Table of Contents
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment
No. 1
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the fiscal year ended December 31, 2009.
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the transition period from to .
Commission File Number 00029815
Allos
Therapeutics, Inc.
(Exact
name of Registrant as specified in its charter)
Delaware
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54-1655029
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(State
or other jurisdiction of
incorporation or organization)
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(I.R.S.
Employer
Identification No.)
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11080 CirclePoint Road, Suite 200
Westminster, Colorado 80020
(303) 426-6262
(Address,
including zip code, and telephone number, including area code, of principal
executive offices)
Securities
registered pursuant to Section 12(b) of the Act:
Common Stock $.001 Par Value
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NASDAQ Stock Market LLC
(NASDAQ Global Market)
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(Title of class)
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(Name of each exchange on which registered)
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Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the
registrant is a well-known seasoned issuer, as defined in Rule 405 of the
Securities Act. Yes
o
No
x
Indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or
Section 15(d) of the Act. Yes
o
No
x
Indicate by check mark
whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes
x
No
o
Indicate by check mark
whether the registrant has submitted electronically and posted on its corporate
Web site, if any, every Interactive Data File required to be submitted and
posted pursuant to Rule 405 of Regulation S-T during the preceding 12
months (or for such shorter period that the registrant was required to submit
and post such files). Yes
o
No
o
Indicate by check mark if
disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the
best of registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
x
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of large accelerated filer, accelerated filer and smaller
reporting company in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
o
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Accelerated filer
x
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Non-accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
|
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|
Indicate by check mark
whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes
o
No
x
The aggregate market value of
common stock held by nonaffiliates of the registrant (based upon the closing
sale price of such shares on the NASDAQ Global Market on June 30, 2009)
was $517,871,691. Shares of the registrants common stock held by each current
executive officer and director and by each stockholder who is known by the
registrant to own 10% or more of the outstanding common stock have been
excluded from this computation in that such persons may be deemed to be
affiliates of the registrant. Share ownership information of certain persons
known by the registrant to own greater than 10% of the outstanding common stock
for purposes of the preceding calculation is based solely on information on
Schedules 13D and 13G, if any, filed with the Commission. This
determination of affiliate status is not necessarily a conclusive determination
for other purposes.
As of February 25, 2010,
there were 104,724,779 shares of the registrants common stock outstanding.
Table of Contents
EXPLANATORY
NOTE:
This
Amendment No. 1 on Form 10-K/A (Amendment No. 1) amends the
registrants Annual Report on Form 10-K for the year ended December 31,
2009, as filed by the registrant on March 1, 2010 (the Report), and is
being filed solely to replace Part III, Item 11.
In addition, we are also
including Exhibits 31.01, 31.02 and 32.01 required by the filing of this Amendment No. 1. Except as otherwise stated herein, no other information
contained in the Report has been updated by this Amendment No. 1. Unless
the context requires otherwise, references in this Amendment No. 1 to Allos,
the Company, we, us, and our refer to Allos Therapeutics, Inc.
ALLOS THERAPEUTICS, INC.
ANNUAL REPORT ON FORM 10-K/A
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009
Amendment No. 1
TABLE OF CONTENTS
Table of
Contents
PART III
ITEM 11.
EXECUTIVE COMPENSATION
Compensation
Discussion & Analysis
This compensation discussion
and analysis provides information regarding the compensation program in place
for the executive officers named in the Summary Compensation Table on
page 15 of this Amendment No. 1 (collectively, the named executive
officers). It includes information regarding the objectives of our
compensation program, our compensation processes and procedures, each element
of compensation that we provide, why we choose these elements, how we determine
the amount of each component to pay, and our compensation decisions for 2009
and the first quarter of 2010. This compensation discussion and analysis should
be read in conjunction with the tables and related discussion beginning on
page 15 of this Amendment No. 1.
Objectives of our Executive Compensation Program
Our executive compensation
program is designed to attract, retain and motivate talented executives capable
of providing the leadership, vision and execution necessary to achieve our
business objectives and create long-term stockholder value. We believe there is
a direct correlation between company performance and leadership talent, and
that executive officers with the requisite experience, qualifications and
values are essential to our success and the success of our stockholders. We
also believe the successful execution of our strategic business objectives
necessitates the retention of our management team and keeping management
focused on business goals. We actively seek to foster a pay-for-performance
environment that aligns the interests of our executive officers with the
creation of stockholder value. To this end, our executive compensation program
is strongly linked to the delivery of long-term returns to our stockholders,
the achievement of short- and long-term strategic business objectives,
individual performance, and the demonstration of competencies that are aligned
with our culture and values and that will contribute to our long-term success.
Role of our Compensation Committee
The Compensation Committee
is responsible for overseeing our compensation policies, plans and programs,
and reviewing and determining the salary, bonuses, equity incentives,
perquisites, severance arrangements and other related benefits paid to our
directors and executive officers. The Compensation Committee also oversees the
administration of our employee benefit plans. The Compensation Committees
charter reflects these various responsibilities, and the Compensation Committee
reviews the charter annually and recommends any appropriate changes or
revisions to the Board for its consideration.
The Compensation Committee,
with the input of management and its outside advisors, develops our
compensation policies, plans and programs by utilizing publicly available
compensation data and subscription compensation survey data for national and
regional companies in the biopharmaceutical industry, with a particular focus
on companies of comparable sizes and stages of development as Allos. The
Compensation Committee believes these companies provide appropriate benchmarks
for our executive compensation program because they have similar organizational
structures and tend to compete with us for executives and other employees.
Based on these data, the
Compensation Committee has implemented a pay-for-performance compensation
program, which ties a substantial portion of executives overall compensation,
in the form of short- and long-term cash and equity incentives, to the
achievement of measurable corporate and individual performance objectives and
the creation of stockholder value. As described in more detail below, our
executive compensation program consists of the following key components:
·
Base salary;
·
Performance-based cash
bonuses;
·
Equity incentives; and
·
Severance and
change-in-control benefits.
The Compensation Committee
has not established any formal policies or guidelines for allocating
compensation between current and long-term incentive compensation, or between
cash and non-cash compensation. However, commensurate with the Companys
philosophy of establishing a link between compensation and corporate
performance, the
1
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Compensation Committee
believes that a significant portion of each executive officers total
compensation opportunity should be performance-based, reflecting both upside
potential and down-side risk.
Compensation Committee Processes and Procedures
Typically, the Compensation
Committee meets at least four times a year, and it also considers and takes
action by written consent. The Compensation Committee meets regularly in
executive session. The agenda for each meeting is usually developed by our
Chief Executive Officer, in consultation with the Chair of the Compensation
Committee. From time to time, various members of management and other employees
as well as outside advisors or consultants may be invited by the Compensation
Committee to make presentations, provide financial or other background
information or advice or otherwise participate in Compensation Committee
meetings. The Chair of the Compensation Committee reports on committee actions
and recommendations at each regularly scheduled meeting of the Board.
Historically, the
Compensation Committee has reviewed and determined any base salary increases,
cash bonuses and equity incentives to be awarded to the Companys executive
officers, and established annual corporate and individual performance
objectives, at one or more meetings held during the first quarter of the year.
However, the Compensation Committee also considers matters related to
individual compensation from time-to-time upon an executives promotion or
other change in job responsibility that occurs outside the Companys annual
performance review and appraisal process, as well as in connection with the
hiring of a new executive officer.
Generally, the Compensation
Committees executive compensation process comprises two related elements: the
establishment of performance objectives and the determination of executive
compensation levels. At the beginning of each year, the Compensation Committee
approves annual performance objectives for the corporation as a whole and for
each individual executive officer (other than the Chief Executive Officer,
whose bonus is tied entirely to the achievement of corporate objectives). The
corporate objectives generally target the achievement of specific sales and
marketing, manufacturing, research and development and corporate development
milestones. The individual objectives focus on contributions that are
consistent with and support the corporate objectives or are otherwise intended
to contribute to the success of the Company. The annual corporate and
individual performance objectives are proposed by management and reviewed and
approved by the Compensation Committee, usually during the first quarter of the
year. The corporate objectives are also subject to review and approval by the
full Board. The Compensation Committee typically performs an interim assessment
of the annual performance objectives in the middle of each year to review
corporate and individual progress, and may, on occasion, make certain
adjustments to the objectives that the committee deems appropriate based on
changing circumstances.
At the conclusion of each
year, the Chief Executive Officer prepares a written performance appraisal and
assigns each executive officer (other than himself) a performance rating for
the year. The performance appraisal evaluates each executive officers level of
performance of his or her core job responsibilities, as well as various skills,
behaviors and competencies that are viewed as important to our ability to build
and maintain a high performance operating culture. The Chief Executive Officer
also evaluates the degree of achievement of the annual corporate and individual
performance objectives and submits his recommendations to the Compensation
Committee for any base salary increases, cash bonuses and/or equity incentive
awards for each executive officer (other than himself). The Chief Executive
Officers recommendations and Compensation Committees determinations are
generally based upon a mix of the following factors:
·
The executives individual
performance for the year;
·
The degree of achievement of
annual corporate and individual performance objectives, as well as any
contributions made with regard to objectives or strategic initiatives not
covered by the formal goal-setting process;
·
Comparisons with market data
for compensation paid to comparable executives of other biopharmaceutical or
biotechnology companies, with a particular focus on companies of similar sizes
and stages of development and/or with which we compete for talented executives;
·
The executives compensation
relative to other executive officers at Allos; and
·
The importance of the
executives continued service with the Company.
In the case of the Chief
Executive Officer, his individual performance appraisal is conducted by the
Compensation Committee, which determines his compensation adjustments and
awards, if any, based on these same factors. The Chief Executive Officer may
not participate in or be present during any deliberations or determinations of
the Compensation
2
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Committee regarding his
compensation. To the extent approved, any base salary increases, cash bonuses
and/or equity incentive awards for the executives, including the Chief
Executive Officer, are implemented during the first calendar quarter of the
year.
With respect to newly hired
executive officers, the Compensation Committee, in consultation with the Chief
Executive Officer, determines the executives compensation package, including
the terms of any employment agreement, relocation arrangements, severance
arrangements or change-in-control protections, based on a variety of subjective
and objective factors, including:
·
The executives particular
qualifications and experience;
·
The competitive recruiting
environment for the executives services;
·
Comparisons to market data
regarding compensation levels for comparable executives of other
biopharmaceutical or biotechnology companies of similar sizes and stages of
development and/or with which we compete for talented executives;
·
The executives anticipated
role and responsibilities with the Company; and
·
The executives past
compensation history.
For all executives, as part
of its deliberations, the Compensation Committee reviews a tally sheet setting
forth each component of the executives proposed compensation package,
including base salary, bonus potential, the value to the executive and cost to
the Company of all equity incentives, perquisites and other personal benefits,
the executives realized and unrealized equity gains, and the Companys
projected payout obligations under several severance and change-in-control
scenarios, to ensure that each executives total compensation remains in line
with the Companys overall compensation philosophy. The Compensation Committee
may also review and consider, as appropriate, materials such as financial
reports and projections, operational data, tax and accounting information,
company stock performance data, analyses of historical executive compensation
levels and current company-wide compensation levels, and recommendations of the
Compensation Committees compensation consultant.
Under its charter, the
Compensation Committee may form and delegate authority to subcommittees, as
appropriate, including, but not limited to, a subcommittee composed of one or
more members of the Board, to grant stock awards under the Companys equity
incentive plans to persons who are not executive officers of the Company. In February 2007,
the Compensation Committee adopted an Equity Compensation Awards Policy to
define the specific practices and procedures to be followed in connection with
the granting of equity awards. Pursuant to the Equity Compensation Awards
Policy, as amended in February 2009, the Compensation Committee delegated
authority to the Chief Executive Officer to grant stock options and restricted
stock units to newly hired employees who are not executive officers in
connection with such employees commencement of employment, within specific
guidelines and limitations approved by the Compensation Committee. The
authority to approve all other stock awards, including all stock options or
other equity grants to the Companys executive officers, and all annual or
promotional grants to the Companys other employees, remains vested in the
Compensation Committee.
Role of our Compensation Consultant
The Compensation Committee
believes that it is important when making compensation decisions to be informed
as to the compensation practices of comparable publicly-held companies. To this
end, in connection with the 2009 review process, the Compensation Committee
engaged Compensia, Inc., an independent compensation consulting firm, to
review the structure and effectiveness of the Companys executive compensation
program. As part of its engagement, Compensia was requested by the Compensation
Committee to develop a peer group of comparable companies in the life sciences
industry, with a focus on late-stage and commercial oncology companies, and
provide an assessment of the competitiveness of our 2008 executive compensation
program relative to that peer group.
The 2009 peer group, which
was reviewed and approved by the Compensation Committee, was comprised of eight
development-stage companies of similar size and scope to Allos and eight next-stage
companies that had brought at least one product to market and were generating
revenue based on the sale of that product. The Compensation Committee felt that
the use of a blended peer group that was comprised of one-half
development-stage companies and one-half next-stage companies was appropriate
given the then-current status of the FOLOTYN development program and because the
competitive recruiting environment for Messrs. Berns and Caruso and
Dr. Cagnoni (our former Senior Vice President, Chief
3
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Medical Officer) was
composed largely of next-stage companies. The blended peer group was also
intended to allow Compensia to benchmark our executive compensation practices
against a broad spectrum of the competitive markets for executive talent.
Compensia compared all elements of total direct compensation (i.e., base
salary, annual bonus and equity incentives) for our executive officers to
compensation data compiled from the most recent proxy statements for the peer
group. Compensia also reviewed and provided guidance to the Compensation
Committee regarding the Companys equity compensation strategy, including the
use of restricted stock units in the Companys 2009 annual grant program, and
the Companys non-executive equity grant guidelines.
The peer group for 2009
included the following companies:
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Ariad
Pharmaceuticals, Inc.
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·
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Dendreon Corporation
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·
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OSI
Pharmaceuticals, Inc.
|
|
·
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Array BioPharma Inc.
|
·
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Geron Corporation
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·
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Regeneron
Pharmaceuticals, Inc.
|
|
·
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Alexion
Pharmaceuticals, Inc.
|
·
|
Incyte Corporation
|
·
|
Rigel
Pharmaceuticals, Inc.
|
|
·
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BioMarin
Pharmaceutical Inc.
|
·
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Maxygen, Inc.
|
·
|
Seattle
Genetics, Inc.
|
|
·
|
Cubist
Pharmaceuticals, Inc.
|
·
|
Onyx
Pharmaceuticals, Inc.
|
·
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ZymoGenetics, Inc.
|
|
·
|
CV Therapeutics, Inc.
|
|
|
|
|
Compensias findings,
observations and recommendations were presented to the Compensation Committee
in December 2008 and February 2009 and were considered by the
Compensation Committee, among other factors, in setting 2009 executive
compensation.
For 2010, the Compensation
Committee retained Compensia to update our peer group and provide an assessment
of the competitiveness of our 2009 executive compensation program relative to
the updated peer group. The updated peer group, which was reviewed and approved
by the Compensation Committee, was comprised of nine development-stage
companies and nine next-stage companies, and was intended to allow Compensia to
benchmark our executive compensation practices against a broad spectrum of the
competitive markets for executive talent. The Compensation Committee felt that
the use of a blended peer group that was comprised of one-half
development-stage companies and one-half next-stage companies was appropriate
given the recent approval by the U.S. Food and Drug Administration of FOLOTYN for
the treatment of patients with relapsed or refractory peripheral T-cell
lymphoma and because the competitive recruiting environment for
Messrs. Berns and Caruso, as well as the expected successor to
Dr. Cagnoni as Chief Medical Officer, is composed primarily of next-stage
companies. Once again, Compensia compared all elements of total direct
compensation (i.e., base salary, annual bonus and equity incentives) for
our executive officers to compensation data compiled from the most recent proxy
statements for the updated peer group. As part of its assessment, Compensia
also reviewed and provided guidance regarding the Companys equity compensation
strategy, including increasing the value of restricted stock units in the
Companys 2010 annual grant program to increase retention incentives for the
Companys executives and other officers.
The updated peer group for
2010 included the following companies:
|
·
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Ariad
Pharmaceuticals, Inc.
|
·
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Exelixis, Inc.
|
·
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Onyx
Pharmaceuticals, Inc.
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·
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Acorda
Therapeutics Inc.
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·
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Facet Biotech Corporation
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·
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OSI
Pharmaceuticals, Inc.
|
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·
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BioMarin
Pharmaceutical Inc.
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·
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Genomic Health, Inc.
|
·
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Regeneron
Pharmaceuticals, Inc.
|
|
·
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Cytokinetics, Inc.
|
·
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Immunomedics, Inc.
|
·
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Seattle
Genetics, Inc.
|
|
·
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Dendreon Corporation
|
·
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Incyte Corporation
|
·
|
Spectrum
Pharmaceuticals, Inc.
|
|
·
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Dyax Corporation
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·
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Intermune, Inc.
|
·
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ZymoGenetics, Inc.
|
Changes from the Companys
2009 peer group were as follows:
Companies
added for 2010
|
|
Companies dropped for 2010
|
·
Acorda
Therapeutics Inc.
|
|
·
Array
BioPharma Inc.
|
·
Cytokinetics, Inc.
|
|
·
Alexion
Pharmaceuticals, Inc.
|
·
Dyax
Corporation
|
|
·
Cubist
Pharmaceuticals, Inc.
|
·
Exelixis, Inc.
|
|
·
CV
Therapeutics, Inc.
|
·
Facet
Biotech Corporation
|
|
·
Geron
Corporation
|
·
Genomic
Health, Inc.
|
|
·
Maxygen, Inc.
|
·
Immunomedics, Inc.
|
|
·
Rigel
Pharmaceuticals, Inc.
|
·
Intermune, Inc.
