
Potential
Payments Upon Termination or Change of Control
The employment agreements or arrangements for each of our NEOs
provide (or in the case of Mr. Atieh, provided) for certain
potential payments and other rights upon the termination of such
officer.
Payments Made Upon Termination.
Upon a
termination of employment for any reason, each of our NEOs is
entitled to receive any accrued but unpaid salary and benefits.
Dr. Goddard also receives the pro-rata bonus he would have
been entitled to receive for the fiscal year in which the
termination occurs.
Payments Made Upon Death or Disability.
Upon
their death or permanent disability, Messrs. Legault and
Leung and Dr. Goddard receive, and Mr. Atieh was
entitled to receive, the pro-rata bonus they would have been
entitled to receive for the fiscal year in which the termination
occurs. Upon his death, Dr. Lundemose receives his pro-rata
bonus that he would have been entitled to receive for the fiscal
year in which his death occurs. Dr. Lundemose is not
entitled to receive any additional payments upon his termination
for disability, unless such termination results in his loss of
his health insurance benefits. In such case, Dr. Lundemose
is entitled to receive his base salary for one year plus a
pro-rata portion of the bonus that he would have been entitled
to receive for the fiscal year in which his termination occurs.
Potential Payments Upon Termination for Good Reason, Without
Cause or Upon a Change of Control.
The employment
agreements or arrangements for each of our NEOs, other than
Mr. Simon, contain provisions which provide for severance
and other benefits upon a termination of employment without
cause or for good reason. The employment agreement for
Mr. Legault provides that if he is terminated without
cause, terminates his employment for good reason, or resigns
within 60 days following a change of control, then he will
be entitled to receive his accrued but unpaid salary and
benefits, a continuation of health benefits for a period of two
years, and a lump sum equal to two years of base salary plus two
years of his target bonus and his pro-rated target bonus through
the date of termination. In the event that
Mr. Legaults termination payments and other benefits
following a change of control result in the imposition of an
excise tax imposed by Section 4999 of the
U.S. Internal Revenue Code, then Mr. Legault will
receive an additional payment to cover the imposition of such
excise tax. In the event however that a 10% reduction in such
payments and benefits would eliminate the excise tax, such
payments and other benefits
34
will be reduced to the extent necessary to avoid the imposition
of such excise tax. Good reason under Mr. Legaults
agreement includes a material reduction of duties, titles or
responsibilities or the relocation of OSIs corporate
headquarters outside of a specified area. Mr. Legault is
also entitled to the reimbursement of his costs to relocate out
of New York in the event that he is terminated without cause or
for good reason on or before December 29, 2009.
The employment agreements for Mr. Leung and
Dr. Lundemose provide, and the employment agreement for
Mr. Atieh provided, that if the officer is terminated
without cause, or terminates his employment for good reason,
then the officer will be entitled to receive his accrued but
unpaid salary and benefits, a continuation of health benefits
for a period of one year, and a lump sum equal to (a) one
year of base salary and (b) the pro-rata bonus he would
have been entitled to receive for the fiscal year in which the
termination occurs. Good reason under these officers
agreements includes a material reduction of duties, titles or
responsibilities, the relocation of OSIs corporate
headquarters outside of a specified area or a change of control
of OSI.
The employment agreement for Dr. Goddard provides that if
Dr. Goddard is terminated without cause, or terminates his
employment for good reason, then he will be entitled to receive
his accrued but unpaid salary and benefits, a continuation of
health and disability benefits for a period of three years, and
a lump sum equal to (a) three years of base salary and
(b) the pro-rata bonus he would have been entitled to
receive for the fiscal year in which the termination occurs.
Good reason under Dr. Goddards agreement includes a
material reduction of duties, titles or responsibilities, the
relocation of OSIs corporate headquarters outside of a
specified area, failure to be re-elected to the Board of
Directors or a change of control of OSI. In the event that
Dr. Goddards termination payments and other benefits
following a change of control result in the imposition of an
excise tax under Section 4999 of the U.S. Internal
Revenue Code, then Dr. Goddard will receive an additional
payment to cover the imposition of such excise tax.
The employment letter for Mr. Simon provides that if he is
terminated without cause, he will be entitled to receive his
base salary for a period of twelve months. In addition, if
within six months of a change of control, Mr. Simon is
terminated by the controlling company or terminates his
employment for good reason, Mr. Simon will also be entitled
to receive his pro-rated base salary for the fiscal year in
which the termination occurs. Good reason under
Mr. Simons employment letter includes a reduction in
his total compensation package, duties or responsibilities, or
the requirement that he relocate more than 40 miles from
his present location or home.
For each NEO other than Dr. Goddard and Mr. Legault, a
change of control is generally defined as the sale of all or
substantially all of assets of the company, or a merger or
consolidation where the existing stockholders of the company
cease to hold a majority (40% in the case of Mr. Atieh) of
the voting power of the company. Dr. Lundemoses
agreement also provides that a change of control includes a
change of control of Prosidion. Dr. Goddard and
Mr. Legaults employment agreements define a change of
control as (i) the acquisition of stock by any one person,
entity or group constituting (A) 50% or more of the total
fair market value or total voting power of the company when
combined with the existing stock held by such person, entity or
group or (B) 35% of the voting power of the company when
combined with the stock acquired by such person, entity or group
over the previous 12 months, (ii) the replacement of a
majority of the members of the Board of Directors during any
12 month period with directors whose nomination has not
been endorsed by the Corporate Governance and Nominating
Committee or (iii) the acquisition by any one person,
entity or group of assets from the company in any 12 month
period with a gross fair market value equal to at least 40% of
the total gross fair market value of all assets of the company
immediately prior to such acquisition.
Vesting of Equity Upon a Change of Control or Other
Events.
The employment agreements or arrangements
for each of our NEOs provide that upon a change of control of
OSI, all of their outstanding unvested equity grants vest
and/or
become immediately exercisable. In addition, Dr. Goddard
and Mr. Legaults employment agreements provide that
all of their outstanding unvested equity grants vest
and/or
become immediately exercisable in the event that they are
terminated without cause or terminate their employment for good
reason.
35
Potential
Payments Upon Termination or Change of Control
The following table sets forth the potential payments and
benefits that our NEOs could be entitled to (or in the case of
Mr. Atieh, was entitled to previously) under their
respective employment agreements upon their termination from our
company, assuming a termination date of December 31, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
|
|
|
|
Cash
|
|
|
|
|
|
Accelerated
|
|
|
|
|
|
Severance
|
|
|
Medical
|
|
|
Equity
|
|
|
|
|
|
Payment
|
|
|
Continuation
|
|
|
Awards
|
|
Name
|
|
Basis for Termination
|
|
($)(a)
|
|
|
($)
|
|
|
($)(b)
|
|
|
Colin Goddard, Ph.D(c)
|
|
Separation without cause/ for good reason
|
|
|
2,560,000
|
(d)
|
|
|
51,144
|
|
|
|
3,585,450
|
|
|
|
Change of control
|
|
|
2,560,000
|
(d)
|
|
|
51,444
|
|
|
|
3,585,450
|
|
|
|
Retirement
|
|
|
640,000
|
(e)
|
|
|
|
|
|
|
|
|
|
|
Death or disability
|
|
|
640,000
|
(e)
|
|
|
|
|
|
|
|
|
Pierre Legault(c)
|
|
Separation without cause/ for good reason
|
|
|
1,395,000
|
(f)
|
|
|
29,880
|
|
|
|
|
|
|
|
Change of control
|
|
|
1,395,000
|
(g)
|
|
|
29,880
|
|
|
|
|
|
|
|
Retirement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death or disability
|
|
|
|
(h)
|
|
|
|
|
|
|
|
|
Michael G. Atieh
|
|
Separation without cause/ for good reason
|
|
|
668,000
|
(i)
|
|
|
17,148
|
|
|
|
|
|
|
|
Change of control
|
|
|
668,000
|
(i)
|
|
|
17,148
|
|
|
|
1,040,973
|
|
|
|
Retirement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death or disability
|
|
|
233,000
|
(e)
|
|
|
|
|
|
|
|
|
Anker Lundemose, M.D., Ph.D., D.Sc.
|
|
Separation without cause/ for good reason
|
|
|
656,830
|
(i)
|
|
|
|
|
|
|
|
|
|
|
Change of control
|
|
|
656,830
|
(i)
|
|
|
|
|
|
|
1,321,548
|
|
|
|
Retirement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
|
240,937
|
(e)
|
|
|
|
|
|
|
|
|
|
|
Disability
|
|
|
|
(k)
|
|
|
|
|
|
|
|
|
Gabriel Leung
|
|
Separation without cause/ for good reason
|
|
|
657,450
|
(i)
|
|
|
17,148
|
|
|
|
|
|
|
|
Change of control
|
|
|
657,450
|
(i)
|
|
|
17,148
|
|
|
|
1,281,548
|
|
|
|
Retirement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death or disability
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert L. Simon
|
|
Separation without cause/ for good reason
|
|
|
393,000
|
(j)
|
|
|
|
|
|
|
|
|
|
|
Change of control
|
|
|
616,300
|
(i)
|
|
|
17,148
|
|
|
|
1,353,204
|
|
|
|
Retirement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death or disability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
As noted above, upon the occurrence of specified termination
events, the employment agreements for each of our NEOs provide
for the payment of a pro-rated bonus that they would have been
entitled to receive for the fiscal year in which the termination
occurs. As a result of our decision, beginning in the 2008
fiscal year, to award annual bonuses in the February following
the fiscal year end, this pro-rated bonus amount would have been
equal to the full target bonus for each such NEO. In contrast,
our NEOs would not have been entitled to any pro-rated bonus
payment assuming a specified termination event occurred on
December 31, 2007, as we paid the annual bonus to our NEOs
for the 2007 fiscal year in mid-December 2007.
|
|
(b)
|
|
Value includes acceleration of unvested option awards as of
December 31, 2008 with a 90 day term and valuation of
equity grants under SFAS 123(R). Value also assumes
acceleration of unvested restricted stock or restricted units,
which have been valued based upon the December 31, 2008
stock price of $39.05.
|
|
(c)
|
|
As discussed above, Dr. Goddard and Mr. Legault
(subject to certain limitations discussed above) are entitled to
receive additional payments in the event that their receipt of
termination payments and other benefits following a change of
control subjects them to an excise tax under Section 4999 of the
U.S. Internal Revenue Code. Based on calculated severance
amounts, neither Dr. Goddard nor Mr. Legault would
have been subject to such excise tax assuming a
December 31, 2008 termination date.
|
|
(d)
|
|
Represents three years of 2008 base salary plus
Dr. Goddards 2008 annual target bonus.
|
|
(e)
|
|
Represents the 2008 annual target bonus.
|
|
(f)
|
|
Represents two years of 2008 base salary plus an amount equal to
two times Mr. Legaults annual target and estimated
payments for the cost of relocating Mr. Legault out of New
York, as discussed above.
|
|
(g)
|
|
Represents two years of 2008 base salary plus an amount equal to
two times Mr. Legaults annual target bonus.
|
36
|
|
|
(h)
|
|
Mr. Legault is entitled to receive a pro-rata annual bonus
for the year of termination due to death or disability, but was
not eligible for a bonus for the 2008 fiscal year.
|
|
(i)
|
|
Represents one year of 2008 base salary plus the 2008 annual
target bonus.
|
|
(j)
|
|
Represents one year of 2008 base salary.
|
|
(k)
|
|
As discussed above, in the event that Dr. Lundemoses
termination due to disability results in the loss of his health
insurance benefits, he would be entitled to receive $656,830,
representing one year of 2008 base salary plus his target bonus
for 2008.
|
DIRECTOR
COMPENSATION
Director
Compensation Table
for Fiscal Year Ended December 31, 2008
The following table sets forth the compensation earned or paid,
or recognized as compensation expense under SFAS 123(R), to
the non-employee members of our Board of Directors for the 2008
fiscal year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
All Other
|
|
|
|
|
|
|
or Paid in Cash
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Total
|
|
Name
|
|
($)
|
|
|
($)(a)
|
|
|
($)(a)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Robert A. Ingram(b)
|
|
|
160,090
|
|
|
|
71,582
|
|
|
|
97,704
|
|
|
|
|
|
|
|
|
|
|
|
329,376
|
|
Santo J. Costa(c)
|
|
|
70,583
|
|
|
|
86,882
|
|
|
|
114,645
|
|
|
|
|
|
|
|
|
|
|
|
272,110
|
|
Daryl K. Granner, M.D.(d)
|
|
|
65,437
|
|
|
|
38,460
|
|
|
|
59,351
|
|
|
|
|
|
|
|
75,000
|
(e)
|
|
|
238,248
|
|
Joseph Klein, III(f)
|
|
|
77,972
|
|
|
|
86,882
|
|
|
|
114,645
|
|
|
|
|
|
|
|
|
|
|
|
279,499
|
|
Kenneth B. Lee, Jr.(g)
|
|
|
72,444
|
|
|
|
85,039
|
|
|
|
107,398
|
|
|
|
|
|
|
|
|
|
|
|
264,881
|
|
Viren Mehta(h)
|
|
|
68,201
|
|
|
|
38,460
|
|
|
|
68,157
|
|
|
|
|
|
|
|
100,000
|
(i)
|
|
|
274,818
|
|
David W. Niemiec(j)
|
|
|
75,208
|
|
|
|
86,882
|
|
|
|
114,645
|
|
|
|
|
|
|
|
|
|
|
|
276,735
|
|
Herbert M. Pinedo, M.D., Ph.D.(k)
|
|
|
64,056
|
|
|
|
38,460
|
|
|
|
54,949
|
|
|
|
|
|
|
|
81,700
|
(l)
|
|
|
239,165
|
|
Katharine B. Stevenson(m)
|
|
|
95,089
|
|
|
|
38,460
|
|
|
|
187,067
|
|
|
|
|
|
|
|
|
|
|
|
320,616
|
|
John P. White(n)
|
|
|
61,292
|
|
|
|
38,460
|
|
|
|
54,949
|
|
|
|
|
|
|
|
|
|
|
|
154,701
|
|
|
|
|
(a)
|
|
The amounts reflected in this column represent compensation
expense recorded in the income statement for fiscal year 2008 as
described in SFAS 123(R) for our directors. Executive
compensation disclosure rules require that compensation to a
director resulting from stock option grants and stock awards,
i.e., restricted stock and restricted stock units, be determined
based upon the compensation expense that we record in our
financial statements for 2008 with respect to such grants. Under
SFAS 123(R), we recognized compensation expense in 2008 based on
the value of that portion of stock and option awards that relate
to the services provided by the grant recipient. To determine
the value of stock awards, we use the closing price of our
common stock on the grant date. To determine the value of stock
option awards, we use a Black Scholes pricing model to value
stock options at the time of their grant. This model requires us
to estimate the future value of our stock price based in part on
the historic price volatility of our stock. See Note 16 to
our consolidated financial statement included in our Annual
Report on Form
10-K
for our
fiscal year ended December 31, 2008 for details as to the
assumption used to determine the fair value of equity awards.