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·
Spectrum
Pharmaceuticals, Inc.
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|
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Compensias findings,
observations and recommendations were presented to the Compensation Committee
in February 2010 and were considered by the Compensation Committee, among
other factors, in setting 2010 executive compensation.
Compensation Benchmarking
The Compensation Committee
recognizes that biopharmaceutical companies, such as Allos, often have senior
management teams that are differentiated significantly by industry experience,
leadership skills and performance. As a result, the point of reference for
market practices can vary for individual members of the executive team within
the same company. The Compensation Committee believes that the use of a blended
peer group as described above allows us to benchmark our executive officers
against appropriate reference points in the market.
For each element of
compensation, our strategy has been to examine peer group compensation
practices and target our executive compensation between the 25
th
and 75
th
percentile of the relevant blended peer
group based on the specific industry experience, leadership skills and
performance of our executive officers. In addition, under our pay for
performance philosophy, the Compensation Committee places a great emphasis on
variable, or at-risk compensation, which helps calibrate actual compensation to
performance since executives do not receive value if the Company is not
performing well.
The Compensation Committee
realizes that benchmarking our executive compensation program against
compensation earned at comparable companies may not always be appropriate as a
stand-alone tool for setting compensation due to some aspects of our business
and objectives that may be unique to Allos. However, the Compensation Committee
generally believes that gathering this information is an important part of its
decision-making process with respect to our executive compensation program. In
addition to the compensation benchmarking data provided by its consultants, the
Compensation Committee has historically taken into account input from other
sources, including input from other members of the Board of Directors and
commercially available survey data relating to compensation practices for the
pharmaceutical and biotechnology sectors.
Elements of Executive Compensation Program
Our executive compensation
program consists of the following key components:
·
Base salary;
·
Performance-based cash
bonuses;
·
Equity incentives; and
·
Severance and
change-in-control benefits.
The Compensation Committee
believes that these four components are the most effective combination in
motivating and retaining talented executive officers at this stage in our
development. The Compensation Committee does not have any specific targets for
the percentage of compensation represented by each component, although it seeks
to maintain an appropriate balance between fixed and performance-based
compensation, with a significant percentage of total compensation allocated to
long-term equity incentives. Cash bonuses and equity incentives are considered
performance-based compensation, while base salary is considered fixed,
although performance is considered when determining annual increases. For 2009,
the named executive officers average compensation was approximately 30% fixed
and 70% performance based, with approximately 55% of total compensation
allocated to long-term equity incentives. As a general matter, subject only to
limited exceptions relating to the relocation of executive officers, we do not
provide perquisites or benefits for our named executive officers on a basis
that is different from other eligible employees.
Base Salary
Base salary is the primary
fixed component of our executive compensation program. We use base salary to
compensate executives for services rendered during the fiscal year, and to
ensure that we remain competitive in attracting and retaining executive talent.
Base salaries are generally set within a range of salaries paid to industry
peers with comparable qualifications, experience, responsibilities and
performance at similar companies.
For each newly hired
executive, the Compensation Committee determines base salary on a case-by-case
basis by evaluating a number of factors, including the executives
qualifications and experience, the competitive recruiting environment for his
or her services, the executives anticipated role and responsibilities with the
Company, the executives
5
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past compensation history,
and comparisons to market data regarding compensation levels for comparable
executives of other biotechnology companies of similar sizes and stages of
development or with which we compete for talented executives.
For continuing executives,
the Compensation Committee reviews base salaries annually as part of our
performance review and appraisal process. Base salary increases, if any, are
based primarily on each executives job performance for the prior year, as well
as a review of competitive market data, the executives compensation relative
to other executive officers, and the importance of retaining the executives
services with the Company. Annual salary adjustments are effective March 1
of each year. The Compensation Committee may also review an executives base
salary from time-to-time upon a promotion or other change in job responsibility
that occurs outside of our annual performance review and appraisal process.
Performance-Based
Cash Bonuses
Our performance-based cash
bonus program is designed to promote the interests of the Company and its
stockholders by providing executive officers with the opportunity to earn
annual cash bonuses based upon the achievement of pre-specified corporate and
individual performance objectives, and to assist the Company in attracting and
retaining executive talent.
At the beginning of each
year, we establish annual performance objectives for the corporation as a whole
and for each executive officer (other than our Chief Executive Officer, whose
bonus is tied entirely to the achievement of corporate objectives). The corporate
objectives generally target the achievement of specific sales and marketing,
manufacturing, research and development and corporate development milestones
that are considered to be critical to the achievement of our long-term
strategic goals. Each category of corporate objectives is assigned a weighted
number so that the sum of all the weighted objectives equals 100%. The
individual objectives for each executive officer focus on contributions that
are consistent with and support the corporate objectives or are otherwise
intended to contribute to the success of the Company. As with the corporate
objectives, each category of individual objectives is assigned a weighted
number so that the sum of all the weighted objectives equals 100%. The annual
corporate and individual performance objectives are proposed by management and
reviewed and approved by the Compensation Committee, typically during the first
quarter of the year. The corporate objectives are also subject to review and
approval by the full Board. At this time, the Compensation Committee also
approves each executive officers bonus target for the year based on its
analysis of relevant market data, and determines the relative weighting of each
executives bonus between corporate and individual objectives.
The Compensation Committee
typically performs an interim assessment of the annual performance objectives
in the middle of each year to review corporate and individual progress, and
may, on occasion, make certain adjustments to the objectives that the Committee
deems appropriate based on changing circumstances. At the conclusion of each
year, the Chief Executive Officer evaluates the degree of achievement of each
category of corporate and individual performance objectives and assigns a
performance multiplier which may range from 0% to 150%. The performance
multipliers are then applied to the weighting assigned to each category of
objectives to determine the categorys contribution to the overall corporate or
individual bonus percentages, as applicable. For example, for 2009, the
corporate research and development objectives were assigned a 30% weighting and
a 116% performance multiplier, resulting in a 34.75% contribution to the
overall corporate bonus percentage. Then, all the contributions to the overall
corporate and individual bonus percentages are added together to determine the
final corporate bonus percentage, which applies to all employees including the
executive officers, and each executive officers individual bonus percentage.
The final bonus percentages are then applied to the relative weighting between
corporate and individual objectives for each executive officer and multiplied
by the executives bonus target to determine his or her final bonus
recommendation. For illustration purposes, the following table demonstrates the
2009 bonus award calculation for Mr. Bennett based on the following
assumptions: $234,865 in actual base salary earned; 25% bonus target weighted
60% to the achievement of corporate objectives and 40% to the achievement of
individual objectives; and corporate and individual performance multipliers of
113.50% and 115.00%, respectively.
Bonus
Component
|
|
Target Bonus
Weighting (%)
|
|
Target Bonus
Opportunity ($)(1)
|
|
Actual Bonus
Percentage
Attained (%)
|
|
Actual Bonus
Payment ($)
|
|
Corporate
|
|
60
|
%
|
$
|
35,230
|
|
113.50
|
%
|
$
|
39,986
|
|
Individual
|
|
40
|
%
|
$
|
23,487
|
|
115.00
|
%
|
$
|
27,009
|
|
Total
|
|
100
|
%
|
$
|
58,716
|
|
|
|
$
|
66,995
|
|
(1)
Bonus awards are calculated
based on actual base salary earned during the applicable bonus year. Annual salary adjustments are effective March 1
of each year.
After the Chief Executive
Officer formulates his bonus recommendations, he submits them to the
Compensation Committee, which determines the final performance multipliers and
bonus payments, if any, for each executive officer. The Company
6
Table of Contents
must generally achieve at
least 75% of its weighed corporate objectives for the year in order for any
bonuses to be paid, although the Compensation Committee may determine to grant
a bonus even though certain corporate or individual performance objectives are
not met. If the Compensation Committee determines that corporate or individual
performance for the year exceeded objectives or was excellent in view of
prevailing conditions, the Compensation Committee may approve corporate or
individual performance multipliers, as the case may be, up to 150%. The
Compensation Committee also retains the authority, in its discretion, to
identify any unplanned achievements that have been accomplished and to approve
adjustments to an executive officers bonus award. Bonuses are generally paid
in March of each year for services rendered during the prior fiscal year.
Equity
Incentives
Equity incentives represent
the largest at-risk component of our executive compensation program. Our equity
incentives are designed to (i) align the interests of our executive
officers with those of our stockholders by creating an incentive for our
executive officers to maximize stockholder value through the grant of stock
options and (ii) to encourage our executive officers to remain employed
with us despite a competitive labor market through the grant of time-vesting
restricted stock.
Historically, we have
granted stock options and shares of restricted stock or restricted stock units
to newly-hired executive officers on their first day of employment with us. We
have also granted stock options and, beginning in 2009, restricted stock units
to continuing executive officers once a year as part of our annual performance
review and appraisal process. The annual stock options and restricted stock
unit awards are granted as a reward for past individual and corporate
performance and as an incentive for future performance. The restricted stock
units are also intended to promote employee retention as the Compensation
Committee believes that the successful execution of our business strategy
necessitates keeping our management team in place and focused on business
goals. In addition, there is a trend among our peer group and the
biopharmaceutical industry in general toward the use of full value shares, and
the Compensation Committee believes the use of restricted stock units are
appropriate to maintain a competitive compensation program.
All stock options are
granted with a 10-year term and an exercise price equal to 100% of the fair
market value of our common stock on the date of grant. The stock options
generally vest over a four-year period, with 25% of the options vesting one
year after the date of grant, and the remaining 75% of the options vesting in
equal monthly installments thereafter over the next three years, subject to the
executives continued employment with us through such vesting dates. The shares
of restricted stock and restricted stock units vest in equal installments on
each of the first four anniversaries of the date of grant, subject to the
executives continued employment with us through such vesting dates.
The Compensation Committee
approves all equity incentive awards for our executive officers. New-hire
equity awards are either approved by the Compensation Committee, at regularly
scheduled meetings or by unanimous written consent, or by our Chief Executive
Officer in accordance with our Equity Compensation Awards Policy. The
Compensation Committee approves annual equity grants at its February meeting,
the date of which is generally set approximately one year in advance. The
Compensation Committee selected the February meeting as the date to
approve annual equity grants because it coincides with the Compensation
Committees review of prior year corporate and individual performance and the
approval of other executive compensation decisions (e.g., base salary
increases and bonus determinations). Grants approved during scheduled meetings
become effective and are priced as of the date of approval or a predetermined
future date (for example, new hire grants are effective as of the later of the
date of approval or the newly-hired executives start date). Grants approved by
unanimous written consent become effective and are priced as of the date the
last signature is obtained or as of a predetermined future date. The
Compensation Committee has not granted, nor does it intend to grant, equity
compensation awards to executive officers in anticipation of the release of
material nonpublic information that is likely to result in changes to the price
of our common stock, such as a significant positive or negative clinical trial
result. Similarly, the Compensation Committee has not timed, nor does it intend
in the future to time, the release of material nonpublic information based on
equity award grant dates. Also, because equity compensation awards typically
vest over a four-year period (and, with respect to options, with a one-year cliff
followed by monthly vesting thereafter), the value to recipients of any
immediate increase in the price of our common stock following a grant will be
attenuated.
The Compensation Committee
determines the number of stock options, shares of restricted stock and/or
restricted stock units to award to a newly-hired executive officer using the
same factors described above that are considered in determining the base
salaries of newly-hired executive officers.
The Compensation Committee determines the number of stock options and
restricted stock units to be awarded to continuing executives based on a
variety of factors, including its review of competitive market data, its
assessment of each executive officers individual performance and expected
future contribution, a review of each executives existing equity incentive
awards, and the importance of the executives continued service with the
Company.
7
Table of
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Severance
and Change-in-Control Benefits
We enter into employment
agreements with our executives in select cases, generally when it is necessary
to secure the services of a newly hired executive. We have entered into
employment agreements with each of Messrs. Berns, Caruso and Graboyes and
Dr. Cagnoni, each of which were amended and restated in December 2007,
as well as certain other officers, in connection with their commencement of
employment with the Company. In addition, we entered into an employment
agreement with Mr. Clark in June 2009 in order to retain and assure
the Company of his continued services as Vice President, Finance and Treasurer.
These agreements provide for severance compensation to be paid if the officers
are terminated under certain conditions, such as in connection with a
change-in-control of the Company or a termination without cause by us, each as
defined in the agreements. In addition, the employment agreements with each of
Messrs. Berns and Caruso and Dr. Cagnoni provide that if it is
determined that any payment or distribution by the Company to such person to be
made in connection with a change-in-control of the Company would be subject to
the excise tax imposed by Section 4999 of the Code, such person will be
entitled to receive an additional payment or gross up to offset the economic
impact of such excise tax. The terms of such employment agreements, as amended,
including the severance compensation payable thereunder, are described in more
detail beginning on page 20 of this Amendment No. 1 under the heading
Employment, Severance and Change-in-Control Agreements.
In our experience,
post-termination protection for executive officers is common among our peer
group, and the Compensation Committee believes that providing this protection
is essential to our ability to attract and retain talented executives capable
of providing the leadership, vision and execution necessary to achieve our
business objectives. In addition, the employment agreements and the related
post-termination compensation provisions are designed to meet the following
objectives:
·
Change-in-control:
As
part of our normal course of business, we engage in discussions with other
pharmaceutical companies about possible collaborations, licensing and/or other
ways in which the companies may work together to further our respective long-term
objectives. In addition, many larger established pharmaceutical companies
consider companies at similar stages of development to ours as potential
acquisition targets. In certain scenarios, the potential for a merger or being
acquired may be in the best interests of our stockholders. We provide
post-termination compensation if an officer is terminated as a result of a
change-in-control transaction to promote the ability of our officers to act in
the best interests of our stockholders even though they could be terminated as
a result of the transaction.
·
Termination
without Cause:
In certain instances, if we terminate
the employment of an officer without cause or the officer resigns for good
reason, each as defined in the applicable agreement, we are obligated to pay
the officers certain severance benefits under their employment agreements. We
believe this is appropriate because the terminated officer is bound by
confidentiality and non-competition provisions covering one year after
termination and because we and the officer have a mutually agreed-to severance
package that is in place prior to any termination event. This provides us with
more flexibility to make a change in senior management if such a change is in
our and our stockholders best interest.
We have also adopted a
broad-based Severance Benefit Plan and related Change of Control Severance
Benefit Schedule that provides for severance compensation to all officers and
employees of the Company with whom we do not have employment agreements, including
Mr. Bennett, in the event such individuals are terminated in connection
with a change-in-control. The Severance Benefit Plan and related Change of
Control Severance Benefit Schedule is designed to meet the same objectives
discussed above with respect to the change-in-control protection provided to
Messrs. Berns, Caruso, Clark and Graboyes and Dr. Cagnoni under their
employment agreements with the Company. The Severance Benefit Plan and related
Change of Control Severance Benefit Schedule is described in more detail on
page 23 of this Amendment No. 1 under the heading Severance and
Change-in-Control Arrangements.
In addition, our equity
incentive plans have provisions regarding vesting following a
change-in-control, as defined in those plans.
Perquisites
Perquisites and other
personal benefits are not factored into our executive compensation program. We
prefer to compensate executive officers using a mix of current, short- and
long-term compensation with an emphasis on performance and do not believe that
providing an executive perquisite program is consistent with our overall
compensation philosophy. We typically provide perquisites and other personal
benefits to executive officers on an exception-only basis, and they are
generally limited to executive relocation assistance and temporary commuting
and living expenses.
8
Table of
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Employee
Stock Purchase Plan
We have an Employee Stock
Purchase Plan, or ESPP, in which all eligible employees, including our
executive officers, may elect to participate. Under the ESPP, eligible
employees can choose to have up to 10% of their annual base earnings withheld
to purchase shares of our common stock during each offering period. The
purchase price of the common stock is 85% percent of the lower of the fair
market value of a share of common stock on the first day of the offering or the
fair market value of a share of common stock on the last day of the offering
period. Each offering is for a period of six months beginning on January 1
and July 1 of each year.
Indemnification
Agreements
We enter into
indemnification agreements with each of our directors and executive officers.
These indemnification agreements provide, among other things, that we will
indemnify our directors and executive officers for certain expenses, including
attorneys fees, judgments, fines and settlement amounts, incurred by any such
person in any action or proceeding by reason of their position as a director,
officer, employee, agent or fiduciary of the Company, any subsidiary of the
Company or any other company or enterprise that such executive officer or
director serves at the Companys request. We believe that indemnification
agreements are necessary to attract and retain qualified persons as directors
and officers.
Other
Benefits
We maintain health, dental
and vision insurance plans for the benefit of all eligible employees, including
our executive officers. Each of these benefit plans requires the employee to
pay a portion of the premium, and we pay the remainder of the premiums. These
benefits are offered on the same basis to all employees. We also maintain a 401(k) retirement
savings plan that is available to all eligible employees. Under the 401(k) plan,
we match 50% of each employees contribution up to a maximum of $5,000 per
year. Executives are eligible to participate in the 401(k) plan up to
ERISA limits. No supplementary participation is available to the executives.