Given the significant volatility in our stock price, the
volatility factor used to value our stock option grants has
ranged in recent years from 78% in 2004 to 50% in 2008. Higher
volatility factors result in a higher potential future value
assigned to the stock option grants.
|
|
|
|
The compensation expense recognized for financial statement
purposes and presented in the above table is not necessarily
indicative of the value an option holder may actually realize
from the grant; option grants of the same size may result in
different amounts of compensation expense depending on the
timing of the grant and factors such as the volatility and value
of the stock at the time of grant.
|
|
(b)
|
|
During 2008, Mr. Ingram received a grant of 10,000 stock
options and 4,000 deferred stock units. The grant date fair
value of each award, as computed in accordance with
SFAS 123(R), was $176,500 and $154,520,
|
37
|
|
|
|
|
respectively. As of December 31, 2008, Mr. Ingram had
77,000 options awards and 7,750 stock awards outstanding.
|
|
(c)
|
|
During 2008, Mr. Costa received a grant of 3,000 stock
options and 1,500 shares of restricted stock. The grant
date fair value of each award, as computed in accordance with
SFAS 123(R), was $52,950 and $57,945, respectively. As of
December 31, 2008, Mr. Costa had 31,000 options awards
and 6,875 stock awards outstanding.
|
|
(d)
|
|
During 2008, Dr. Granner received a grant of 7,500 stock
options, and 2,500 shares of restricted stock. The grant
date fair value of each award, as computed in accordance with
SFAS 123(R), was $132,375 and $96,575, respectively. As of
December 31, 2008, Dr. Granner had 68,500 options
awards and 4,375 stock awards outstanding.
|
|
(e)
|
|
Represents consulting fees paid to Dr. Granner in 2008 of
$75,000.
|
|
(f)
|
|
During 2008, Mr. Klein received a grant of 3,000 stock
options and 1,500 deferred stock units. The grant date fair
value of each award, as computed in accordance with
SFAS 123(R), was $52,950 and $57,945, respectively. As of
December 31, 2008, Mr. Klein had 17,750 options awards
and 6,875 stock awards outstanding.
|
|
(g)
|
|
During 2008, Mr. Lee received a grant of 3,000 stock
options and 1,500 deferred stock units. The grant date fair
value of each award, as computed in accordance with
SFAS 123(R), was $52,950 and $57,945, respectively. As of
December 31, 2008, Mr. Lee had 28,000 options awards
and 7,875 stock awards outstanding.
|
|
(h)
|
|
During 2008, Dr. Mehta received a grant of 7,500 stock
options, and 2,500 restricted stock units. The grant date fair
value of each award, as computed in accordance with
SFAS 123(R), was $132,375 and $96,575, respectively. As of
December 31, 2008, Dr. Mehta had 66,269 options awards
and 4,375 stock awards outstanding.
|
|
(i)
|
|
Represents consulting fees paid to Dr. Mehta of $100,000.
|
|
(j)
|
|
During 2008, Mr. Niemiec received a grant of 3,000 stock
options and 1,500 deferred stock units. The grant date fair
value of each award, as computed in accordance with
SFAS 123(R), was $52,950 and $57,945, respectively. As of
December 31, 2008, Mr. Niemiec had 31,000 options
awards and 6,875 stock awards outstanding.
|
|
(k)
|
|
During 2008, Dr. Pinedo received a grant of 7,500 stock
options, and 2,500 restricted stock units. The grant date fair
value of each award, as computed in accordance with
SFAS 123(R), was $132,375 and $96,575, respectively. As of
December 31, 2008, Dr. Pinedo had 71,000 options
awards and 4,375 stock awards outstanding.
|
|
(l)
|
|
Represents consulting fees paid to Dr. Pinedo in 2008 of
$81,700.
|
|
(m)
|
|
During 2008, Ms. Stevenson received a grant of 7,500 stock
options and 2,500 shares of restricted stock. The grant
date fair value of each award, as computed in accordance with
SFAS 123(R), was $132,375 and $96,575, respectively. As of
December 31, 2008, Ms. Stevenson had 63,500 options
awards and 4,375 stock awards outstanding.
|
|
(n)
|
|
During 2008, Mr. White received a grant of 7,500 stock
options and 2,500 shares of restricted stock. The grant
date fair value of each award, as computed in accordance with
SFAS 123(R), was $132,375 and $96,575, respectively. As of
December 31, 2008, Mr. White had 52,000 options awards
and 4,375 stock awards outstanding.
|
Annual
Retainer Fee
Ms. Stevenson and Drs. Granner, Mehta, and Pinedo and
Messrs. Costa, Ingram, Klein, Lee, Niemiec, and White
(comprising our non-employee directors) receive an annual
retainer fee for attendance at Board of Directors meetings
comprised of both cash and equity compensation. In 2007, the
Compensation Committee engaged Radford, its independent
compensation consultant, to evaluate our Board compensation.
Upon evaluation and review, Radford, the Compensation Committee
and the Board determined that the compensation structure should
be revised in order to (1) better align Board members
compensation with their responsibilities and (2) align
Board compensation with the more typical practices at peer
companies. Our former Board compensation provided greater
38
annual compensation upon initial election to the Board as
opposed to subsequent elections. Pursuant to Radfords
recommendation and the Compensation Committees and
Boards review, the Board approved changes to the
compensation structure, effective beginning on the date of the
Companys 2008 Annual Meeting of Stockholders (the
2008 Annual Meeting), (1) to compensate the
Chairs of Board committees and service on more than one
committee and (2) in general, to decrease the amount of
compensation awarded upon initial election to the Board and to
increase the amount of compensation awarded upon subsequent
elections. In order to be more equitable and avoid any
windfalls, the Board approved a requirement that all directors
elected to the Board prior to the 2008 Annual Meeting must serve
at least until the date of the third annual meeting following
their first election or appointment to the Board before they are
eligible to receive the revised annual equity grants described
below. As a result, Messrs. Costa, Klein, and Niemiec would
become entitled to receive the revised annual equity grant
commencing on the date of the annual meeting in 2009;
Mr. Lee would become entitled to receive the revised annual
equity grant commencing on the date of the annual meeting in
2010; and all other non-employee directors were entitled to
receive the revised annual equity grant commencing on the date
of the annual meeting in 2008.
Cash
Retainer
Each of the non-employee directors of the Company receives an
annual cash retainer fee as set forth in the table below.
|
|
|
|
|
Baseline Cash Compensation
|
|
|
|
Board Member Retainer Fee
|
|
$
|
50,000
|
|
|
|
|
|
|
Additional Cash Compensation
|
|
|
|
|
Chair of Board
|
|
$
|
100,000
|
|
Chair of Audit Committee
|
|
$
|
30,000
|
|
Chair of Compensation Committee
|
|
$
|
15,000
|
|
Chair of Corporate Governance and Nominating Committee
|
|
$
|
10,000
|
|
Chair of All Other Committees
|
|
$
|
10,000
|
|
Member of Audit Committee
|
|
$
|
15,000
|
|
Member of Compensation Committee
|
|
$
|
7,500
|
|
Member of Corporate Governance and Nominating Committee
|
|
$
|
5,000
|
|
Member of All Other Committees (excluding the Executive
Committee)
|
|
$
|
5,000
|
|
The baseline cash compensation indicated above is paid to each
Board member for his or her annual service on the Board. Each
Board member who serves as the Chair or a member of a Board
Committee receives additional cash compensation, as indicated
above, for each Committee on which he or she serves.
Option
Grants and Other Stock Awards
Each non-employee director receives an initial grant of options
to purchase 15,000 shares of common stock and also receives
an award of 5,000 shares of restricted stock, restricted
stock units or deferred stock units upon his or her initial
election to the Board.
In addition to initial equity awards, non-employee directors
receive annual equity grants. Each non-employee director, not
including the Chairman of the Board, receives options to
purchase 7,500 shares of common stock and an award of
2,500 shares of restricted stock, restricted stock units or
deferred stock units upon each re-election for a one-year Board
term, with the exception of those directors who as of the 2008
Annual Meeting had not served three years on the Board. Such
directors receive an annual option to purchase 3,000 shares
of common stock and an award of 1,500 shares of restricted
stock, restricted stock units or deferred stock units until they
have served three years on the Board, at which time they would
receive the grants described above. The Chairman of the Board
receives options to purchase 10,000 shares of common stock
and an award of 4,000 shares of restricted stock,
restricted stock units or deferred stock units upon re-election
for a one-year Board term.
39
The restricted stock and restricted stock units represent the
right of a director to receive one share of our common stock
upon vesting. Each deferred stock unit represents the right of a
director to receive one share of our common stock upon the
earlier of the directors termination from service on the
Board or on a date no earlier than two years from the date of
grant, as designated by the director.
The stock option awards and restricted stock awards, including
restricted stock units and deferred stock units, granted to the
directors after June 14, 2006 vest annually over four years
of the date of grant. The option awards expire on the seventh
anniversary of their respective grant dates, subject to the
earlier expiration upon the occurrence of certain events set
forth in our Amended and Restated Stock Incentive Plan. The
exercise price of all option awards is equal to 100% of the fair
market value of the underlying common stock on the date of grant.
Other
Payments
Dr. Granner was paid $75,000 by Prosidion, our wholly-owned
subsidiary, for services rendered as Chairman of
Prosidions Scientific Advisory Board and for consulting
services to Prosidion during the year ended December 31,
2008. Dr. Mehta was paid $100,000 for consulting services
rendered to us during the year ended December 31, 2008 with
respect to strategic in-licensing and mergers and acquisition
opportunities. Dr. Pinedo was paid $81,700 for consulting
services rendered to us during the year ended December 31,
2008 with respect to our clinical development of oncology
products.
Share
Ownership Requirements
In April 2006, the Compensation Committee approved a policy
requiring directors to increase their ownership of OSI common
stock to a value greater than $150,000 by 2010 for current
directors and within four years of joining the Board for new
directors.
Post-Retirement
Medical Benefits
Prior to April 2007, we provided post-retirement medical and
life insurance benefits to eligible employees and qualified
dependents, and members of our Board of Directors. Eligibility
was based on age and service requirements. These benefits are
subject to deductibles, co-payment provisions and other
limitations. In April 2007, we terminated this benefit and
grandfathered the directors who were eligible for participation
in the plan at the time of termination (Mr. White and
Drs. Granner and Mehta).
REPORT OF
THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors has prepared the
following report on its activities with respect to our audited
consolidated financial statements for the fiscal year ended
December 31, 2008.
Management is responsible for the preparation, presentation and
integrity of our financial statements, the maintenance of
appropriate accounting and financial reporting practices and
policies, as well as internal controls and procedures designed
to provide reasonable assurance that we are in compliance with
accounting standards and applicable laws and regulations. The
independent registered public accounting firm is responsible for
planning and performing an independent audit of our consolidated
financial statements and for determining the effectiveness of
our internal control over financial reporting in accordance with
auditing standards prescribed by the Public Company Accounting
Oversight Board and to issue reports thereon. The independent
registered public accounting firm is responsible for expressing
an opinion on the conformity of those audited consolidated
financial statements with accounting principles generally
accepted in the United States of America. The Audit Committee,
on behalf of the Board of Directors, monitors and reviews these
processes, acting in an oversight capacity relying on the
information provided to it and on the representations made to it
by our management, the independent registered public accounting
firm and other advisors.
The Audit Committee held twelve meetings during fiscal 2008,
including meetings with management and KPMG LLP, our independent
registered public accounting firm, at which our quarterly
financial statements were reviewed in advance of their public
release. Periodically during its meetings, the Audit Committee
met in executive
40
sessions (i.e., without management present) with representatives
of KPMG LLP and also met in executive sessions with our Chief
Financial Officer, General Counsel and, Corporate Controller.
The Audit Committee has reviewed and discussed with management
the audited consolidated financial statements for the fiscal
year ended December 31, 2008. The Audit Committee has also
discussed with KPMG LLP, the matters required to be discussed by
the statement on Auditing Standards No. 61, as amended
(AICPA,
Professional Standards
, Vol. 1, AU
Section 380), as adopted by the Public Company Accounting
Oversight Board in Rule 3200T. The Audit Committee has
received the written disclosures and the letter from KPMG LLP
required by applicable requirements of the Public Company
Accounting Oversight Board regarding the independent registered
public accounting firms communications with the Audit
Committee concerning independence, and has discussed with KPMG
LLP the firms independence.
Based on the reviews and discussions referenced above, the Audit
Committee recommended to our Board of Directors, and the Board
approved, that the audited consolidated financial statements
referred to above be included in our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008 for filing with
the Securities and Exchange Commission.
Katharine B. Stevenson, Chair of the Audit Committee
Joseph Klein, III
Kenneth B. Lee, Jr.