Life, accidental death and dismemberment, short- and long-term disability
insurance coverage, and wellness programs are also offered to all eligible
employees and premiums are paid in full by the Company. Other voluntary
benefits, such as supplemental long-term disability insurance coverage and
supplemental life insurance, are also made available and paid for by the
employees. The above benefits are available to our executive officers on the
same basis as all other eligible employees.
2009 and 2010 Executive Compensation Determinations
The key compensation
determinations for Mr. Berns and the other named executive officers during
2009 and through March 31, 2010 were as follows:
Paul L.
BernsPresident and Chief Executive Officer
For fiscal 2009,
Mr. Berns volunteered to forego any increases to his base salary or bonus
target as a result of the prevailing economic environment. As a result, his
2009 base salary remained at $500,800 and his 2009 bonus target remained at 60%
of base salary, weighted 100% to the achievement of corporate objectives. For
2009, the Compensation Committee determined that the Company successfully
achieved or exceeded its Board-approved corporate objectives. As a result, the Compensation Committee
approved a corporate bonus percentage of 113.375% of target for the Companys
corporate objectives. Accordingly, Mr. Berns was awarded a cash bonus of
$340,700 (which was determined and paid in 2010), representing a total payout
of 113.375% of his 2009 bonus target. The table below summarizes the Companys
corporate objective categories and target performance for 2009, as well as the
relative weightings and performance multipliers approved by the Compensation
Committee for each category:
9
Table of Contents
Corporate Objective Category
|
|
Target Performance
|
|
2009
Weighting
(A)
|
|
2009
Acheivement
(B)
|
|
Contribution
to Overall
Corporate
Bonus
Percentage
(A x B)
|
|
Research & Development
|
|
Complete
PROPEL and obtain FDA approval
|
|
30
|
%
|
116
|
%
|
34.750
|
%
|
|
|
Develop
hematologic malignancies portfolio
|
|
|
|
|
|
|
|
|
|
Develop
solid tumor portfolio
|
|
|
|
|
|
|
|
|
|
Medical
affairs initatives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
Complete
priority market research
|
|
25
|
%
|
125
|
%
|
31.250
|
%
|
|
|
Implement
FOLOTYN launch plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing
|
|
Ensure
US commercial product availability
|
|
15
|
%
|
117
|
%
|
17.500
|
%
|
|
|
Qualify
global commercial drug product supplier
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate resourcing and controls
|
|
Raise
capital per strategic financing plan
|
|
15
|
%
|
103
|
%
|
15.500
|
%
|
|
|
Execute
staffing plan
|
|
|
|
|
|
|
|
|
|
Develop
and implement corporate compliance program
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate development
|
|
Establish
global registration strategies and commercial positioning
|
|
15
|
%
|
96
|
%
|
14.375
|
%
|
|
|
Establish
ex-US partnering opportunities for Board review
|
|
|
|
|
|
|
|
|
|
Develop
and evaluate in-licensing and M&A opportunities to support 5-year
strategic plan
|
|
|
|
|
|
|
|
|
|
Execute
IP lifecycle development opportunities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CORPORATE BONUS PERCENTAGE (1):
|
|
|
|
|
|
113.375
|
%
|
(1)
The Corporate Bonus
Percentage approved by the Compensation Committee applies to all of our
employees (including the named executive officers), except that the weighting
of corporate and individual performance varies by employee level.
Highlights of our 2009
corporate achievements considered by the Compensation Committee include the
following:
·
Research
and development:
In determining that we exceeded our research and
development objectives, the Compensation Committee considered the successful
completion of our pivotal PROPEL trial, the preparation and submission of our
new drug application for FOLOTYN, our receipt of a positive recommendation from
the Oncologic Drugs Advisory Committee, and our receipt of accelerated approval
from the U.S. Food and Drug Administration to market FOLOTYN for the treatment
of patients with relapsed or refractory peripheral T-cell lymphoma, or PTCL.
The Compensation Committee also noted our progress with our research and
development program for FOLOTYN in other hematologic malignancies and solid
tumors, including the completion of certain patient enrollment and study
conduct objectives relating to our Phase 1 study of FOLOTYN in patients
with cutaneous T-cell lymphoma, our Phase 1/2a study of FOLOTYN plus
gemcitabine in patients with non-Hodgkins lymphoma, our Phase 2b study of
FOLOTYN in patients with non-small cell lung cancer, and our Phase 2 study
of FOLOTYN in patients with advanced or metastatic relapsed transitional cell
carcinoma of the urinary bladder. With respect to our medical affairs objectives,
we established a PTCL medical information call center and web portal and
launched COMPLETE, a global observational study designed to enroll patients
with newly-diagnosed PTCL and obtain data regarding longitudinal treatment
patterns and outcomes. We also published or presented clinical data from
several studies and established a research agreement with the National
Comprehensive Cancer Network to support the development, initiation,
administration and completion of an NCCN-sponsored research program involving FOLOTYN. Based on these accomplishments, the
Compensation Committee determined that we achieved 116% of the 30% weighting
assigned to our research and development objectives, resulting in a 34.750%
10
Table of Contents
contribution to the overall
corporate bonus percentage.
·
Commercial:
We achieved or exceeded our commercial objectives by completing
priority market research and executing our brand launch plan in support of the
commercialization of FOLOTYN for patients with relapsed or refractory PTCL. We
completed qualitative and quantitative market research in the areas of pricing,
reimbursement and key opinion leadership. With respect to our brand launch
plan, we completed customer segmentation, targeting and sales force alignment,
developed and implemented our sales training program, and established our
commercial supply chain. We also established our FOLOTYN brand positioning, key
messages and pricing, and secured approval of our initial educational and
promotional materials from the FDAs Division of Drug Marketing, Advertising
and Communications. In addition, we established the Allos Support for Assisting
Patients, or ASAP program, to facilitate access to FOLOTYN by providing
reimbursement resources and support to patients and their healthcare provides,
and we submitted applications to the Centers for Medicare and Medicaid Services
for permanent reimbursement codes. FOLOTYN was also added to the National
Comprehensive Cancer Networks Clinical Practice Guidelines in Oncology, which
is recognized by the Centers for Medicare and Medicaid Services and private
payers as a mandated reference for oncology coverage policies. The Compensation
Committee also noted that we executed our trade launch and generated $4.9
million in gross product sales of FOLOTYN to distributors in the fourth quarter
of 2009. Based on these accomplishments,
the Compensation Committee determined that we achieved 125% of the 25%
weighting assigned to our commercial objectives, resulting in a 31.250%
contribution to the overall corporate bonus percentage.
·
Manufacturing:
We achieved or exceeded our manufacturing objectives by successfully
validating one of our third-party drug product suppliers, releasing our drug
substance and drug product validation lots to commercial supply, establishing
supply agreements with additional third-party suppliers of drug substance and
drug product, and extending our commercial drug product shelf life to 24
months. We also successfully qualified our new world-wide drug product supplier
and completed the required validation runs. Based on these accomplishments, the
Compensation Committee determined that we achieved 117% of the 15% weighting
assigned to our manufacturing objectives, resulting in a 17.500% contribution
to the overall corporate bonus percentage.
·
Corporate
resourcing and controls.
We achieved or exceeded our corporate
resourcing and controls objectives. We executed our strategic financing plan by
completing two public offerings of common stock in April and October 2009,
which resulted in aggregate net proceeds of approximately $140 million to
fund the commercialization of FOLOTYN for patients with relapsed or refractory
PTCL and the continued preclinical research and clinical development of FOLOTYN
for other indications. We also executed our staffing plan by hiring a vice
president of sales, vice president of marketing, senior director of managed
care, five regional business directors, over 40 clinical sales specialists, a
director of medical affairs, and five medical science liaisons, while achieving
over $2.1 million in recruiting cost savings relative to our 2009 budget. In
addition, we developed and implemented a comprehensive corporate compliance
program, including a revised code of business conduct and ethics, an employee
compliance manual, federal government price reporting policies, and other
commercial and medical affairs policies and procedures. Based on these
accomplishments, the Compensation Committee determined that we achieved 103% of
the 15% weighting assigned to our corporate resourcing and controls objectives,
resulting in a 15.500% contribution to the overall corporate bonus percentage.
·
Corporate
development:
We achieved substantially all of our corporate
development objectives, including the completion of various objectives relating
to the development, implementation and execution of our corporate growth
strategy and ex-U.S. partnering strategy for FOLOTYN. We established
registration strategies and commercial positioning for FOLOTYN in Europe and
Japan, and entered into an agreement with Idis, a U.K.-based global company, to
manage a named patient program for FOLOTYN outside the United States. We also
advanced our intellectual property estate for FOLOTYN, including the issuance
of a U.S. patent for the use of FOLOTYN for the treatment T-cell lymphoma.
Based on these accomplishments, the Compensation Committee determined that we
achieved 96% of the 15% weighting assigned to our corporate development
objectives, resulting in a 14.375% contribution to the overall corporate bonus
percentage.
In February 2009,
Mr. Berns was awarded a stock option to purchase 280,000 shares of common
stock at an exercise price of $6.40 per share, the fair market value of our
common stock on the date of grant, and 46,667 restricted stock units. As was
the case for all named executive officers, the 2009 stock option and restricted
stock unit grants were awarded both as a reward for 2008 individual and
corporate performance and as an incentive for future performance. Additionally,
the restricted stock units were intended to promote employee retention in light
of the current macroeconomic environment, where successful Company performance
may not necessarily be reflected in the Companys stock price.
11
Table of Contents
For fiscal 2010,
Mr. Berns base salary was set at $550,000, representing a 10% increase
from his 2009 base salary. Mr. Berns 2010 bonus target was increased from
60% of base salary to 75% of base salary, weighted 100% to the achievement of
corporate objectives. Based on its review of cash compensation practices for
chief executive officers at companies included in the Companys 2010 peer
group, it was determined that Mr. Berns annual cash compensation was
inconsistent with the market data. Thus, the increase in Mr. Berns base
salary and bonus target were intended to address Mr. Berns below-market
cash compensation relative to the Companys 2010 peer group as well as his
excellent performance in 2009. As was the case for all named executive
officers, the increase in Mr. Berns 2010 bonus target was also intended
to enhance the Companys focus on performance-based cash compensation as a
result of the Companys transition from a development-stage to commercial-stage
pharmaceutical company. This decision was based, in part, on the Compensation
Committees review of short-term incentive practices for the Companys 2010
peer group, which demonstrated that commercial-stage pharmaceutical companies
generally have higher target bonus percentages and a greater focus on financial
performance metrics than development-stage companies. In February 2010,
Mr. Berns was awarded a stock option to purchase 170,000 shares of common
stock at an exercise price of $7.56 per share, the fair market value of our
common stock on the date of grant, and 100,000 restricted stock units. As
was the case in 2009, all named executive officers were awarded the 2010 stock
option and restricted stock unit grants as a reward for 2009 individual and
corporate performance and as an incentive for future performance. Additionally,
as in 2009, the restricted stock units were intended to promote employee
retention in light of the current macroeconomic environment, where successful
Company performance may not necessarily be reflected in the Companys stock
price.
Mr. Berns does not
receive separate compensation for serving as a member of the Board.
Bruce K.
BennettVice President, Pharmaceutical Operations
For fiscal 2009,
Mr. Bennetts base salary was set at $235,800, representing a merit
increase of 2.5% from his 2008 base salary. Mr. Bennetts 2009 bonus
target was set at 25% of base salary, weighted 60% to the achievement of
corporate objectives and 40% to the achievement of individual objectives. For
2009, the Compensation Committee approved a corporate bonus percentage of
113.375% of target for the Companys corporate objectives (as described above
for Mr. Berns) and an individual bonus percentage of 115.000% of target
for Mr. Bennetts individual objectives. Accordingly, Mr. Bennett was
awarded a cash bonus of $67,000 (which was determined and paid in 2010),
representing a total payout of 114% of his 2009 bonus target. The following
table summarizes Mr. Bennetts 2009 bonus award calculation:
Bonus
Component
|
|
Target Bonus
Weighting (%)
|
|
Target Bonus
Opportunity ($)(1)
|
|
Actual Bonus
Percentage
Attained (%)
|
|
Actual Bonus
Payment ($)
|
|
Corporate
|
|
60
|
%
|
$
|
35,230
|
|
113.375
|
%
|
$
|
39,942
|
|
Individual
|
|
40
|
%
|
$
|
23,487
|
|
115.000
|
%
|
$
|
27,009
|
|
Total
|
|
100
|
%
|
$
|
58,716
|
|
|
|
$
|
66,951
|
|
(1)
Bonus awards are calculated
based on actual base salary earned during the applicable bonus year. Annual
salary adjustments are effective March 1 of each year. As a result, Mr. Bennett
earned $234,865 in actual base salary during 2009 and his 25% bonus target was
$58,716.
As noted above, the
Compensation Committee determined that Mr. Bennett had performed at 115%
of target with respect to his individual objectives, which included the
completion of key regulatory and manufacturing initiatives in support of our
new drug application for FOLOTYN, the establishment of a global commercial
product plan and related supply agreements for FOLOTYN, the management of our
worldwide clinical supply requirements for FOLOTYN, and the advancement of our
patent portfolio. In February 2009, Mr. Bennett was awarded a stock
option to purchase 35,000 shares of common stock at an exercise price of $6.40
per share, the fair market value of our common stock on the date of grant, and
5,875 restricted stock units.
For fiscal 2010,
Mr. Bennetts base salary was set at $245,200, representing a merit
increase of 4% from his 2009 base salary. Mr. Bennetts 2010 bonus target
was increased from 25% of base salary to 30% of base salary, weighted 60% to
the achievement of corporate objectives and 40% to the achievement of
individual objectives. In addition, Mr. Bennett was awarded a stock option
to purchase 31,500 shares of common stock at an exercise price of $7.56 per share,
the fair market value of our common stock on the date of grant, and 17,937
restricted stock units.
James V.
CarusoExecutive Vice President, Chief Commercial Officer
For fiscal 2009,
Mr. Carusos base salary was set at $408,500, representing a merit
increase of 2.5% from his 2008 base salary. Mr. Carusos 2009 bonus target
was set at 40% of base salary, weighted 60% to the achievement of corporate
12
Table of Contents
objectives and 40% to the
achievement of individual objectives. For 2009, the Compensation Committee
approved a corporate bonus percentage of 113.375% of target for the Companys
corporate objectives (as described above
for Mr. Berns) and an individual bonus percentage of 111.750% of target
for Mr. Carusos individual objectives. Accordingly, Mr. Caruso was
awarded a cash bonus of $183,500 (which was determined and paid in 2010),
representing a total payout of 113% of his 2009 bonus target. The following
table summarizes Mr. Carusos 2009 bonus award calculation:
Bonus
Component
|
|
Target Bonus
Weighting (%)
|
|
Target Bonus
Opportunity ($)(1)
|
|
Actual Bonus
Percentage
Attained (%)
|
|
Actual Bonus
Payment ($)
|
|
Corporate
|
|
60
|
%
|
$
|
97,680
|
|
113.375
|
%
|
$
|
110,745
|
|
Individual
|
|
40
|
%
|
$
|
65,120
|
|
111.750
|
%
|
$
|
72,772
|
|
Total
|
|
100
|
%
|
$
|
162,800
|
|
|
|
$
|
183,516
|
|
(1)
Bonus awards are calculated
based on actual base salary earned during the applicable bonus year. Annual
salary adjustments are effective March 1 of each year. As a result, Mr. Caruso
earned $407,012 in actual base salary during 2009 and his 40% bonus target was
$162,800.
As noted above, the
Compensation Committee determined that Mr. Caruso had performed at
111.750% of target with respect to his individual objectives, which included
the completion of key objectives relating to the planned commercialization of
FOLOTYN for patients with relapsed or refractory PTCL, the completion of
various objectives relating to the development, implementation and execution of
our corporate growth strategy and ex-U.S. partnering strategy for FOLOTYN, the
advancement of our corporate operations and information technology
infrastructure, and Mr. Carusos leadership role in the areas of corporate
communications and investor relations. In February 2009, Mr. Caruso
was awarded a stock option to purchase 143,452 shares of common stock at
an exercise price of $6.40 per share, the fair market value of our common stock
on the date of grant, and 23,873 restricted stock units.
For fiscal 2010,
Mr. Carusos base salary was set at $426,900, representing a merit
increase of 4.5% from his 2009 base salary. Mr. Carusos 2010 bonus target
was increased from 40% of base salary to 50% of base salary, weighted 60% to
the achievement of corporate objectives and 40% to the achievement of
individual objectives. In addition, Mr. Caruso was awarded a stock option
to purchase 102,300 shares of common stock at an exercise price of $7.56 per
share, the fair market value of our common stock on the date of grant, and
58,254 restricted stock units.
David C.
ClarkVice President, Finance, Treasurer and Assistant Secretary
For fiscal 2009,
Mr. Clarks base salary was set at $215,300, representing a merit increase
of 2.5% from his 2008 base salary. Mr. Clarks 2009 bonus target was set
at 25% of base salary, weighted 60% to the achievement of corporate objectives
and 40% to the achievement of individual objectives. For 2009, the Compensation
Committee approved a corporate bonus percentage of 113.375% of target for the
Companys corporate objectives (as
described above for Mr. Berns) and an individual bonus percentage of
108.750% of target for Mr. Clarks individual objectives. Accordingly,
Mr. Clark was awarded a cash bonus of $59,800 (which was determined and
paid in 2010), representing a total payout of 112% of his 2009 bonus target.