David W. Niemiec
RATIFICATION
OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
KPMG LLP, an independent registered public accounting firm, has
audited our consolidated financial statements for over
20 years and the Audit Committee of the Board of Directors
desires to continue the services of this firm. The Audit
Committee has appointed KPMG LLP to serve as the independent
registered public accounting firm to conduct an audit of our
consolidated financial statements for the fiscal year ending
December 31, 2009.
Appointment of our independent registered public accounting firm
is not required to be submitted to a vote of our stockholders
for ratification. However, the Audit Committee has recommended
that the Board of Directors submit this matter to the
stockholders as a matter of good corporate practice. If the
stockholders fail to ratify the appointment, the Audit Committee
will reconsider whether to retain KPMG LLP, and may retain that
firm or another without resubmitting the matter to our
stockholders. Even if the appointment is ratified, the Audit
Committee may, in its discretion, direct the appointment of a
different independent registered public accounting firm at any
time during the year if it determines that such a change would
be in our best interests and the best interests of our
stockholders.
41
Audit and
Non-Audit Fees
The following table presents fees for professional audit
services rendered by KPMG LLP for the audit of our annual
consolidated financial statements for the fiscal years ended
December 31, 2008 and 2007 and fees for other services
rendered by KPMG LLP during those periods.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year
|
|
|
|
|
|
Fiscal Year
|
|
|
|
|
|
|
Ended
|
|
|
|
|
|
Ended
|
|
|
|
|
Fee Category:
|
|
12/31/08
|
|
|
% of Total
|
|
|
12/31/07
|
|
|
% of Total
|
|
|
Audit Fees
|
|
$
|
1,050,000
|
|
|
|
68
|
%
|
|
$
|
1,190,000
|
|
|
|
79
|
%
|
Audit-Related Fees
|
|
|
78,500
|
|
|
|
5
|
%
|
|
|
77,500
|
|
|
|
5
|
%
|
Tax Fees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax compliance and preparation
|
|
|
65,540
|
|
|
|
4
|
%
|
|
|
66,000
|
|
|
|
4
|
%
|
Other tax services
|
|
|
359,934
|
|
|
|
23
|
%
|
|
|
174,572
|
|
|
|
12
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Tax Fees
|
|
|
425,474
|
|
|
|
27
|
%
|
|
|
240,572
|
|
|
|
16
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Fees
|
|
$
|
1,553,974
|
|
|
|
100
|
%
|
|
$
|
1,508,072
|
|
|
|
100
|
%
|
Audit fees related to services rendered in connection with the
annual audit of our consolidated financial statements, the
quarterly reviews of our consolidated financial statements,
annual statutory audits in the U.K., and services related to
registration statements and offering memoranda.
Audit-related fees consisted primarily of fees for accounting
consultation and audits of our employee benefit plan.
Tax fees consisted of tax compliance, preparation and other tax
services. Tax compliance and preparation consisted of fees
billed for professional services related to federal, state,
local and international tax compliance. Other tax services
consisted of fees billed for tax consulting.
All other fees consisted primarily of miscellaneous services. No
portion of these fees related to financial information or
operational system design or implementation services.
On an ongoing basis, management communicates to the Audit
Committee specific projects and categories of services for which
advance approval of the Audit Committee is required. The Audit
Committee reviews these requests and advises management and the
independent registered public accounting firm if the Audit
Committee approves the engagement of the independent registered
public accounting firm for such projects and services. On a
periodic basis, the independent registered public accounting
firm reports to the Audit Committee the actual spending for such
projects and services compared to the approved amounts. The
Audit Committee may delegate the ability to pre-approve audit
and permitted non-audit services to a sub-committee of the Audit
Committee, provided that any such pre-approvals are reported at
the next Audit Committee meeting.
The Audit Committee has considered whether the provision of all
other services by KPMG LLP is compatible with maintaining KPMG
LLPs independence and concluded that KPMG LLP is
independent based on information provided by KPMG LLP.
Representatives of KPMG LLP are expected to be available at the
meeting to respond to appropriate questions and will be given
the opportunity to make a statement if they desire to do so.
The Board of Directors recommends a vote FOR such
the ratification of the appointment of KPMG LLP as the
independent registered public accounting firm for OSI.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires our officers and directors, and persons who
own more than 10 percent of a registered class of our
equity securities, to file reports of ownership and changes in
ownership with the SEC. Officers, directors and greater than
10 percent stockholders are required by SEC regulations to
furnish us with copies of all Section 16(a) forms they file.
42
During 2008, there were no late Form 4 filings made by any
of our directors and executive officers except for one
Form 4 filing by Michael G. Atieh. In making these
disclosures, we have relied on written representations of our
directors and executive officers and copies of the reports that
we have filed on their behalf with the SEC.
STOCKHOLDER
PROPOSALS
In order for a stockholder proposal (other than a director
nomination) to be considered for inclusion in our proxy
statement for the Annual Meeting of Stockholders to be held in
2010, the written proposal must be received by our Secretary at
OSI Pharmaceuticals, Inc., 41 Pinelawn Road, Melville, New York
11747 no later than December 31, 2009. These proposals must
comply with the SECs rules and regulations regarding the
inclusion of shareholder proposals in our proxy materials set
forth in
Rule 14a-8.
With respect to director nominations, stockholders should refer
to page 11 of this Proxy Statement. If a stockholder
desires to present any proposal at our 2010 Annual Meeting,
written notice of such proposal, as prescribed in our Amended
and Restated Bylaws, must be received by our Secretary at OSI
Pharmaceuticals, Inc., 41 Pinelawn Road, Melville, New York
11747 no earlier than February 17, 2010 and no later than
March 19, 2010 and must be in accordance with the
requirements set forth in our Amended and Restated Bylaws. If
notification of a stockholder proposal is not received by the
above date, the proposal may not be presented.
By Order of the Board of Directors,
BARBARA A. WOOD
Secretary
May 6, 2009
43
LIST OF
APPENDICES
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|
|
|
|
|
|
Appendix
|
|
Audit Committee Charter, as amended
|
|
|
A
|
|
Corporate Governance and Nominating Committee Charter, as amended
|
|
|
B
|
|
Compensation Committee Charter, as amended
|
|
|
C
|
|
Proxy Card
|
|
|
D
|
|
44
APPENDIX A
OSI
PHARMACEUTICALS, INC.
AUDIT
COMMITTEE CHARTER
(As
amended April 1, 2009)
The Audit Committee has been established by the Board of
Directors to assist the Board in fulfilling its fiduciary
responsibilities by overseeing the integrity of the
Corporations financial statements, the financial reporting
processes, internal accounting and financial controls, the
annual independent audit of the Corporations financial
statements, and other aspects of the financial management of the
Corporation, including overseeing the establishment and
maintenance of processes to assure compliance by the Corporation
with all applicable laws, regulations and Corporation policy. In
so doing, it is the responsibility of the Audit Committee to
foster free and open means of communication between the
directors, the independent registered public accounting firm and
the financial management of the Corporation.
It is the responsibility of the financial management of the
Corporation to prepare financial statements in accordance with
generally accepted accounting principles and of the independent
registered public accounting firm to audit the annual financial
statements. It is not the responsibility of the Committee to
plan or conduct audits or to determine that the
Corporations financial statements are complete and
accurate or are in compliance with generally accepted accounting
principles.
The Committee shall consist of at least three members elected by
the Board at the first Board meeting following the annual
stockholders meeting to serve until their successors shall
be duly elected and qualified. The Chair of the Committee shall
be designated by the Board. The composition of the membership of
the Committee shall comply with all applicable statutes and the
rules and regulations of the Securities and Exchange Commission
(SEC) and the Nasdaq Stock Market. Committee members
shall not simultaneously serve on the audit committees of more
than three other public companies.
The Committee shall meet at such times as it determines, but not
less frequently than quarterly. Special meetings may be called
by the Chair. As part of its obligation to foster open
communications, the Committee shall meet regularly with
management and the independent registered public accounting firm
in separate executive sessions to discuss any matters that the
Committee or each of these groups believe should be discussed
privately. The operation of the Committee is subject to the
provisions of the Corporations Amended and Restated
Bylaws, including with respect to notice of meetings, quorum
requirements, action without a meeting and waiver of notice of
meetings. The Committee may determine such other procedural
rules for meeting and conducting its business, except as
otherwise provided in the Amended and Restated Bylaws or
required by applicable law. A majority of the members shall
represent a quorum of the Committee, and, if a quorum is
present, any action approved by at least a majority of the
members present shall represent the valid action of the
Committee.
|
|
IV.
|
AUTHORITY
OF COMMITTEE
|
|
|
|
|
A.
|
The Committee shall have the sole authority to appoint and
dismiss the Corporations independent registered public
accounting firm. The independent registered public accounting
firm shall report directly to the Committee.
|
|
|
|
|
B.
|
The Committee shall have the sole authority to approve the
amount of fees and other terms of any engagement by the
Corporation of the independent registered public accounting firm.
|
A-1
|
|
|
|
C.
|
The Committee shall have the authority to retain special legal,
accounting or other consultants to advise the Committee.
|
|
|
|
|
D.
|
The Committee may request any director, officer or employee of
the Corporation or the Corporations outside counsel, or
independent registered public accounting firm or other
consultant to attend a meeting of the Committee or to meet with
any members of, or consultants to, the Committee.
|
|
|
|
|
E.
|
The Committee may form and delegate authority to a subcommittee
of the Committee, consisting of one or more members of the
Committee, whenever it deems appropriate.
|
|
|
|
|
F.
|
The Committee shall have appropriate funding from the
Corporation, as determined by the Committee, to permit the
Committee to perform its duties under this Charter and to
compensate its advisors.
|
|
|
V.
|
RESPONSIBILITIES
AND DUTIES
|
To fulfill its responsibilities and duties the Committee shall:
A.
Independent Audit and Independent Registered Public
Accounting Firm.
|
|
|
|
1.
|
Appoint and dismiss the Corporations independent
registered public accounting firm.
|
|
|
2.
|
Review and approve the independent registered public accounting
firms proposed audit scope, approach, staffing and fees.
|
|
|
3.
|
Pre-approve all audit and permitted non-audit services to be
performed by the independent registered public accounting firm
subject to such procedures as may be established by the
Committee.
|
|
|
4.
|
At least annually, obtain and review a report by the independent
registered public accounting firm describing the firms
internal quality-control procedures, any material issues raised
by the most recent internal quality-control or peer review of
the firm, or by any inquiry or investigation by governmental or
professional authorities, within the preceding five years,
respecting one or more independent audits carried out by the
firm, and any steps taken to deal with any such issues.
|
|
|
5.
|
Establish policies for ensuring the receipt from the independent
registered public accounting firm of a formal written statement
prior to engagement of the firm and then on a periodic basis,
not less frequently than annually, a written statement
delineating all relationships between the independent registered
public accounting firm and the Corporation, including each
non-audit service provided to the Corporation.
|
|
|
6.
|
Actively engage in a dialogue with the independent registered
public accounting firm with respect to any disclosed
relationships or services that may impact the objectivity and
independence of the independent registered public accounting
firm.
|
|
|
7.
|
Discuss with the independent registered public accounting firm
the matters required to be discussed by Statement on Auditing
Standards No. 61, and as amended by Statement on Auditing
Standards No. 90, relating to the conduct of the audit.
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8.
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Receive and review with management any management letter
provided by the independent registered public accounting firm
and the Corporations response to that letter, review with
the independent registered public accounting firm any problems
or difficulties the registered public accounting firm may have
encountered and any disagreements with management.
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9.
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Discuss with the independent registered public accounting firm
whether it has identified the existence of any issues of the
type described in Section 10A of the Securities Exchange
Act of 1934 (concerning detection of illegal acts).
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10.
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Review and approve hiring policies for employees or former
employees of the independent registered public accounting firm.
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A-2
B.
Financial Statement Review.
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1.
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Oversee the annual and quarterly financial reporting processes.
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a
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The Committee shall review with management and the independent
registered public accounting firm the financial statements and
Managements Discussion and Analysis
(MD&A) to be included in the Corporations
Annual Report on
Form 10-K
prior to filing or distribution, including the applicability of
critical accounting policies, the reasonableness of significant
judgments and the clarity of the disclosures in the financial
statements. The Committee shall also discuss the results of the
annual audit and any other matter required to be communicated to
the Committee by the independent registered public accounting
firm under auditing standards of the Public Company Accounting
Oversight Board (United States).
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b
|
The Committee shall review with management the interim financial
statements and MD&A to be included in the
Corporations quarterly reports on
Form 10-Q.
The Committee shall also discuss the results of the quarterly
reviews and any other matters required to be communicated to the
Committee by the independent registered public accounting firm
under current regulations and standards.
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2.
|
Discuss with management the Corporations earnings press
releases, including the use of non-GAAP information, as well as
financial information and earnings guidance provided to analysts.
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3.
|
Obtain and review periodic reports at least annually from
management and the independent registered public accounting firm
assessing the effectiveness of the Corporations internal
control structure and procedures for financial reporting
including: (a) all significant deficiencies or material
weaknesses in the design or operation of internal controls, and
(b) any fraud, whether or not material, that involves
management or other employees having a significant role in the
internal controls, all significant changes to internal controls,
including corrective actions, since the last report to the
Committee.
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A.
|
Review compliance with the Corporations Code of Conduct
and its related policies and procedures on a regular basis and
review the content of the Code and related policies and
procedures from time to time.
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B.
|
Establish procedures for the receipt, retention, and treatment
of complaints received by the Corporation regarding accounting,
internal accounting controls, or auditing matters and the
confidential, anonymous submission by employees of the
Corporation of concerns regarding questionable accounting or
auditing matters.
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C.
|
Review with the Corporations counsel legal and regulatory
matters that may have a material impact on the
Corporations financial statements.
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D.
|
Review and discuss the Corporations guidelines and
policies with respect to financial risk assessment, including
the risk of fraud.
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A.
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Prepare the report required by the rules of the SEC to be
included in the Corporations proxy statement.
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B.
|
Review and reassess the adequacy of this charter annually and
submit any recommended changes to the Board for approval.