The following table summarizes Mr. Clarks 2009 bonus award calculation:
Bonus
Component
|
|
Target Bonus
Weighting (%)
|
|
Target Bonus
Opportunity ($)(1)
|
|
Actual Bonus
Percentage
Attained (%)
|
|
Actual Bonus
Payment ($)
|
|
Corporate
|
|
60
|
%
|
$
|
32,166
|
|
113.375
|
%
|
$
|
36,469
|
|
Individual
|
|
40
|
%
|
$
|
21,444
|
|
108.750
|
%
|
$
|
23,321
|
|
Total
|
|
100
|
%
|
$
|
53,611
|
|
|
|
$
|
59,789
|
|
(1)
Bonus awards are calculated
based on actual base salary earned during the applicable bonus year. Annual
salary adjustments are effective March 1 of each year. As a result, Mr. Clark
earned $214,443 in actual base salary during 2009 and his 25% bonus target was
$53,611.
As noted above, the
Compensation Committee determined that Mr. Clark had performed at 108.750%
of target with respect to his individual objectives, which included the
development and execution of our corporate financing plan (including the
completion of two public offerings which resulted in aggregate net proceeds of
approximately $140 million), the advancement of our finance and accounting
infrastructure to support the planned commercialization of FOLOTYN, the
effectiveness of our internal control over financial reporting, and Mr. Clarks
leadership role in the areas of financial planning, corporate communications
and investor relations. In February 2009, Mr. Clark was awarded a
stock option to purchase 35,000 shares of common stock at an exercise price of
$6.40 per share, the fair market value of our common stock
13
Table of Contents
on the date of grant, and
5,875 restricted stock units.
For fiscal 2010,
Mr. Clarks base salary was set at $236,800, representing a 10% increase
from his 2009 base salary. This included a 4% merit increase and a 6% market
adjustment based on the Compensation Committees review of competitive market
data. Mr. Clarks 2010 bonus target was increased from 25% of base salary
to 30% of base salary, weighted 60% to the achievement of corporate objectives
and 40% to the achievement of individual objectives. In addition,
Mr. Clark was awarded a stock option to purchase 26,250 shares of common
stock at an exercise price of $7.56 per share, the fair market value of our
common stock on the date of grant, and 14,948 restricted stock units.
Marc H.
GraboyesSenior Vice President, General Counsel and Secretary
For fiscal 2009,
Mr. Graboyes base salary was set at $308,100, representing a merit
increase of 2.5% from his 2008 base salary. Mr. Graboyes 2008 bonus
target was set at 40% of base salary, weighted 60% to the achievement of
corporate objectives and 40% to the achievement of individual objectives. For
2009, the Compensation Committee approved a corporate bonus percentage of
113.375% of target for the Companys corporate objectives (as described above
for Mr. Berns) and an individual bonus percentage of 109.750% of target
for Mr. Graboyes individual objectives. Accordingly, Mr. Graboyes
was awarded a cash bonus of $137,400 (which was determined and paid in 2010),
representing a total payout of 112% of his 2009 bonus target. The following
table summarizes Mr. Graboyes 2009 bonus award calculation:
Bonus
Component
|
|
Target Bonus
Weighting (%)
|
|
Target Bonus
Opportunity ($)(1)
|
|
Actual Bonus
Percentage
Attained (%)
|
|
Actual Bonus
Payment ($)
|
|
Corporate
|
|
60
|
%
|
$
|
73,666
|
|
113.375
|
%
|
$
|
83,519
|
|
Individual
|
|
40
|
%
|
$
|
49,111
|
|
109.750
|
%
|
$
|
53,899
|
|
Total
|
|
100
|
%
|
$
|
122,777
|
|
|
|
$
|
137,418
|
|
(1)
Bonus awards are calculated
based on actual base salary earned during the applicable bonus year. Annual
salary adjustments are effective March 1 of each year. As a result, Mr.
Graboyes earned $306,942 in actual base salary during 2009 and his 40% bonus
target was $122,777.
As noted above, the
Compensation Committee determined that Mr. Graboyes had performed at
109.750% of target with respect to his individual objectives, which included
the advancement of our patent portfolio, the execution of our corporate
financing plan (including the completion of two public offerings which resulted
in aggregate net proceeds of approximately $140 million), the completion
of various objectives relating to the development, implementation and execution
of our corporate growth strategy and ex-U.S. partnering strategy for FOLOTYN,
the development and implementation of our comprehensive corporate compliance
program, and Mr. Graboyes leadership role in the areas of human
resources, executive compensation and corporate communications. In February 2009,
Mr. Graboyes was awarded a stock option to purchase 90,496 shares of
common stock at an exercise price of $6.40 per share, the fair market value of
our common stock on the date of grant, and 15,060 restricted stock units.
For fiscal 2010,
Mr. Graboyes base salary was set at $321,200, representing a merit
increase of 4.25% increase from his 2009 base salary. Mr. Graboyes 2009
bonus target was increased from 40% of base salary to 50% of base salary, weighted
60% to the achievement of corporate objectives and 40% to the achievement of
individual objectives. In addition, Mr. Graboyes was awarded a stock
option to purchase 73,083 shares of common stock at an exercise price of $7.56
per share, the fair market value of our common stock on the date of grant, and
41,617 restricted stock units.
Pablo J.
Cagnoni, M.DFormer Senior Vice President, Chief Medical Officer
For fiscal 2009,
Dr. Cagnonis base salary was set at $414,400, representing a merit
increase of 2.5% from his 2008 base salary. Dr. Cagnonis 2009 bonus
target was set at 40% of base salary, weighted 60% to the achievement of
corporate objectives and 40% to the achievement of individual objectives. In
addition, Dr. Cagnoni was awarded a stock option to purchase 143,452
shares of common stock at an exercise price of $6.40 per share, the fair market
value of our common stock on the date of grant, and 23,873 restricted stock
units.
Dr. Cagnoni resigned as
Senior Vice President, Chief Medical Officer of the Company, effective
September 30, 2009. As a result, Dr. Cagononi did not receive a cash
bonus for 2009.
Accounting and Tax Considerations
We follow the fair value
recognition provisions of Financial Accounting Standards Board (FASB)
Accounting
14
Table of Contents
Standard Codification (ASC)
Topic 718 (formerly, FASB Statement 123R). Under FASB ASC Topic 718 we are
required to estimate and record an expense for each award of equity
compensation over the vesting period of the award. Until we achieve sustained
profitability, the availability to us of a tax deduction for compensation
expense is not material to our financial position. We structure cash incentive
bonus compensation so that it is taxable to our employees at the time it
becomes available to them.
Section 162(m) of
the Code limits us to a deduction for federal income tax purposes of up to
$1 million of compensation paid to certain named executive officers in a
taxable year. It is possible that compensation attributable to awards, when
combined with all other types of compensation received by a covered employee
from us, may cause this limitation to be exceeded in any particular year.
Certain kinds of compensation, including qualified performance-based
compensation, are disregarded for purposes of the deduction limitation. In
accordance with Treasury Regulations issued under Section 162(m) of
the Code, compensation attributable to stock options and stock appreciation
rights will qualify as performance-based compensation if (a) such awards
are granted by a compensation committee comprised solely of outside directors,
(b) the plan contains a per-employee limitation on the number of shares
for which such awards may be granted during a specified period, (c) the
per-employee limitation is approved by the stockholders, and (d) the
exercise or strike price of the award is no less than the fair market value of
the stock on the date of grant. Compensation attributable to stock purchase
awards, stock bonus awards, stock unit awards, performance stock awards, and
performance cash awards will qualify as performance-based compensation,
provided that: (i) the award is granted by a compensation committee
comprised solely of outside directors; (ii) the award is granted (or
exercisable) only upon the achievement of an objective performance goal
established in writing by the compensation committee while the outcome is
substantially uncertain; (iii) the compensation committee certifies in
writing prior to the grant, vesting or exercise of the award that the
performance goal has been satisfied; and (iv) prior to the grant of the
award, stockholders have approved the material terms of the award (including
the class of employees eligible for such award, the business criteria on which
the performance goal is based, and the maximum amount, or formula used to
calculate the amount, payable upon attainment of the performance goal).
Our
Compensation Committee intends for all stock options and stock appreciation
rights granted under our 2008 Equity Incentive Plan to qualify as
performance-based compensation within the meaning of Section 162(m) of
the Code. In addition, under our 2008 Equity Incentive Plan our Compensation
Committee has the discretion to grant other types of awards that may qualify as
performance-based compensation within the meaning of Section 162(m) of
the Code. Except as noted below, stock options granted under our 2000 Stock Incentive
Compensation Plan are performance-based compensation within the meaning of
Section 162(m) of the Code and, as such, the spread between the fair
market value of the underlying stock and the exercise price of such options is
fully deductible upon exercise, as long as our Board of Directors or the
committee of our Board of Directors granting such stock options was composed
solely of outside directors. However, stock options previously granted under
our 2002 Broad Based Equity Incentive Plan and our 2006 Inducement Award Plan
are not considered performance-based compensation within the meaning of
Section 162(m) of the Code because such plans were not approved by
our stockholders, and options granted under the 2000 Stock Incentive
Compensation Plan from May 12, 2004 to December 20, 2005 are not
considered performance-based compensation because that plan was not re-approved
by stockholders until December 20, 2005. Accordingly, our compensation
deduction, if any, resulting from the exercise of such options may not be fully
deductible, depending on whether the optionee is a named executive officer at
the time of exercise and on whether the total non-exempt compensation paid to
such optionee exceeds $1 million in the year of such option exercise. To
maintain flexibility in compensating executive officers in a manner designed to
promote varying corporate goals, our Compensation Committee has not adopted a
policy requiring all compensation to be deductible. Our Compensation Committee
intends to continue to evaluate the effects of the compensation limits of
Section 162(m) of the Code and to grant compensation awards in the
future in a manner consistent with the best interests of the Company and our
stockholders.
Compensation Risk Assessment
With
the assistance of the Companys management, the Compensation Committee reviewed
the Companys material compensation policies and practices for all employees,
including its executive officers, and concluded that these policies and
practices do not create risks that are reasonably likely to have a material
adverse effect on the Company.
Summary Compensation Table
The following table shows
for the fiscal years ended December 31, 2009, 2008 and 2007, compensation
awarded or paid to, or earned by, the Companys President and Chief Executive
Officer (Principal Executive Officer), Vice President, Finance and Treasurer
(Principal Financial Officer), our three other most highly compensated
executive officers at
15
Table of Contents
December 31, 2009 and a
former executive officer who was no longer serving in the capacity of an
executive officer at the end of the fiscal year (as previously defined, the named
executive officers).
Name and Principal Position
|
|
Year
|
|
Salary
($)
|
|
Bonus
($)
|
|
Stock
Awards
($)(1)
|
|
Option
Awards
($)(2)
|
|
Non-Equity
Incentive Plan
Compensation
($)(3)
|
|
All
Other
Compensation
($)(4)
|
|
Total
($)
|
|
Paul L. Berns
|
|
2009
|
|
500,800
|
|
|
|
298,700
|
|
1,091,200
|
|
340,700
|
|
18,700
|
(5)
|
2,250,100
|
|
President and Chief
|
|
2008
|
|
497,200
|
|
|
|
|
|
1,073,700
|
|
298,300
|
|
12,800
|
(6)
|
1,882,000
|
|
Executive Officer
|
|
2007
|
|
472,800
|
|
|
|
|
|
1,283,900
|
|
280,800
|
|
156,100
|
(7)
|
2,193,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce K. Bennett (8)
|
|
2009
|
|
234,900
|
|
|
|
37,600
|
|
136,400
|
|
67,000
|
|
5,000
|
|
480,900
|
|
Vice President,
|
|
2008
|
|
215,000
|
|
|
|
|
|
459,400
|
|
57,100
|
|
5,000
|
|
736,500
|
|
Pharmaceutical
Operations
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James V. Caruso
|
|
2009
|
|
407,000
|
|
|
|
152,800
|
|
559,000
|
|
183,500
|
|
5,000
|
|
1,307,300
|
|
Executive Vice
President,
|
|
2008
|
|
395,600
|
|
|
|
|
|
585,700
|
|
168,900
|
|
5,000
|
|
1,155,200
|
|
Chief Commercial Officer
|
|
2007
|
|
377,400
|
|
|
|
|
|
700,300
|
|
154,900
|
|
3,700
|
(9)
|
1,236,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David C. Clark
|
|
2009
|
|
214,400
|
|
|
|
37,600
|
|
136,400
|
|
59,800
|
|
5,000
|
|
453,200
|
|
Vice President, Finance
|
|
2008
|
|
206,200
|
|
|
|
|
|
224,500
|
|
53,600
|
|
5,000
|
|
489,300
|
|
and Treasurer
|
|
2007
|
|
183,900
|
|
5,600
|
(10)
|
|
|
233,400
|
|
53,200
|
|
5,000
|
|
481,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marc H. Graboyes
|
|
2009
|
|
306,900
|
|
|
|
96,400
|
|
352,700
|
|
137,400
|
|
5,000
|
|
898,400
|
|
Senior Vice President,
|
|
2008
|
|
293,600
|
|
|
|
|
|
390,500
|
|
91,600
|
|
5,000
|
|
780,700
|
|
General Counsel and
Secretary
|
|
2007
|
|
252,600
|
|
|
|
|
|
350,200
|
|
73,200
|
|
5,000
|
|
681,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pablo J. Cagnoni (11)
|
|
2009
|
|
314,200
|
|
|
|
152,800
|
|
559,000
|
|
|
|
60,000
|
(12)
|
1,086,000
|
|
Senior Vice President,
|
|
2008
|
|
401,300
|
|
|
|
|
|
585,700
|
|
170,100
|
|
5,000
|
|
1,162,100
|
|
Chief Medical Officer
|
|
2007
|
|
303,600
|
|
50,000
|
(13)
|
462,800
|
|
1,149,800
|
|
175,000
|
(14)
|
4,700
|
|
2,145,900
|
|
(1)
The amounts shown in this
column represent the aggregate full grant date fair value calculated in
accordance with Financial Accounting Standards Board (FASB) Accounting
Standards Codification (ASC) Topic 718, Stock Compensation (formerly, FASB
Statement 123R) for stock awards granted during the fiscal year to the named
executive officers. Pursuant to SEC rules, the amounts shown exclude the impact
of estimated forfeitures related to service-based vesting conditions. For
additional information, see Note 5 to the Financial Statements included in
the Companys Annual Report on Form 10-K for the year ended
December 31, 2009.
(2)
The amounts shown in this column represent the
aggregate full grant date fair value calculated in accordance with FASB ASC
Topic 718 for stock options granted during the fiscal year to the named
executive officers. Pursuant to SEC rules, the amounts shown exclude the impact
of estimated forfeitures related to service-based vesting conditions. For additional
information on the valuation assumptions used to calculate these amounts, see
Note 5 to the Financial Statements included in the Companys Annual Report
on Form 10-K for the year ended December 31, 2009.
(3)
The amounts shown in this column represent the cash
bonuses earned by the named executive officers with respect to the fiscal year
under the Companys performance-based cash bonus program. Amounts earned with
respect to the fiscal year are generally paid in March of the following
year. For example, the amounts shown for 2009 were paid in March 2010. For
additional information, see the Compensation Discussion and Analysis beginning
on page 1 of this Amendment No. 1.
(4)
Unless otherwise indicated, the amounts shown in
this column represent Company contributions under the Companys 401(k) plan.
(5)
This amount for Mr. Berns consists of the
following: (i) $7,800 in supplemental disability insurance premiums,
(ii) a $5,900 tax reimbursement with respect to such disability insurance,
and (iii) a $5,000 Company contribution under the Companys 401(k) plan.
(6)
This amount for Mr. Berns consists of the
following: (i) $7,800 in supplemental disability insurance premiums and
(ii) a $5,000 Company contribution under the Companys 401(k) plan.
(7)
This amount for Mr. Berns consists of the
following: (i) executive relocation expenses totaling $96,200, which total
includes closing costs on the sale of his residence of $64,000, temporary
living expenses of $18,900, travel between home and office of $7,600 and car
rental costs; (ii) a $5,000 Company contribution under the Companys 401(k) plan;
(iii) $7,700 in supplemental disability insurance premiums; and
(iv) $47,200 in tax reimbursement in connection with the relocation
expenses and supplemental disability insurance premiums described in
(i) and (iii) above.
(8)
Mr. Bennett was hired to serve as the Companys
Vice President, Manufacturing on January 24, 2008. Mr. Bennett was
not employed by the Company prior to that date.
(9)
This amount for Mr. Caruso consists of a $5,000
Company contribution under the Companys 401(k) plan, offset by $1,300 in
payments received from Mr. Caruso as reimbursement for certain benefits
provided by the Company during 2006.
16
Table of Contents
(10)
This amount for Mr. Clark represents a cash
payment made in connection with the increase in the exercise price of an option
granted to Mr. Clark in April 2004 in order to avoid the adverse tax
consequences of Section 409A of the Code. During 2007, the Company
determined that the actual date on which the option was granted to
Mr. Clark was April 28, 2004, when the closing market price of the
Companys common stock was $4.78, rather than April 19, 2004, when the
closing market price of the Companys common stock was $4.50. In order to avoid
the adverse tax consequences of Section 409A of the Code resulting from
the vesting of a discounted option after December 31, 2004,
Mr. Clark and the Company agreed to amend the option to provide that, with
respect to the portion of the option vesting after December 31, 2004
(20,000 shares), the option will have an exercise price of $4.78 per share. In
connection with such amendment, in January 2008, the Company awarded
Mr. Clark a cash payment of $5,600, which is equal to the aggregate
increase in the exercise price of the option.
(11)
Dr. Cagnoni resigned as Senior Vice President,
Chief Medical Officer of the Company, effective September 30, 2009.
(12)
This amount for Dr. Cagnoni consists of
(i) a $5,000 Company contribution under the Companys 401(k) plan and
(ii) $55,000 of accrued but unused vacation and sick leave he received
after his resignation as Senior Vice President, Chief Medical Officer of the
Company became effective on September 30, 2009.
(13)
This amount for Dr. Cagnoni represents a
signing bonus paid in connection with his commencement of employment with the
Company in March 2007.
(14)
This amount for Dr. Cagnoni consists of the
following: (i) a $125,000 cash bonus earned under the Companys
performance-based cash bonus program (which was determined and paid in 2008);
and (ii) an additional $50,000 bonus paid in January 2008 under the
terms of his employment agreement with the Company based on his achievement of
certain clinical development milestones.
Grants
of Plan-Based Awards
The following table sets
forth certain information regarding grants of plan-based awards to the named
executive officers during the year ended December 31, 2009:
|
|
|
|
Estimated
Possible Payouts
Under Non-Equity Incentive
Plan Awards(1)
|
|
All
Other
Stock Awards:
Number of
Shares or
|
|
All
Other
Option
Awards:
Number
of Securities
Underlying
|
|
Exercise
or
Base Price of
Option
|
|
Grant
Date
Fair Value of
Stock and
Option
|
|
Name
|
|
Grant
Date
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
Units
of Stock
(#)(2)
|
|
Options
(#)(3)
|
|
Awards
($/Sh)(4)
|
|
Awards
($)(5)
|
|
Paul
L. Berns
|
|
1/1/2009
|
|
225,400
|
|
300,500
|
|
450,700
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2009
|
|
|
|
|
|
|
|
46,667
|
|
280,000
|
|
6.40
|
|
1,389,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce
K. Bennett
|
|
1/1/2009
|
|
44,000
|
|
58,700
|
|
88,100
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2009
|
|
|
|
|
|
|
|
5,875
|
|
35,000
|
|
6.40
|
|
174,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
V. Caruso
|
|
1/1/2009
|
|
122,100
|
|
162,800
|
|
244,200
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2009
|
|
|
|
|
|
|
|
23,873
|
|
143,452
|
|
6.40
|
|
711,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
C. Clark
|
|
1/1/2009
|
|
40,200
|
|
53,600
|
|
80,400
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2009
|
|
|
|
|
|
|
|
5,875
|
|
35,000
|
|
6.40
|
|
174,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marc
H. Graboyes
|
|
1/1/2009
|
|
92,100
|
|
122,800
|
|
184,100
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2009
|
|
|
|
|
|
|
|
15,060
|
|
90,496
|
|
6.40
|
|
449,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pablo
J. Cagnoni
|
|
1/1/2009
|
|
124,300
|
(6)
|
165,800
|
(6)
|
248,600
|
(6)
|
|
|
|
|
|
|
|
|
|
|
2/23/2009
|
|
|
|
|
|
|
|
23,873
|
|
143,452
|
|
6.40
|
|
711,800
|
|
(1)
These columns show the possible threshold, target
and maximum cash bonus payments to the named executive officers for the year
ended December 31, 2009 under the Companys performance-based cash bonus
program, which is described in more detail in the Compensation Discussion and
Analysis beginning on page 1 of this Amendment No. 1. The actual cash
bonus awards earned by the named executive officers for the year ended
December 31, 2009 are set forth in the Summary Compensation Table above
under the column entitled Non-Equity Incentive Plan Compensation, and the
amounts set forth in these columns do not represent additional compensation
paid to or earned by the named executive officers for the year ended
December 31, 2009. The Companys performance-based cash bonus program
provides that the Company must generally achieve at least 75% of its weighted
corporate objectives for the year in order for any bonuses to be paid, although
the Compensation Committee may determine to grant a bonus even though certain
corporate or individual performance objectives are not met. If the Compensation
Committee determines that corporate or individual performance for the year
exceeded objectives or was excellent in view of prevailing conditions, the
Compensation Committee may approve corporate or individual multipliers, as the
case may be, up to 150% of target. The possible threshold, target and maximum
cash bonus payments for the named executive officers for the year ended
December 31, 2009 under the Companys performance-based cash bonus program
are calculated as follows:
17
Table of
Contents
Name
|
|
Actual Base
Salary
Earned
($)
|
|
Bonus
Target
as % of
Base
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
Paul L. Berns
|
|
500,800
|
|
60
|
%
|
225,400
|
|
300,500
|
|
450,700
|
|
Bruce K. Bennett
|
|
234,900
|
|
25
|
%
|
44,000
|
|
58,700
|
|
88,100
|
|
James V. Caruso
|
|
407,000
|
|
40
|
%
|
122,100
|
|
162,800
|
|
244,200
|
|
David C. Clark
|
|
214,400
|
|
25
|
%
|
40,200
|
|
53,600
|
|
80,400
|
|
Marc H. Graboyes
|
|
306,900
|
|
40
|
%
|
92,100
|
|
122,800
|
|
184,100
|
|
Pablo J. Cagnoni
|
|
314,200
|
|
40
|
%
|
124,300
|
(6)
|
165,800
|
(6)
|
248,600
|
(6)
|
(2)
This column shows the number of shares or units of
common stock awarded to the named executive officers during the year ended December 31,
2009. The stock awards vest over a four-year period, with 25% of the options
vesting yearly on each of the first, second, third, and forth anniversaries of
the date of grant, subject to the recipients continued employment with the
Company through such vesting dates.
(3)
This column shows the number of shares of common
stock underlying stock options granted to the named executive officers during
the year ended December 31, 2009. The stock options have a 10-year term
and vest over a four-year period, with 25% of the options vesting on the first
anniversary of the date of grant and the remaining 75% of the options vesting
in equal monthly installments thereafter over the next three years, subject to
the recipients continued employment with the Company through such vesting
dates.
(4)
This column shows the exercise price for the stock
options granted to the named executive officers during the year ended
December 31, 2009, which equals the fair market value of the Companys
common stock on the date of grant.
(5)
This column shows the full grant date fair value of
the stock and option awards granted to the named executive officers during the
year ended December 31, 2009, calculated under FASB ASC Topic 718. The
full grant date fair value is the amount that the Company recognizes as
stock-based compensation expense in its financial statements over the required
service period of the award. For additional information, see Note 5 to the
Financial Statements included in the Companys Annual Report on Form 10-K
for the year ended December 31, 2009.
(6)
Dr. Cagnoni resigned as Senior Vice President,
Chief Medical Officer of the Company, effective September 30, 2009. As a
result, Dr. Cagnoni was ineligible to receive a cash bonus payment for the
year ended December 31, 2009 under the Companys performance-based cash
bonus program. These numbers represent his bonus Threshold, Target and Maximum
as of January 1, 2009 based on his base salary of $414,400.
Outstanding
Equity Awards at Fiscal Year End
The following table sets
forth certain information regarding equity awards granted to the named
executive officers that were outstanding as of December 31, 2009:
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Market Value
|
|
|
|
|
|
|
|
|
|
|
|
Shares or
|
|
of Shares
|
|
|
|
Number of Securities
|
|
|
|
|
|
Units of
|
|
or Units of
|
|
|
|
Underlying Unexercised
|
|
Option
|
|
|
|
Stock That
|
|
Stock That
|
|
|
|
Options(1)
|
|
Exercise
|
|
Option
|
|
Have Not
|
|
Have Not
|
|
|
|
Exercisable
|
|
Unexercisable
|
|
Price
|
|
Expiration
|
|
Vested
|
|
Vested
|
|
Name
|
|
(#)
|
|
(#)
|
|
($)
|
|
Date
|
|
(#)
|
|
($)(2)
|
|
Paul L. Berns
|
|
306,242
|
|
43,758
|
|
3.14
|
|
3/9/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,000
|
(3)
|
493,500
|
|
|
|
194,789
|
|
80,211
|
|
7.47
|
|
2/16/2017
|
|
|
|
|
|
|
|
126,040
|
|
148,960
|
|
6.12
|
|
2/25/2018
|
|
|
|
|
|
|
|
|
|
280,000
|
|
6.40
|
|
2/23/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,667
|
(4)
|
307,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce K. Bennett
|
|
47,916
|
|
52,084
|
|
7.20
|
|
1/23/2018
|
|
|
|
|
|
|
|
|
|
35,000
|
|
6.40
|
|
2/23/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,875
|
(5)
|
38,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James V. Caruso
|
|
56,246
|
|
43,754
|
|
3.13
|
|
6/5/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,500
|
(6)
|
181,000
|
|
|
|
106,248
|
|
43,752
|
|
7.47
|
|
2/16/2017
|
|
|
|
|
|
|
|
68,749
|
|
81,251
|
|
6.12
|
|
2/25/2018
|
|
|
|
|
|
|
|
|
|
143,452
|
|
6.40
|
|
2/23/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,873
|
(7)
|
157,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David C. Clark
|
|
20,000
|
|
|
|
4.78
|
(8)
|
4/19/2014
|
|
|
|
|
|
|
|
7,499
|
|
1,668
|
|
2.70
|
|
2/10/2016
|
|
|
|
|
|
|
|
5,741
|
|
2,813
|
|
2.93
|
|
5/9/2016
|
|
|
|
|
|
|
|
4,279
|
|
|
|
2.93
|
|
5/9/2016
|
|
|
|
|
|
|
|
35,416
|
|
14,584
|
|
7.47
|
|
2/16/2017
|
|
|
|
|
|
|
|
26,353
|
|
31,147
|
|
6.12
|
|
2/25/2018
|
|
|
|
|
|
|
|
|
|
35,000
|
|
6.40
|
|
2/23/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,875
|
(9)
|
38,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marc H. Graboyes
|
|
37,800
|
|
4,168
|
|
2.70
|
|
2/10/2016
|
|
|
|
|
|
|
|
33,032
|
|
|
|
2.70
|
|
2/10/2016
|
|
|
|
|
|
|
|
53,124
|
|
21,876
|
|
7.47
|
|
2/16/2017
|
|
|
|
|
|
|
|
45,832
|
|
54,168
|
|
6.12
|
|
2/25/2018
|
|
|
|
|
|
|
|
|
|
90,496
|
|
6.40
|
|
2/23/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,060
|
(10)
|
99,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pablo J. Cagnoni(11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18
Table of
Contents
(1)
Unless otherwise indicated, these options have a
10-year term and vest over a four-year period, with 25% of the options vesting
on the first anniversary of the date of grant and the remaining 75% of the
options vesting in equal monthly installments thereafter over the next three
years, subject to the recipients continued employment with the Company through
such vesting dates.
(2)
The market value of the shares of restricted stock
that have not vested as of December 31, 2009 is based on $6.58 per share,
which equaled the closing price of the Companys common stock on
December 31, 2009, the last business day of the 2009 fiscal year.
(3)
Three hundred thousand shares of restricted stock
were granted to Mr. Berns on March 9, 2006 in connection with his
commencement of employment with the Company. Twenty-five percent of the shares
(75,000 shares) vested on each of March 9, 2007, 2008 and 2009. The
remaining 25% of the shares (75,000 shares) vested on March 9, 2010.
(4)
Forty-six thousand six hundred and sixty-seven
restricted stock units were granted to Mr. Berns on February 23,
2009. 11,666 units vested on February 23, 2010 and 11,667 units vest on
each of February 23, 2011, 2012 and 2013, subject to Mr. Berns
continued employment with the Company through such vesting dates.
(5)
Five thousand eight hundred and seventy-five
restricted stock units were granted to Mr. Bennett on February 23,
2009. 1,468 units vested on February 23, 2010 and 1,469 units vest on each
of February 23, 2011, 2012 and 2013, subject to Mr. Bennetts
continued employment with the Company through such vesting dates.
(6)
One hundred and ten thousand shares of restricted
stock were granted to Mr. Caruso on June 5, 2006 in connection with
his commencement of employment with the Company. Twenty-five percent of the
shares (27,500 shares) vested on each of June 5, 2007, 2008 and 2009. The
remaining 25% of the shares (27,500 shares) will vest on June 5, 2010,
subject to Mr. Carusos continued employment with the Company through such
vesting date.
(7)
Twenty-three thousand eight hundred and
seventy-three restricted stock units were granted to Mr. Caruso on
February 23, 2009. 5,968 units vested on February 23, 2010, 5,968
units vest on each of February 23, 2011 and 2012 and 5,969 units vest on
February 23, 2013, subject to Mr. Carusos continued employment with
the Company through such vesting dates.
(8)
The exercise price of this option was previously
reported as $4.50 per share, which equaled the closing price of the Companys
common stock on April 19, 2004. During 2007, the Company determined that
the actual date on which the option was granted to Mr. Clark was
April 28, 2004, when the closing price of the Companys common stock was
$4.78, rather than April 19, 2004. In order to avoid the adverse tax
consequences of Section 409A of the Code resulting from the vesting of a discounted
option after December 31, 2004, Mr. Clark and the Company agreed to
amend the option to provide that, with respect to the portion of the option
vesting after December 31, 2004 (20,000 shares), the option will have an
exercise price of $4.78 per share.
(9)
Five thousand eight hundred and seventy-five
restricted stock units were granted to Mr. Clark on February 23,
2009. 1,468 units vested on February 23, 2010 and 1,469 units vest on each
of February 23, 2011, 2012 and 2013, subject to Mr. Clarks continued
employment with the Company through such vesting dates.
(10)
Fifteen thousand and sixty restricted stock units were granted to
Mr. Graboyes on February 23, 2009. 3,765 units vested on
February 23, 2010 and 3,765 units vest on each of February 23, 2011,
2012 and 2013, subject to Mr. Graboyes continued employment with the
Company through such vesting dates.
(11)
Dr. Cagnoni resigned as Senior Vice President, Chief Medical
Officer of the Company, effective September 30, 2009. Dr. Cagnoni had
no outstanding equity awards as of December 31, 2009.
Option Exercises And Stock Vested
The following table sets
forth certain information regarding option exercises and shares of restricted
stock that vested during the year ended December 31, 2009 with respect to
the named executive officers:
|
|
Option Awards
|
|
Stock Awards
|
|
Name
|
|
Number of
Shares
Acquired on
Exercise
(#)
|
|
Value
Realized
on Exercise
($)(1)
|
|
Number of
Shares
Acquired on
Vesting
(#)
|
|
Value
Realized
on Vesting
($)(2)
|
|
Paul L. Berns
|
|
350,000
|
|
1,785,500
|
|
75,000
|
|
480,000
|
|
Bruce K. Bennett
|
|
|
|
|
|
|
|
|
|
James V. Caruso
|
|
250,000
|
|
1,142,600
|
|
27,500
|
|
198,300
|
|
David C. Clark
|
|
70,000
|
|
306,500
|
|
|
|
|
|
Marc H. Graboyes
|
|
125,000
|
|
649,400
|
|
|
|
|
|
Pablo J. Cagnoni
|
|
246,872
|
|
50,700
|
|
18,750
|
|
126,600
|
|
(1)
The value realized on
exercise of the options equals the difference between the market price of the
underlying stock at exercise and the exercise or base price of the options,
multiplied by the number of shares acquired on exercise.
(2)
The value realized on vesting of shares of
restricted stock equals the market value of the Companys common stock on the
vesting date, multiplied by the number of shares that vested.
19
Table of Contents
Retirement Payments and Benefits
None
of the named executive officers participate in or have account balances in
qualified or non-qualified deferred benefit plans sponsored by the Company.
Nonqualified Deferred Compensation
None
of the named executive officers participate in or have account balances in
non-qualified defined contribution plans or other deferred compensation plans
maintained by the Company. In the future, the Compensation Committee may elect
to provide the named executive officers and other employees with non-qualified
defined contribution or deferred compensation benefits if the Compensation
Committee determines that doing so is in the Companys best interests.
Employment, Severance and Change-in-Control Agreements
The
Company has entered into employment agreements with each of the named executive
officers other than Mr. Bennett. The material terms of such agreements are
summarized below.
Employment Agreement with Mr. Berns
On
March 9, 2006, the Company entered into an employment agreement with
Mr. Berns in connection with his appointment to serve as the Companys
President and Chief Executive Officer. On December 12, 2006, the Company
and Mr. Berns amended and restated the employment agreement to extend the
time during which the Company was obligated to reimburse certain commuting and
temporary living expenses to June 30, 2007. On December 13, 2007, the
Company and Mr. Berns entered into a second amended and restated
employment agreement to, among other things, bring the employment agreement
into compliance with Section 409A of the Code and clarify Mr. Berns
change-in-control termination benefits regarding the acceleration of stock
options and restricted stock upon a change-in-control termination.