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C.
|
Conduct an evaluation of the Committees performance at
least annually.
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D.
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The Chair of the Committee shall regularly report to the Board
regarding the Committees actions.
|
A-3
OSI
PHARMACEUTICALS, INC.
CORPORATE
GOVERNANCE AND NOMINATING COMMITTEE CHARTER
(As
amended April 1, 2009)
The purpose of the Corporate Governance and Nominating Committee
(the Committee) is to (i) identify qualified
individuals to become members of the Board of Directors (the
Board) of OSI Pharmaceuticals, Inc. (the
Corporation); (ii) recommend to the Board the
director nominees to the Board to be presented for election at
each annual meeting of stockholders; (iii) develop, review,
evaluate and recommend for approval to the Board corporate
governance practices and principles; and (iv) to provide
oversight of the corporate governance affairs of the Board and
the Corporation.
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II.
|
COMMITTEE
MEMBERSHIP AND ORGANIZATION
|
The Committee shall be composed of at least three directors, all
of whom shall satisfy the definition of independent
director under the listing standards of The Nasdaq Stock
Market (Nasdaq) and applicable law. The Committee
members shall be appointed by the Board and may be removed by
the Board in its discretion. The Chairman of the Committee shall
be designated by the Board.
The Committee shall meet as often as its members deem necessary
to perform the Committees responsibilities. The operation
of the Committee is subject to the provisions of the
Corporations Amended and Restated Bylaws, including with
respect to notice of meetings, quorum requirements, action
without a meeting and waiver of notice of meetings. The
Committee may determine such other procedural rules for meeting
and conducting its business, except as otherwise provided in the
Amended and Restated Bylaws or required by applicable law. A
majority of the members shall represent a quorum of the
Committee, and, if a quorum is present, any action approved by
at least a majority of the members present shall represent the
valid action of the Committee.
|
|
IV.
|
COMMITTEE
AUTHORITY, RESPONSIBILITIES AND DUTIES
|
Nominations
The Committee shall have the following authority and
responsibilities:
|
|
|
|
|
Prior to each annual meeting of stockholders, following a
determination by the Board of the number of directors to be
elected at such meeting, (i) the Committee shall identify
individuals qualified to stand for re-election or to become new
members of the Board, consistent with any qualifications,
expertise and characteristics which may have been approved by
the Board or determined by the Committee from time to time;
(ii) the Committee shall evaluate incumbent directors whose
terms are expiring at the meeting and consider their
qualifications to stand for re-election; and (iii) the
Committee shall evaluate nominees for election to the Board
submitted by stockholders in accordance with procedures adopted
by the Committee, the By-laws of the Corporation, and applicable
law. Once the Committee completes its evaluation of the
candidates, the Committee shall submit its recommendations for
director nominees to the Board for approval.
|
|
|
|
In the event of a vacancy on the Board, following a
determination by the Board that such vacancy shall be filled,
the Committee shall identify individuals qualified to fill such
vacancy, consistent with any qualifications, expertise and
characteristics which may have been approved by the Board or
determined by the Committee from time to time. Once the
Committee completes its evaluation of the candidates, the
Committee shall submit its recommendation, for the director
nominee to fill such vacancy, to the Board for approval.
|
B-1
|
|
|
|
|
The Committee shall prioritize, contact, interview and evaluate
all candidates that it has identified a director nominee for an
annual meeting or to fill a vacancy on the Board.
|
|
|
|
Before selecting any nominee for director, the Committee shall
review the candidates availability and willingness to
serve.
|
|
|
|
The Committee shall have the authority, to the extent it deems
necessary or appropriate, to retain any search firm to assist in
identifying and evaluating director candidates and to retain
independent legal counsel and any other advisors. The
Corporation shall provide adequate funding, as determined by the
Committee, for payment of compensation for any advisors retained
by the Committee.
|
|
|
|
The Committee may from time to time delegate duties or
responsibilities to subcommittees of the Committee or to one or
more members as the Committee deems necessary.
|
Corporate Governance
The Committee shall have the following responsibilities and
duties:
|
|
|
|
|
Develop and periodically review corporate governance practices
and principles for the Board and the Corporation.
|
|
|
|
Evaluate the effectiveness of the Board and make recommendations
relating to practices, policies and performance of the Board.
|
|
|
|
Periodically review and assess the structure of the Board and
committee functions and composition, including recommending
committee assignments for directors and Chairs of committees.
|
|
|
|
Review directorships in other public companies by or offered to
directors.
|
|
|
|
Review and revise policies for director tenure and retirement.
|
|
|
|
Review, analyze and report to the Board all relationships of the
directors with the Corporation that could impair their
independence as defined by applicable SEC and Nasdaq rules and
regulations in order to assist the Board with its responsibility
to make an affirmative determination regarding the independence
of directors.
|
|
|
|
Review and consider conflicts of interests regarding Board
members and executive officers and approve related person
transactions pursuant to the Corporations Policy and
Procedures with respect to Agreements and Arrangements between
Directors and the Company and Related Person Transactions.
|
|
|
|
Oversee and coordinate annual self-evaluations of the Board and
its committees.
|
|
|
|
Establish and monitor, as appropriate, director orientation and
recommend and monitor continuing education programs for members
of the Board.
|
General
|
|
|
|
|
The Committee shall make regular reports to the Board with
respect to its activities and propose any necessary action to
the Board.
|
|
|
|
The Committee shall review and reassess the adequacy of this
charter annually and recommend any proposed changes to the Board.
|
|
|
|
The Committee shall annually evaluate its own performance and
provide a report on such evaluation to the Board.
|
B-2
OSI
PHARMACEUTICALS, INC.
COMPENSATION
COMMITTEE CHARTER
(As
amended April 10, 2009)
The Compensation Committee is appointed by the Board of
Directors to review and approve the Corporations
compensation and benefit programs.
The Committee will be composed of at least three directors. All
members of the Committee shall satisfy the definition of
independent under the listing standards of The
Nasdaq Stock Market (Nasdaq). The Committee members
will be appointed by the Board and may be removed by the Board
in its discretion. The Chairman of the Committee will be
designated by the Board. The Committee shall have the authority
to delegate any of its responsibilities to one or more
subcommittees as the Committee may from time to time deem
appropriate. Each such subcommittee shall consist of one or more
members of the Committee. The Committee shall also have the
authority to delegate any of its administrative or other
responsibilities to executive officers or other employees of the
Corporation where such delegation is consistent with applicable
law and Nasdaq listing standards.
III.