Pursuant
to the second amended and restated employment agreement, Mr. Berns earns
an annual base salary, which amount may be increased annually at the discretion
of the Board. Currently, Mr. Berns earns an annual base salary of
$550,000. Mr. Berns is also eligible to participate in the Companys
performance-based cash bonus plan, pursuant to which he is eligible for an
annual bonus award determined in accordance with the terms of the plan.
Currently, Mr. Berns target bonus is set at 75% of his annual base
salary.
The
second amended and restated employment agreement with Mr. Berns also
provides that his employment with the Company is at-will and may be terminated
by either Mr. Berns or the Company at any time. However, if the Company
terminates Mr. Berns employment without just cause or if he resigns for
good reason (other than in connection with a change-in-control of the Company),
provided that Mr. Berns executes a general release in favor of the Company
at the election of the Company, he will be entitled to receive certain payments
and other benefits, which are described in more detail under the heading Potential
Payments Upon Termination or Change-in-Control beginning on 24 of this
Amendment No. 1.
The
second amended and restated employment agreement with Mr. Berns further
provides that if the Company (or any surviving or acquiring corporation)
terminates Mr. Berns employment without cause or if he resigns for good
reason within one month prior to or two years following the effective date of a
change-in-control of the Company, provided that Mr. Berns executes a
general release in favor of the Company (or any surviving or acquiring
corporation) at the election thereof, he will be entitled to receive certain
payments and other benefits, which are described in more detail under the
heading Potential Payments Upon Termination or Change-in-Control beginning on
page 24 of this Amendment No. 1.
The
second amended and restated employment agreement also imposes on Mr. Berns
certain confidentiality, non-compete and non-solicitation obligations. The
non-compete and non-solicit obligations are in effect for the term of his
employment and will continue for 12 months after termination of his
employment for any reason, provided that such non-compete obligations will
terminate upon a change-in-control of the Company. In the event that
Mr. Berns violates his confidentiality, non-compete or non-solicitation
obligations or the terms of his confidentiality and inventions assignment
agreement with the Company, his right to most of the severance benefits that he
would have otherwise been entitled to pursuant to the second amended and
restated employment agreement (other than in connection with a
change-in-control of the Company) will cease on the date of such violation.
20
Table of
Contents
In
May 2009, the Company and Mr. Berns agreed to amend his second
amended and restated employment agreement in order to, among other things,
provide for the acceleration of vesting of all stock awards held by
Mr. Berns if he is terminated in connection with a change-in-control of
the Company, as described above. Prior to such amendment, Mr. Berns
second amended and restated employment agreement only provided for acceleration
of vesting of stock options and restricted stock grants under such
circumstances.
Offer Letter with Mr. Bennett
In
a letter dated January 21, 2008, the Company offered Mr. Bennett a
position as the Companys Vice President, Manufacturing. Pursuant to the offer
letter, Mr. Bennett earns an annual base salary, which is subject to
annual review and adjustment by the Compensation Committee. Currently,
Mr. Bennett earns an annual base salary of $245,200. Mr. Bennett is
also eligible to participate in the Companys performance-based cash bonus
plan, pursuant to which he is eligible for an annual bonus award determined in
accordance with the terms of the plan. Currently, Mr. Bennetts target
bonus is set at 30% of his annual base salary.
Pursuant to the offer
letter, Mr. Bennett is eligible for all Allos benefits, including
participation in the Companys 401(k) retirement plan. Mr. Bennett is
also entitled to reimbursement for relocation expenses up to $125,000. Such
expenses will be reimbursed once the Company requests Mr. Bennett relocate
his residence within a reasonable distance of the Companys corporate
headquarters. To date, no such request has been made.
Employment Agreement with Mr. Caruso
On
June 5, 2006, the Company entered into an employment agreement with
Mr. Caruso in connection with his appointment to serve as the Companys
Executive Vice President, Chief Commercial Officer. On December 13, 2007,
the Company and Mr. Caruso entered into an amended and restated employment
agreement to, among other things, bring the employment agreement into
compliance with Section 409A of the Code and implement certain changes
recommended by the Companys outside compensation consultant regarding
Mr. Carusos change-in-control severance benefits.
Pursuant
to the amended and restated employment agreement, Mr. Caruso earns an
annual base salary, which is subject to annual review and adjustment by the
Compensation Committee. Currently, Mr. Caruso earns an annual base salary
of $426,900. Mr. Caruso is also eligible to participate in the Companys
performance-based cash bonus plan, pursuant to which he is eligible for an
annual bonus award determined in accordance with the terms of the plan.
Currently, Mr. Carusos target bonus is set at 50% of his annual base
salary.
The
amended and restated employment agreement with Mr. Caruso also provides
that his employment with the Company is at-will and may be altered or
terminated by either Mr. Caruso or the Company at any time. However, if
the Company terminates Mr. Carusos employment without just cause or if he
resigns for good reason (other than in connection with a change-in-control of
the Company), provided that Mr. Caruso executes a general release in favor
of the Company, he will be entitled to receive certain payments and other
benefits, which are described in more detail under the heading Potential
Payments Upon Termination or Change-in-Control beginning on page 24 of
this Amendment No. 1.
The
amended and restated employment agreement with Mr. Caruso further provides
that if the Company (or any surviving or acquiring corporation) terminates
Mr. Carusos employment without just cause or if he resigns for good
reason within one month prior to or 12 months following the effective date
of a change-in-control of the Company, provided that Mr. Caruso executes a
general release in favor of the Company (or any surviving or acquiring
corporation), he will be entitled to receive certain payments and other
benefits, which are described in more detail under the heading Potential
Payments Upon Termination or Change-in-Control beginning on page 24 of
this Amendment No. 1.
In
May 2009, the Company and Mr. Caruso agreed to amend his amended and
restated employment agreement in order to, among other things, provide for the
acceleration of vesting of all stock awards held by Mr. Caruso if he is
terminated in connection with a change-in-control of the Company, as described
above. Prior to such amendment, Mr. Carusos amended and restated
employment agreement only provided for acceleration of vesting of stock options
and restricted stock grants under such circumstances.
21
Table of
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Employment Agreement with Mr. Clark
On
June 25, 2009, the Company entered into an employment agreement with
Mr. Clark in connection with his appointment to serve as the Companys
Vice President, Finance.
Pursuant
to the employment agreement, Mr. Clark earns an annual base salary, which
is subject to annual review and adjustment by the Compensation Committee.
Currently, Mr. Clark earns an annual base salary of $236,800.
Mr. Clark is also eligible to participate in the Companys
performance-based cash bonus plan, pursuant to which he is eligible for an
annual bonus award determined in accordance with the terms of the plan.
Currently, Mr. Clarks target bonus is set at 30% of his annual base
salary.
The
employment agreement with Mr. Clark also provides that his employment with
the Company is at-will and may be altered or terminated by either
Mr. Clark or the Company at any time. However, if the Company terminates
Mr. Clarks employment without just cause or if he resigns for good reason
(other than in connection with a change-in-control of the Company), provided
that Mr. Clark executes a general release in favor of the Company, he will
be entitled to receive certain payments and other benefits, which are described
in more detail under the heading Potential Payments Upon Termination or
Change-in-Control beginning on page 24 of this Amendment No. 1.
The
employment agreement with Mr. Clark further provides that if the Company
(or any surviving or acquiring corporation) terminates Mr. Clarks
employment without just cause or if he resigns for good reason within one month
prior to or 12 months following the effective date of a change-in-control
of the Company, provided that Mr. Clark executes a general release in
favor of the Company (or any surviving or acquiring corporation), he will be
entitled to receive certain payments and other benefits, which are described in
more detail under the heading Potential Payments Upon Termination or
Change-in-Control beginning on page 24 of this Amendment No. 1.
Employment Agreement with Mr. Graboyes
On
October 11, 2004, the Company entered into an employment agreement with
Mr. Graboyes in connection with his appointment as Vice President, General
Counsel. On December 13, 2007, the Company and Mr. Graboyes entered
into an amended and restated employment agreement to, among other things, bring
the employment agreement into compliance with Section 409A of the Code and
implement certain changes recommended by the Companys outside compensation
consultant.
Pursuant
to the amended and restated employment agreement, Mr. Graboyes earns an
annual base salary, which is subject to annual review and adjustment by the
Compensation Committee. Currently, Mr. Graboyes earns an annual base
salary of $321,200. Mr. Graboyes is also eligible to participate in the
Companys performance-based cash bonus plan, pursuant to which he is eligible
for an annual bonus award determined in accordance with the terms of the plan.
Currently, Mr. Graboyes target bonus is set at 50% of his annual base
salary.
The
amended and restated employment agreement with Mr. Graboyes also provides
that his employment with the Company is at-will and may be altered or
terminated by either Mr. Graboyes or the Company at any time. However, if
the Company terminates Mr. Graboyes employment without just cause or if
he resigns for good reason (other than in connection with a change-in-control
of the Company), provided that Mr. Graboyes executes a general release in
favor of the Company, he will be entitled to receive certain payments and other
benefits, which are described in more detail under the heading Potential
Payments Upon Termination or Change-in-Control beginning on page 24 of
this Amendment No. 1.
The
amended and restated employment agreement with Mr. Graboyes further
provides that if the Company (or any surviving or acquiring corporation)
terminates Mr. Graboyes employment without just cause or if he resigns
for good reason within one month prior to or 12 months following the
effective date of a change-in-control, provided that Mr. Graboyes executes
a general release in favor of the Company (or any surviving or acquiring
corporation), he will be entitled to receive certain payments and other
benefits, which are described in more detail under the heading Potential
Payments Upon Termination or Change-in-Control beginning on page 24 of
this Amendment No. 1.
In
May 2009, the Company and Mr. Graboyes agreed to amend his amended
and restated employment agreement in order to, among other things, provide for
the acceleration of vesting of all stock awards held by Mr. Graboyes if he
is terminated in connection with a change-in-control of the Company, as
described above. Prior to such amendment, Mr. Graboyes amended and
restated employment agreement only provided for acceleration of vesting of
stock options and restricted stock grants under such circumstances.
22
Table of
Contents
Employment Agreement with Dr. Cagnoni
On
March 19, 2007, the Company entered into an employment agreement with
Dr. Cagnoni in connection with his appointment to serve as the Companys
Senior Vice President, Chief Medical Officer. On December 13, 2007, the
Company and Dr. Cagnoni entered into an amended and restated employment
agreement to, among other things, bring the employment agreement into
compliance with Section 409A of the Code and implement certain changes
recommended by the Companys outside compensation consultant regarding
Dr. Cagnonis change-in-control severance benefits.
Pursuant
to the amended and restated employment agreement, Dr. Cagnoni earned an
annual base salary, which was subject to annual review and adjustment by the
Compensation Committee. Prior to his resignation on September 30, 2009,
Dr. Cagnonis annual base salary was $414,400. Dr. Cagnoni was also
eligible to participate in the Companys performance-based cash bonus plan,
pursuant to which he was eligible for an annual bonus award determined in
accordance with the terms of the plan. Prior to his resignation on
September 30, 2009, Dr. Cagnonis target bonus was set at 40% of his
annual base salary.
Pursuant
to the amended and restated employment agreement, on the date Dr. Cagnoni
started employment with the Company, he received a signing bonus of $50,000
less applicable employment tax withholdings and deductions. Upon satisfaction
of certain milestones and pursuant to the amended and restated employment
agreement, Dr. Cagnoni received an additional bonus of $50,000 less applicable
employment tax withholdings and deductions on January 11, 2008.
The
amended and restated employment agreement with Dr. Cagnoni also provided
that his employment with the Company was at-will and may be altered or
terminated by either Dr. Cagnoni or the Company at any time. However, if
the Company terminated Dr. Cagnonis employment without just cause or if
he resigned for good reason (other than in connection with a change-in-control
of the Company), provided that Dr. Cagnoni executed a general release in
favor of the Company, he would have been entitled to receive certain payments
and other benefits, which are described in more detail under the heading Potential
Payments Upon Termination or Change-in-Control beginning on page 24 of
this Amendment No. 1.
The
amended and restated employment agreement with Dr. Cagnoni further
provided that if the Company (or any surviving or acquiring corporation)
terminated Dr. Cagnonis employment without just cause or if he resigned
for good reason within one month prior to or 12 months following the
effective date of a change-in-control of the Company, provided that
Dr. Cagnoni executed a general release in favor of the Company (or any
surviving or acquiring corporation), he would have been entitled to receive
certain payments and other benefits, which are described in more detail under
the heading Potential Payments Upon Termination or Change-in-Control
beginning on page 24 of this Amendment No. 1.
In
May 2009, the Company and Dr. Cagnoni agreed to amend his amended and
restated employment agreement in order to, among other things, provide for the
acceleration of vesting of all stock awards held by Dr. Cagnoni if he is
terminated in connection with a change-in-control of the Company, as described
above. Prior to such amendment, Dr. Cagnonis amended and restated employment
agreement only provided for acceleration of vesting of stock options and
restricted stock grants under such circumstances.
Dr. Cagnoni
resigned as Senior Vice President, Chief Medical Officer of the Company,
effective September 30, 2009.
Severance and
Change-in-Control Arrangements
The Company has established
a Severance Benefit Plan to provide for the payment of severance benefits to
all full-time employees, including the named executive officers, who do not
otherwise have separate employment agreements with the Company and whose
employment is involuntarily terminated due to a change-in-control of the
Company.
The Change of Control
Severance Benefit Schedule under the Severance Benefit Plan provides that if
the Company terminates an eligible employees employment without just cause or
if the eligible employee resigns for good reason within two months prior to or
six months following the effective date of a change-in-control of the Company,
and upon the eligible employees execution of a general release releasing the
Company from all claims known or unknown that the eligible employee may have
against the Company, the eligible employee will be entitled to receive the
following severance benefits:
·
If the eligible employee holds a position with the
Company of director or above, the Company will pay the employee a lump-sum cash
payment equal to (i) six months of the employees base salary then in
effect plus an additional two weeks base salary for each 12 months of
continuous service with the Company, up to a maximum of
23
Table of Contents
52 weeks, plus
(ii) the employees target bonus award for the year in which the employees
employment terminates, prorated through the date of termination. Eligible
employees who are entitled to severance under this paragraph with more than
five but fewer than 12 full months of continuous service with the Company will
be deemed to be in continuous service with the Company for 12 full months.
·
If the eligible employee holds a position with the
Company below director, the Company will pay the employee a lump-sum cash
payment equal to (i) three months of the employees base salary then in
effect plus an additional two weeks base salary for each 12 months of
continuous service with the Company, up to a maximum of 52 weeks, plus
(ii) the employees target bonus award for the year in which the employees
employment terminates, prorated through the date of termination. Eligible
employees who are entitled to severance under this paragraph with more than
five but fewer than 12 full months of continuous service with the Company will
be deemed to be in continuous service with the Company for 12 full months.
·
Full acceleration of vesting of any outstanding
stock options and other stock awards issued to the eligible employee.
·
Payment of premiums for the eligible employees
group health insurance COBRA continuation coverage after the date of
termination for the number of weeks that are used to determine the amount of
the eligible employees cash severance as described above.
·
Outplacement assistance through an outside
organization as a resource to aid in the eligible employees career transition.
Potential Payments Upon
Termination or Change-in-Control
The following tables reflect
the estimated potential payments upon termination or change-in-control of the
Company that would be payable to each of the named executive officers. For
purposes of calculating the potential payments set forth in the tables below,
we have assumed that (i) the date of termination was December 31,
2009 and (ii) the stock price was $6.58, the closing market price of the
Companys common stock on December 31, 2009, the last business day of the
2009 fiscal year.
Paul L. Berns President
and Chief Executive Officer
Under
the terms of Mr. Berns second amended and restated employment agreement,
as amended, if the Company terminates Mr. Berns employment for just cause
or Mr. Berns resigns without good reason, Mr. Berns is entitled to
the following: (i) any base salary and annual bonus earned but unpaid
prior to the date of termination; (ii) all accrued but unused personal
time; and (iii) any unreimbursed business expenses (collectively, the Accrued
Obligations). Such amounts are to be paid within 30 days after the date
of termination. Following such termination, Mr. Berns then outstanding
stock options and other stock awards will remain subject to the terms of their
respective governing documents.
Under
the terms of Mr. Berns second amended and restated employment agreement,
as amended, if the Company terminates Mr. Berns employment without just
cause or Mr. Berns resigns with good reason (other than in connection with
a change-in-control of the Company), provided that Mr. Berns executes a
general release in favor of the Company at the election of the Company,
Mr. Berns is entitled to the following: (i) payment of the Accrued Obligations
within 30 days after the date of termination; (ii) an amount equal to
his target bonus for the year in which the termination occurs, pro rated
through the date of termination; (iii) an amount equal to 1.5 times his
base salary then in effect, payable in monthly installments over the 18-month
period following the date of termination; (iv) an amount equal to 1.5
times his annual bonus for the year preceding the year in which the termination
occurs, payable in a lump sum within 30 days after the date of
termination; (v) treatment of his then outstanding stock options and other
stock awards in accordance with the terms of their respective governing
documents; (vi) payment of premiums for his group health insurance COBRA
continuation coverage for up to 12 months following the date of
termination; and (vii) outplacement assistance for up to 12 months
following the date of termination with an aggregate cost of up to $15,000.
Except for the Accrued Obligations, the payments described above shall cease,
and the Company shall have no further obligations to Mr. Berns with
respect thereto, in the event that Mr. Berns breaches his confidentiality,
non-compete or non-solicitation obligations under the second amended and
restated employment agreement, as amended, or the terms of his confidentiality
and inventions assignment agreement with the Company. The Companys obligation
to pay Mr. Berns COBRA premiums ceases upon Mr. Berns eligibility
for comparable coverage provided by a new employer.
Under
the terms of Mr. Berns second amended and restated employment agreement,
as amended, if the Company (or any surviving or acquiring corporation)
terminates Mr. Berns employment without just cause or Mr. Berns
resigns with
24
Table of Contents
good reason within one month prior to or two
years following the effective date of a change-in-control of the Company,
provided that Mr. Berns executes a general release in favor of the Company
(or any surviving or acquiring corporation) at the election thereof,
Mr. Berns is entitled to the following: (i) payment of the Accrued
Obligations within 30 days after the date of termination; (ii) an
amount equal to his target bonus for the year in which the termination occurs,
pro rated through the date of termination; (iii) a lump-sum cash payment
in an amount equal to (x) two times his highest annual base salary in
effect during the 12 months prior to such termination, plus (y) two
times his highest annualized bonus paid or payable in respect of the five years
preceding the year in which the change-in-control occurs; (iv) immediate
vesting of all outstanding stock options and other stock awards granted to Mr. Berns
and the extension of the option exercise period for 24 months after the
date of termination; (v) continued coverage for 18 months under all
policies of medical, accident, disability and life insurance for Mr. Berns
and his dependents; and (vi) outplacement assistance for up to
12 months following the date of termination with an aggregate cost of up
to $15,000. In addition, Mr. Berns second amended and restated employment
agreement, as amended, provides that, in certain circumstances, he will be
entitled to a gross-up payment for payments that result in an excise tax
imposed by Section 4999 of the Code.
The
following table reflects the estimated potential payments that would be payable
to Mr. Berns upon a termination or change-in-control of the Company under the
terms of his second amended and restated employment agreement, as amended. The
amounts shown reflect only the additional payments or benefits that
Mr. Berns would have received upon the occurrence of the respective
triggering events listed below; they do not include the value of payments or
benefits that would have been earned, or any amounts associated with equity
awards that would have vested, absent the triggering event.
|
|
Termination
For Just
Cause or
Resignation
Without Good
Reason
Termination
|
|
Termination
Without Just
Cause or
Resignation
With Good
Reason
Termination
|
|
Termination
Without Just
Cause or
Resignation With
Good Reason (in
connection with a
Change-in-Control)
|
|
Paul L. Berns
|
|
|
|
|
|
|
|
Cash Payments
|
|
|
|
|
|
|
|
Cash Severance
|
|
$
|
|
|
$
|
1,198,700
|
(1)
|
$
|
1,598,300
|
(2)
|
Target Bonus for Year of Separation
|
|
$
|
|
|
$
|
300,500
|
|
$
|
300,500
|
|
Long-Term Incentives
|
|
|
|
|
|
|
|
Stock Options (Unvested and Accelerated)
|
|
$
|
|
|
$
|
|
|
$
|
269,400
|
(3)
|
Restricted Stock (Unvested and Accelerated)
|
|
$
|
|
|
$
|
|
|
$
|
800,600
|
(4)
|
Benefits and Perquisites
|
|
|
|
|
|
|
|
Accrued Sick Leave
|
|
$
|
30,800
|
|
$
|
30,800
|
|
$
|
30,800
|
|
Benefits Continuation
|
|
$
|
|
|
$
|
19,900
|
|
$
|
32,400
|
|
Outplacement Assistance
|
|
$
|
|
|
$
|
15,000
|
|
$
|
15,000
|
|
Excise Tax Gross-Up (Estimated)
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Total Payments
Upon Termination
|
|
$
|
30,800
|
|
$
|
1,564,900
|
|
$
|
3,047,000
|
|
(1)
Amount represents (i) 1.5 times base salary
then in effect, payable in monthly installments over the 18-month period
following the date of termination, plus (ii) 1.5 times the annual bonus
for the year preceding the year in which the termination occurs, payable in a
lump sum within 30 days after the date of termination.
(2)
Amount represents a lump sum payment equal to
(i) two times base salary, plus (ii) two times highest annualized
bonus, paid or payable, in respect of the five fiscal years preceding the year
of termination.
(3)
Amount represents the in-the-money value of unvested
stock options as of December 31, 2009, using the closing market price of
the Companys common stock on December 31, 2009. The number of shares
underlying such stock options and the exercise price thereof are reflected in
the columns entitled Number of Securities Underlying Unexercised
OptionsUnexercisable and Option Exercise Price, respectively, in the
Outstanding Equity Awards at Fiscal Year End table set forth on page 18 of
this Amendment No. 1.
(4)
Amount represents the in-the-money value of unvested
restricted stock as of December 31, 2009, using the closing market price
of the Companys common stock on December 31, 2009. The number of shares
of restricted stock are reflected in the column entitled Number of Shares or
Units of Stock that Have Not Vested in the Outstanding Equity Awards at Fiscal
Year End table set forth on page 18 of this Amendment No. 1.
Bruce K. Bennett, Vice President, Pharmaceutical Operations
Mr. Bennett
is not party to an employment agreement with the Company. Accordingly, his
entitlement to any termination payment or payments upon a change-in-control of
the Company is subject to and pursuant to the Companys Severance Benefit Plan
and the Change of Control Severance Benefit Schedule thereto.
25
Table of
Contents
Under
the terms of the Change of Control Severance Benefit Schedule, if the Company
terminates Mr. Bennetts employment without just cause or Mr. Bennett
resigns for good reason within two months prior to or six months following the
effective date of a change-in-control of the Company, provided that
Mr. Bennett executes a general release in favor of the Company,
Mr. Bennett is entitled to receive the following: (i) any base salary
earned but unpaid prior to the date of termination; (ii) all accrued but
unused vacation; (iii) any unreimbursed business expenses; (iv) six
months base pay plus an additional two weeks base pay for each 12 months
of continuous service, up to a maximum of 52 weeks base pay;
(v) payment of Mr. Bennetts target bonus award for the year in which
Mr. Bennetts employment terminates, prorated through the date of
termination; (vi) payment of premiums for his group health insurance COBRA
continuation coverage for the same duration as to which he is entitled to base
pay; and (vii) immediate vesting of all outstanding options and other
stock awards granted to him. In addition, Mr. Bennett is eligible to
participate in an outplacement assistance program to be selected by the
Company. The Companys obligation to pay Mr. Bennetts COBRA premiums
ceases upon Mr. Bennetts eligibility for comparable coverage provided by
a new employer. The amount of the foregoing benefits are capped at two times
Mr. Bennetts annual compensation earned during the calendar year
immediately preceding his termination of employment (calculated on an
annualized basis).
The
following table reflects the estimated potential payments that would be payable
to Mr. Bennett upon a termination or change-in-control of the Company
under the Companys Severance Benefit Plan and the Change of Control Severance
Benefit Schedule thereto. The amounts shown reflect only the additional
payments or benefits that Mr. Bennett would have received upon the
occurrence of the respective triggering events listed below; they do not
include the value of payments or benefits that would have been earned, or any
amounts associated with equity awards that would have vested absent the
triggering event.
|
|
Termination
For Just
Cause or
Resignation
Without
Good
Reason
Termination
|
|
Termination
Without Just
Cause or
Resignation
With Good
Reason
Termination
|
|
Termination
Without Just
Cause or
Resignation With
Good Reason (in
connection with a
Change-in-Control)
|
|
Bruce K. Bennett
|
|
|
|
|
|
|
|
Cash Payments
|
|
|
|
|
|
|
|
Cash Severance
|
|
$
|
|
|
$
|
|
|
$
|
136,000
|
(1)
|
Target Bonus for Year of Separation
|
|
$
|
|
|
$
|
|
|
$
|
58,700
|
|
Long-Term Incentives
|
|
|
|
|
|
|
|
Stock Options (Unvested and Accelerated)
|
|
$
|
|
|
$
|
|
|
$
|
6,300
|
(2)
|
Restricted Stock (Unvested and Accelerated)
|
|
$
|
|
|
$
|
|
|
$
|
38,700
|
(3)
|
Benefits and Perquisites
|
|
|
|
|
|
|
|
Accrued Sick Leave
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Benefits Continuation
|
|
$
|
|
|
$
|
|
|
$
|
11,600
|
|
Outplacement Assistance
|
|
$
|
|
|
|
|
$
|
|
|
Total Payments
Upon Termination
|
|
$
|
|
|
$
|
|
|
$
|
251,300
|
|
(1)
Amount represents 0.5 times base salary then in
effect, plus an additional 4 weeks base pay.
(2)
Amount represents the in-the-money value of unvested
stock options as of December 31, 2009, using the closing market price of
the Companys common stock on December 31, 2009. The number of shares
underlying such stock options and the exercise price thereof are reflected in
the columns entitled Number of Securities Underlying Unexercised
OptionsUnexercisable and Option Exercise Price, respectively, in the
Outstanding Equity Awards at Fiscal Year End table set forth on page 18 of
this Amendment No. 1.
(3)
Amount represents the in-the-money value of unvested
restricted stock as of December 31, 2009, using the closing market price
of the Companys common stock on December 31, 2009. The number of shares
of restricted stock are reflected in the column entitled Number of Shares or
Units of Stock that Have Not Vested in the Outstanding Equity Awards at Fiscal
Year End table set forth on page 18 of this Amendment No. 1.
James V. CarusoExecutive Vice
President, Chief Commercial Officer
Under
the terms of Mr. Carusos amended and restated employment agreement, as
amended, if the Company terminates Mr. Carusos employment for just cause
or Mr. Caruso resigns without good reason, Mr. Caruso is entitled to
the following: (i) any salary earned but unpaid prior to the date of
termination; (ii) all accrued but unused vacation; and (iii) any
unreimbursed business expenses.
26
Table of
Contents
Under
the terms of Mr. Carusos amended and restated employment agreement, as
amended, if the Company terminates Mr. Carusos employment without just
cause or Mr. Caruso resigns with good reason (other than in connection
with a change-in-control of the Company), provided that Mr. Caruso
executes a general release in favor of the Company, Mr. Caruso is entitled
to the following: (i) continuation of Mr. Carusos then current base
salary for a period of 12 months following the date of termination, paid
on the same basis and at the same time as previously paid; (ii) payment of
any accrued but unused vacation and sick leave; and (iii) payment of
premiums for his group health insurance COBRA continuation coverage for up to
12 months following the date of termination. The Companys obligation to
pay Mr. Carusos COBRA premiums ceases upon Mr. Carusos eligibility
for comparable coverage provided by a new employer. Except for the payment of
any accrued but unused vacation and sick leave, the payments described above
shall cease, and the Company shall have no further obligations to
Mr. Caruso with respect thereto, in the event that Mr. Caruso
breaches the confidentiality, non-compete or non-solicitation provisions under
his confidentiality and inventions assignment agreement with the Company.
Under
the terms of Mr. Carusos amended and restated employment agreement, as
amended, if the Company (or any surviving or acquiring corporation) terminates
Mr. Carusos employment without just cause or Mr. Caruso resigns with
good reason within one month prior to or 12 months following the effective
date of a change-in-control of the Company, provided that Mr. Caruso
executes a general release in favor of the Company, Mr. Caruso is entitled
to the following: (i) a lump-sum cash payment in an amount equal to
(A) 1.5 times Mr. Carusos annual base salary then in effect, plus
(B) 1.5 times the greater of (1) Mr. Carusos annualized target
bonus award for the year in which Mr. Carusos employment terminates or
(2) the annual bonus amount paid to Mr. Caruso in the immediately
prior year; (ii) payment of any accrued but unused vacation and sick
leave; (iii) payment of Mr. Carusos target bonus award for the year
in which Mr. Carusos employment terminates, prorated through the date of
termination; (iv) payment of premiums for his group health insurance COBRA
continuation coverage for up to 18 months following the date of
termination; (v) outplacement assistance for up to nine months following
the date of termination with an aggregate cost of up to $11,250; and
(vi) immediate vesting of all outstanding stock options and other stock
awards granted to Mr. Caruso and the extension of the option exercise
period for 12 months after the date of termination. The Companys
obligation to pay Mr. Carusos COBRA premiums ceases upon Mr. Carusos
eligibility for comparable coverage provided by a new employer. Certain of the
payments described above shall cease, and the Company shall have no further
obligations to Mr. Caruso with respect thereto, in the event that
Mr. Caruso breaches the confidentiality, non-compete or non-solicitation
provisions under his confidentiality and inventions assignment agreement with the
Company. In addition, Mr. Carusos amended and restated employment
agreement, as amended, provides that, in certain circumstances, he will be
entitled to a gross-up payment for payments that result in an excise tax
imposed by Section 4999 of the Code.
The
following table reflects the estimated potential payments that would be payable
to Mr. Caruso upon a termination or change-in-control of the Company under
the terms of his amended and restated employment agreement, as amended. The
amounts shown reflect only the additional payments or benefits that
Mr. Caruso would have received upon the occurrence of the respective
triggering events listed below; they do not include the value of payments or
benefits that would have been earned, or any amounts associated with equity
awards that would have vested, absent the triggering event.
|
|
Termination
For Just
Cause or
Resignation
Without
Good
Reason
Termination
|
|
Termination
Without Just
Cause or
Resignation
With Good
Reason
Termination
|
|
Termination
Without Just
Cause or
Resignation With
Good Reason (in
connection with a
Change-in-Control)
|
|
James V. Caruso
|
|
|
|
|
|
|
|
Cash Payments
|
|
|
|
|
|
|
|
Cash Severance
|
|
$
|
|
|
$
|
408,500
|
(1)
|
$
|
857,900
|
(2)
|
Target Bonus for Year of Separation
|
|
$
|
|
|
$
|
|
|
$
|
163,400
|
|
Long-Term Incentives
|
|
|
|
|
|
|
|
Stock Options (Unvested and Accelerated)
|
|
$
|
|
|
$
|
|
|
$
|
214,100
|
(3)
|
Restricted Stock (Unvested and Accelerated)
|
|
$
|
|
|
$
|
|
|
$
|
338,100
|
(4)
|
Benefits and Perquisites
|
|
|
|
|
|
|
|
Accrued Sick Leave
|
|
$
|
|
|
$
|
25,100
|
|
$
|
25,100
|
|
Benefits Continuation
|
|
$
|
|
|
$
|
19,900
|
|
$
|
29,800
|
|
Outplacement Assistance
|
|
$
|
|
|
$
|
|
|
$
|
11,250
|
|
Excise Tax Gross-Up (Estimated)
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Total Payments
Upon Termination
|
|
$
|
|
|
$
|
453,500
|
|
$
|
1,639,650
|
|
27
Table of
Contents
(1)
Amount represents 1.0 times base salary then in
effect, payable on the same basis and at the same time as paid at the time of
termination.
(2)
Amount represents a lump sum payment equal to
(i) 1.5 times base salary then in effect, plus (ii) 1.5 times
annualized target bonus award for the year of termination.
(3)
Amount represents the in-the-money value of unvested
stock options as of December 31, 2009, using the closing market price of
the Companys common stock on December 31, 2009. The number of shares
underlying such stock options and the exercise price thereof are reflected in
the columns entitled Number of Securities Underlying Unexercised
OptionsUnexercisable and Option Exercise Price, respectively, in the
Outstanding Equity Awards at Fiscal Year End table set forth on page 18 of
this Amendment No. 1.
(4)
Amount represents the in-the-money value of unvested
restricted stock as of December 31, 2009, using the closing market price
of the Companys common stock on December 31, 2009. The number of shares
of restricted stock are reflected in the column entitled Number of Shares or
Units of Stock that Have Not Vested in the Outstanding Equity Awards at Fiscal
Year End table set forth on page 18 of this Amendment No. 1.
David C. Clark, Vice President,
Finance
Under
the terms of Mr. Clarks employment agreement if the Company terminates
Mr. Clarks employment for just cause or Mr. Clark resigns without
good reason, Mr. Clark is entitled to the following: (i) any base
salary earned but unpaid prior to the date of termination; (ii) all
accrued but unused vacation; and (iii) any unreimbursed business expenses.
Under
the terms of Mr. Clarks employment agreement, if the Company terminates
Mr. Clarks employment without just cause or Mr. Clark resigns with
good reason (other than in connection with a change-in-control of the Company),
provided that Mr. Clark executes a general release in favor of the
Company, Mr. Clark is entitled to the following: (i) continuation of
Mr. Clarks then current base salary for a period of six months following
the date of termination, paid on the same basis and at the same time as
previously paid; (ii) payment of any accrued but unused vacation and sick
leave; and (iii) payment of premiums for his group health insurance COBRA
continuation coverage for up to six months following the date of termination.
The Companys obligation to pay Mr. Clarks COBRA premiums ceases upon
Mr. Clarks eligibility for comparable coverage provided by a new
employer. Except for the payment of any accrued but unused vacation and sick
leave, the payments described above shall cease, and the Company shall have no
further obligations to Mr. Clark with respect thereto, in the event that
Mr. Clark breaches the confidentiality, non-compete or non-solicitation
provisions under his confidentiality and inventions assignment agreement with
the Company.