MEETINGS
The Committee shall meet as often as its members deem necessary
to perform the Committees responsibilities. The operation
of the Committee is subject to the provisions of the
Corporations Amended and Restated Bylaws, including with
respect to notice of meetings, quorum requirements, action
without a meeting and waiver of notice of meetings. The
Committee may determine such other procedural rules for meeting
and conducting its business, except as otherwise provided in the
Amended and Restated Bylaws or required by applicable law. A
majority of the members shall represent a quorum of the
Committee, and, if a quorum is present, any action approved by
at least a majority of the members present shall represent the
valid action of the Committee.
|
|
IV.
|
COMMITTEE
AUTHORITY AND RESPONSIBILITIES
|
The Committee shall:
|
|
|
|
|
evaluate the performance of the Chief Executive Officer in light
of the Corporations goals and objectives and determine the
Chief Executive Officers compensation based on this
evaluation and such other factors as the Committee shall deem
appropriate;
|
|
|
|
approve all salary, bonus, and long-term incentive awards for
executive officers;
|
|
|
|
approve the aggregate amounts and methodology for determination
of all salary, bonus, and long-term incentive awards for all
employees other than executive officers;
|
|
|
|
review and recommend director compensation plans to the full
Board;
|
|
|
|
review and recommend equity-based compensation plans to the full
Board and approve all grants and awards thereunder;
|
|
|
|
review and approve changes to the Corporations
equity-based compensation plans other than those changes that
require shareholder approval under the plans, the requirements
of the Nasdaq Stock Market
and/or
any
applicable law;
|
|
|
|
review and recommend to the full Board changes to the
Corporations equity-based compensation plans that require
shareholder approval under the plans, the requirements of the
Nasdaq Stock Market
and/or
any
applicable law;
|
C-1
|
|
|
|
|
review and approve changes in the Corporations retirement,
health, welfare and other benefit programs that result in a
material change in costs or the benefit levels provided;
|
|
|
|
administer the Corporations equity-based compensation
plans; and
|
|
|
|
review and discuss the Compensation Discussion and Analysis (the
CD&A) to be included in the Corporations
proxy statement or annual report on
10-K
with
management and, based on such review and discussions,
(i) recommend to the Board that the CD&A be included
in the Corporations proxy statement or annual report on
Form 10-K
and (ii) provide a report to that effect in the
Corporations proxy statement in accordance with applicable
rules and regulations of the Securities and Exchange Commission.
|
The Committee will have the authority, to the extent it deems
necessary or appropriate, to retain independent compensation
consultants and other professional advisors to assist it in
carrying out its responsibilities. The Corporation will provide
for appropriate funding, as determined by the Committee, for
payment of the fees and expenses of any advisors retained by the
Committee.
The Committee will make regular reports to the Board and will
propose any necessary action to the Board. Such reports shall
provide information with respect to any delegation of authority
by the full Committee to a subcommittee, to management, or to
third parties.
The Committee will review and reassess the adequacy of this
charter annually and recommend any proposed changes to the Board
for approval.
The Committee will annually evaluate the Committees own
performance and provide a report on such evaluation to the Board.
C-2
APPENDIX D
OSI PHARMACEUTICALS, INC.
PROXY
ANNUAL MEETING OF STOCKHOLDERS, JUNE 17, 2009
This Proxy Is Solicited on Behalf of OSI Pharmaceuticals, Inc.s Board of Directors
The undersigned hereby appoints Colin Goddard, Ph.D. and Pierre Legault, and each of them
jointly and severally, Proxies, with full power of substitution, to vote, as designated on the
reverse side, all shares of Common Stock of OSI Pharmaceuticals, Inc. (the Corporation) held of
record by the undersigned on April 22, 2009 at the annual meeting of stockholders to be held on
June 17, 2009, or any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES TO SERVE AS
DIRECTORS AND FOR THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS THE CORPORATIONS
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM. The shares represented by this Proxy will be voted
as specified on the reverse side. IF NO DIRECTION IS GIVEN IN THE SPACES PROVIDED ON THE REVERSE
SIDE, THIS PROXY WILL BE VOTED FOR ITEMS 1 AND 2.
(Continued and to be dated and signed on the reverse side.)
BNY MELLON SHAREOWNER SERVICES
P.O. BOX 3550
SOUTH HACKENSACK, NJ 07606-9250
|
|
|
|
Address Change/Comments (Mark the corresponding box on the reverse side)
|
|
|
|
|
|
Ù
FOLD AND DETACH HERE
Ù
You can now access your
OSI Pharmaceuticals, Inc.
account online.
Access your OSI Pharmaceuticals, Inc. stockholder account online via Investor ServiceDirect® (ISD).
The transfer agent for OSI Pharmaceuticals, Inc. now makes it easy and convenient to get current
information on your shareholder account.
|
|
|
|
|
|
|
View account status
|
|
View payment history for dividends
|
|
|
|
View certificate history
|
|
Make address changes
|
|
|
|
View book-entry information
|
|
Obtain a duplicate 1099 tax form
|
|
|
|
|
|
Establish/change your PIN
|
Visit us on the web at http://www.bnymellon.com/shareowner/isd
For Technical Assistance Call 1-877-978-7778 between 9am-7pm
Monday-Friday Eastern Time
****TRY IT OUT****
www.bnymellon.com/shareowner/isd
Investor ServiceDirect®
Available 24 hours per day, 7 days per week
Choose
MLink
SM
for fast, easy and secure 24/7 online access to your future proxy materials,
investment plan statements, tax documents and more. Simply log on to
Investor ServiceDirect
® at
www.bnymellon.com/shareowner/isd
where step-by-step instructions will prompt you through enrollment.
D-1
(Please mark, sign, date and return this proxy in the enclosed postage prepaid envelope)
|
|
|
|
|
|
|
Please mark
your votes as
indicated in
this example
|
|
x
|
|
|
|
|
|
|
|
1. Election of Directors (Term to expire at next
|
|
FOR ALL
|
|
WITHHOLD FOR ALL
|
|
EXCEPTIONS
|
Annual Meeting)
|
|
o
|
|
o
|
|
o
|
Nominees:
01 Robert A. Ingram
02 Colin Goddard, Ph.D.
03 Santo J. Costa
04 Joseph Klein, III
05 Kenneth B. Lee, Jr.
06 Viren Mehta
07 David W. Niemiec
08 Herbert M. Pinedo, M.D., Ph.D.
09 Katharine B. Stevenson
10 John P. White
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the Exceptions box
and write that nominees name in the space provided below.) THIS PROXY WILL BE VOTED FOR EACH
NOMINEE FOR WHOM AUTHORITY TO VOTE IS NOT WITHHELD.
*Exceptions
2.
|
|
PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG LLP as the independent registered public
accounting firm of the Corporation for the fiscal year ending December 31, 2009.
|
|
|
|
|
|
FOR
|
|
AGAINST
|
|
ABSTAIN
|
o
|
|
o
|
|
o
|
3.
|
|
In their discretion, the Proxies are authorized to vote upon such other business as may
properly come before the meeting or any adjournment thereof and matters incident to the
conduct of the meeting.
|
|
|
|
|
|
|
|
Mark here for Address
Change or Comments
SEE REVERSE
|
|
o
|
Please sign exactly as the name appears hereon. When shares are held by joint tenants, both should
sign. When signing as attorney, executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate name by President or other
authorized officer and affix corporate seal. If a partnership, please sign in partnership name by
general partner.
5
FOLD AND DETACH HERE
5
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be
Held on
June 17, 2009. The proxy statement and annual report to security holders are available at
www.proxydocs.com/osip.
OSI Pharmaceuticals, Inc.
D-2
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