Under
the terms of Mr. Clarks employment agreement, if the Company (or any
surviving or acquiring corporation) terminates Mr. Clarks employment
without just cause or Mr. Clark resigns with good reason within one month
prior to or 12 months following the effective date of a change-in-control
of the Company, provided that Mr. Clark executes a general release in
favor of the Company, Mr. Clark is entitled to the following: (i) a
lump-sum cash payment in an amount equal to (A) Mr. Clarks annual
base salary then in effect, plus (B) the greater of
(1) Mr. Clarks annualized target bonus award for the year in which
Mr. Clarks employment terminates or (2) the annual bonus amount paid
to Mr. Clark in the immediately prior year; (ii) payment of any
accrued but unused vacation and sick leave; (iii) payment of
Mr. Clarks target bonus award for the year in which Mr. Clarks
employment terminates, prorated through the date of termination;
(iv) payment of premiums for his group health insurance COBRA continuation
coverage for up to 12 months following the date of termination;
(v) outplacement assistance for up to six months following the date of
termination with an aggregate cost of up to $7,500; and (vi) immediate
vesting of all outstanding stock options and other stock awards granted to
Mr. Clark and the extension of the option exercise period for 12 months
after the date of termination. The Companys obligation to pay Mr. Clarks
COBRA premiums ceases upon Mr. Clarks eligibility for comparable coverage
provided by a new employer. Certain of the payments described above shall
cease, and the Company shall have no further obligations to Mr. Clark with
respect thereto, in the event that Mr. Clark breaches the confidentiality,
non-compete or non-solicitation provisions under his confidentiality and
inventions assignment agreement with the Company.
The
following table reflects the estimated potential payments that would be payable
to Mr. Clark upon a termination or change-in-control of the Company under
the terms of his employment agreement. The amounts shown reflect only the
additional payments or benefits that Mr. Clark would have received upon
the occurrence of the respective triggering events listed below; they do not
include the value of payments or benefits that would have been earned, or any
amounts associated with equity awards that would have vested absent the
triggering event.
28
Table of
Contents
|
|
Termination
For Just
Cause or
Resignation
Without
Good
Reason
Termination
|
|
Termination
Without Just
Cause or
Resignation
With Good
Reason
Termination
|
|
Termination
Without Just
Cause or
Resignation With
Good Reason (in
connection with a
Change-in-Control)
|
|
David C. Clark
|
|
|
|
|
|
|
|
Cash Payments
|
|
|
|
|
|
|
|
Cash Severance
|
|
$
|
|
|
$
|
107,600
|
(1)
|
$
|
269,100
|
(2)
|
Target Bonus for Year of Separation
|
|
$
|
|
|
$
|
|
|
$
|
53,800
|
|
Long-Term Incentives
|
|
|
|
|
|
|
|
Stock Options (Unvested and Accelerated)
|
|
$
|
|
|
$
|
|
|
$
|
37,400
|
(3)
|
Restricted Stock (Unvested and Accelerated)
|
|
$
|
|
|
$
|
|
|
$
|
38,700
|
(4)
|
Benefits and Perquisites
|
|
|
|
|
|
|
|
Accrued Sick Leave
|
|
$
|
|
|
$
|
11,600
|
|
$
|
11,600
|
|
Benefits Continuation
|
|
$
|
|
|
$
|
9,900
|
|
$
|
19,900
|
|
Outplacement Assistance
|
|
$
|
|
|
$
|
|
|
$
|
7,500
|
|
Total Payments
Upon Termination
|
|
$
|
|
|
$
|
129,100
|
|
$
|
438,000
|
|
(1)
Amount represents 0.5 times base salary then in
effect, payable on the same basis and at the same time as paid at the time of
termination.
(2)
Amount represents a lump sum payment equal to
(i) 1.0 times base salary then in effect, plus (ii) 1.0 times
annualized target bonus award for the year of termination.
(3)
Amount represents the in-the-money value of unvested
stock options as of December 31, 2009, using the closing market price of
the Companys common stock on December 31, 2009. The number of shares
underlying such stock options and the exercise price thereof are reflected in
the columns entitled Number of Securities Underlying Unexercised
OptionsUnexercisable and Option Exercise Price, respectively, in the
Outstanding Equity Awards at Fiscal Year End table set forth on page 18 of
this Amendment No. 1.
(4)
Amount represents the in-the-money value of unvested
restricted stock as of December 31, 2009, using the closing market price
of the Companys common stock on December 31, 2009. The number of shares
of restricted stock are reflected in the column entitled Number of Shares or
Units of Stock that Have Not Vested in the Outstanding Equity Awards at Fiscal
Year End table set forth on page 18 of this Amendment No. 1.
Marc H. GraboyesSenior Vice President,
General Counsel and Secretary
Under
the terms of Mr. Graboyes amended and restated employment agreement, as
amended, if the Company terminates Mr. Graboyes employment for just cause
or Mr. Graboyes resigns without good reason, Mr. Graboyes is entitled
to the following: (i) any base salary earned but unpaid prior to the date
of termination; (ii) all accrued but unused vacation; and (iii) any
unreimbursed business expenses.
Under
the terms of Mr. Graboyes amended and restated employment agreement, as
amended, if the Company terminates Mr. Graboyes employment without just
cause or Mr. Graboyes resigns with good reason (other than in connection
with a change-in-control of the Company), provided that Mr. Graboyes
executes a general release in favor of the Company, Mr. Graboyes is
entitled to the following: (i) continuation of Mr. Graboyes then
current base salary for a period of six months following the date of
termination, paid on the same basis and at the same time as previously paid;
(ii) payment of any accrued but unused vacation and sick leave; and
(iii) payment of premiums for his group health insurance COBRA
continuation coverage for up to six months following the date of termination.
The Companys obligation to pay Mr. Graboyes COBRA premiums ceases upon
Mr. Graboyes eligibility for comparable coverage provided by a new
employer. Except for the payment of any accrued but unused vacation and sick
leave, the payments described above shall cease, and the Company shall have no
further obligations to Mr. Graboyes with respect thereto, in the event
that Mr. Graboyes breaches the confidentiality, non-compete or
non-solicitation provisions under his confidentiality and inventions assignment
agreement with the Company.
Under
the terms of Mr. Graboyes amended and restated employment agreement, as
amended, if the Company (or any surviving or acquiring corporation) terminates
Mr. Graboyes employment without just cause or Mr. Graboyes resigns
with good reason within one month prior to or 12 months following the
effective date of a change-in-control of the Company, provided that
Mr. Graboyes executes a general release in favor of the Company,
Mr. Graboyes is entitled to the following: (i) a lump-sum cash
payment in an amount equal to (A) Mr. Graboyes annual base salary
then in effect, plus (B) the greater of (1) Mr. Graboyes
annualized target bonus award for the year in which Mr. Graboyes
employment terminates or (2) the annual bonus amount paid to
Mr. Graboyes in the immediately prior year; (ii) payment of any
accrued but unused vacation and sick leave; (iii) payment of
Mr. Graboyes target bonus award for the year in which Mr. Graboyes
employment terminates, prorated through the date of termination;
(iv) payment of premiums for his group health insurance COBRA continuation
coverage for up to 12 months following the date of termination;
(v) outplacement assistance for up to six months following the date of
termination with an aggregate cost of up to $7,500; and (vi) immediate
vesting of all outstanding stock options and other stock awards granted to
Mr. Graboyes and the extension of the option exercise period for
12 months after the date of termination. The Companys obligation to pay
Mr. Graboyes COBRA premiums ceases upon Mr. Graboyes
29
Table of Contents
eligibility for comparable coverage provided
by a new employer. Certain of the payments described above shall cease, and the
Company shall have no further obligations to Mr. Graboyes with respect
thereto, in the event that Mr. Graboyes breaches the confidentiality,
non-compete or non-solicitation provisions under his confidentiality and
inventions assignment agreement with the Company.
The
following table reflects the estimated potential payments that would be payable
to Mr. Graboyes upon a termination or change-in-control of the Company
under the terms of his amended and restated employment agreement, as amended.
The amounts shown reflect only the additional payments or benefits that
Mr. Graboyes would have received upon the occurrence of the respective
triggering events listed below; they do not include the value of payments or
benefits that would have been earned, or any amounts associated with equity awards
that would have vested absent the triggering event.
|
|
Termination
For Just
Cause or
Resignation
Without
Good
Reason
Termination
|
|
Termination
Without Just
Cause or
Resignation
With Good
Reason
Termination
|
|
Termination
Without Just
Cause or
Resignation With
Good Reason (in
connection with a
Change-in-Control)
|
|
Marc H. Graboyes
|
|
|
|
|
|
|
|
Cash Payments
|
|
|
|
|
|
|
|
Cash Severance
|
|
$
|
|
|
$
|
154,000
|
(1)
|
$
|
431,300
|
(2)
|
Target Bonus for Year of Separation
|
|
$
|
|
|
$
|
|
|
$
|
123,200
|
|
Long-Term Incentives
|
|
|
|
|
|
|
|
Stock Options (Unvested and Accelerated)
|
|
$
|
|
|
$
|
|
|
$
|
57,400
|
(3)
|
Restricted Stock (Unvested and Accelerated)
|
|
$
|
|
|
$
|
|
|
$
|
99,100
|
(4)
|
Benefits and Perquisites
|
|
|
|
|
|
|
|
Accrued Sick Leave
|
|
$
|
|
|
$
|
19,000
|
|
$
|
19,000
|
|
Benefits Continuation
|
|
$
|
|
|
$
|
6,600
|
|
$
|
13,300
|
|
Outplacement Assistance
|
|
$
|
|
|
$
|
|
|
$
|
7,500
|
|
Total Payments
Upon Termination
|
|
$
|
|
|
$
|
179,600
|
|
$
|
750,800
|
|
(1)
Amount represents 0.5 times base salary then in
effect, payable on the same basis and at the same time as paid at the time of
termination.
(2)
Amount represents a lump sum payment equal to
(i) 1.0 times base salary then in effect, plus (ii) 1.0 times
annualized target bonus award for the year of termination.
(3)
Amount represents the in-the-money value of unvested
stock options as of December 31, 2009, using the closing market price of
the Companys common stock on December 31, 2009. The number of shares
underlying such stock options and the exercise price thereof are reflected in
the columns entitled Number of Securities Underlying Unexercised
OptionsUnexercisable and Option Exercise Price, respectively, in the
Outstanding Equity Awards at Fiscal Year End table set forth on page 18 of
this Amendment No. 1.
(4)
Amount represents the in-the-money value of unvested
restricted stock as of December 31, 2009, using the closing market price
of the Companys common stock on December 31, 2009. The number of shares
of restricted stock are reflected in the column entitled Number of Shares or
Units of Stock that Have Not Vested in the Outstanding Equity Awards at Fiscal
Year End table set forth on page 18 of this Amendment No. 1.
Pablo J. CagnoniFormer Senior Vice
President, Chief Medical Officer
Dr. Cagnoni
resigned as Senior Vice President, Chief Medical Officer of the Company,
effective September 30, 2009. At the time of his resignation,
Dr. Cagnoni received $55,000 of accrued, but unused vacation.
Dr. Cagnoni had received $314,200 in annual salary as of the date of his
resignation. Dr. Cagnoni also received $152,800 in stock awards (aggregate
full grant date value) and $559,000 in option awards (aggregate full grant date
value) during 2009.
Director
Compensation
The following table shows
certain information with respect to the compensation of all non-employee
directors of the Company for the fiscal year ended December 31, 2009:
30
Table of
Contents
Director Compensation for Fiscal 2009
Name
|
|
Fees Earned or
Paid in Cash
($)
|
|
Option Awards
($)(1)
|
|
Total
($)
|
|
Stephen J. Hoffman(2)
|
|
77,500
|
|
139,300
|
|
216,800
|
|
Michael D. Casey(3)
|
|
65,000
|
|
92,900
|
|
157,900
|
|
Stewart Hen(4)
|
|
47,500
|
|
92,900
|
|
140,900
|
|
Jonathan S. Leff(5)
|
|
45,000
|
|
92,900
|
|
137,900
|
|
Timothy P. Lynch(6)
|
|
61,300
|
|
92,900
|
|
154,200
|
|
Jeffrey R. Latts(7)
|
|
45,000
|
|
92,900
|
|
137,900
|
|
David M. Stout(8)
|
|
37,500
|
|
97,500
|
|
135,000
|
|
(1)
The amounts shown in this column represent the
aggregate full grant date fair value calculated in accordance with FASB ASC
Topic 718 for stock options granted during the fiscal year to the non-employee
directors. Pursuant to SEC rules, the amounts shown exclude the impact of
estimated forfeitures related to service-based vesting conditions. For
additional information on the valuation assumptions used to calculate these
amounts, see Note 5 to the Financial Statements included in the Companys
Annual Report on Form 10-K for the year ended December 31, 2008.
(2)
Grant date fair value of 30,000 options granted in
2009: $139,300. Total number of shares subject to stock options outstanding at
December 31, 2009: 577,571.
(3)
Grant date fair value of 20,000 options granted in
2009: $92,900. Total number of shares subject to stock options outstanding at
December 31, 2009: 140,000.
(4)
Grant date fair value of 20,000 options granted in
2009: $92,900. Total number of shares subject to stock options outstanding at
December 31, 2009: 100,000.
(5)
Grant date fair value of 20,000 options granted in
2009: $92,900. Total number of shares subject to stock options outstanding at
December 31, 2009: 100,000.
(6)
Grant date fair value of 20,000 options granted in
2009: $92,900. Total number of shares subject to stock options outstanding at
December 31, 2009: 105,000.
(7)
Grant date fair value of 20,000 options granted in
2009: $92,900. Total number of shares subject to stock options outstanding at
December 31, 2009: 65,000.
(8)
Grant date fair value of 45,000 options granted in
2009: $97,500. Total number of shares subject to stock options outstanding at
December 31, 2009: 45,000.
Cash Compensation
Effective
as of June 22, 2009, the Board of Directors approved the following
compensation arrangements for the Companys non-employee directors. Each
non-employee director of the Company receives an annual retainer of $40,000,
except that the Chairman of the Board receives an annual retainer of $60,000.
Each non-employee director that serves as Chairman of the Audit Committee of
the Board (the Audit Committee) also receives an additional annual retainer
of $20,000. Each non-employee director that serves as Chairman of the
Compensation Committee of the Board also receives an additional annual retainer
of $12,500. Each non-employee director that serves as chairman of any other
committee of the Board also receives an additional annual retainer of $7,500.
Each non-employee director who serves on the Audit Committee (other than the
Chairman) receives an additional retainer of $10,000. Each non-employee
director who serves on any other committee of the Board (other than the Chairman)
receives an additional retainer of $5,000. Annual retainers are paid in equal
quarterly installments on the first day of each calendar quarter.
In
addition, each non-employee director, including the Chairman of the Board, is
reimbursed for all reasonable out-of-pocket expenses incurred by such director
in connection with attending any regular or special meeting of the Board or any
regular or special meeting of any committee of the Board.
Stock Options
The
Company grants stock options to its non-employee directors under a stock option
grant program for non-employee directors (the Directors Program)
administered under the 2008 Plan.
Under
the Directors Program, each person who becomes a non-employee director of the
Company is automatically granted a non-qualified stock option to purchase
25,000 shares of common stock on the date of his or her initial election,
except that any person who becomes the Companys Chairman of the Board (other
than an employee of the Company) is automatically granted a nonqualified stock
option to purchase 50,000 shares of common stock on the date of his or her
initial election (each, an Initial Grant). Initial Grants vest in equal
installments on each of the first, second and third anniversaries.
31
Table of
Contents
In
addition, under the Directors Program, each non-employee director is
automatically granted a non-qualified stock option to purchase 20,000 shares of
common stock immediately following each years annual meeting of stockholders,
except that the Chairman of the Board is automatically granted a non-qualified
stock option to purchase 30,000 shares of common stock immediately following
each years annual meeting of stockholders (each, an Annual Grant). Annual
Grants fully vest on the date of the next years annual meeting of
stockholders, assuming continued service as a director during such period.
However, any non-employee director who received an Initial Grant within three
months prior to an annual meeting is not eligible to receive an Annual Grant
until the second annual meeting after his or her Initial Grant.
All
stock options granted under the Directors Program have a term of 10 years
and an exercise price equal to the closing price of a share of the Companys
common stock on the date of grant.
Compensation Committee Interlocks
and Insider Participation
As noted above, the Companys
Compensation Committee consists of Messrs. Leff and Stout and
Dr. Latts. Michael D. Casey, who resigned as a director of the Company
effective January 25, 2010, also served as Chairperson of the Compensation
Committee during the fiscal year ended December 31, 2009. None of the Companys
executive officers serve as a member of the board of directors or compensation
committee of any entity that has one or more executive officers who serve on
the Companys Board of Directors or Compensation Committee.
Compensation Committee Report(1)
The
Compensation Committee has reviewed and discussed with management the
Compensation Discussion and Analysis contained in this Amendment No. 1.
Based on this review and discussion, the Compensation Committee has recommended
to the Board of Directors that such Compensation Discussion and Analysis be
included in this Amendment No. 1.
|
Dr. Jeffrey
R. Latts
|
|
Mr. Jonathan
S. Leff
|
|
Mr. David
M. Stout
|
(1) The material in this report is not soliciting material,
is not deemed filed with the SEC, and is not to be incorporated by reference
into any filing of the Company under the Securities Act or the Exchange Act
whether made before or after the date hereof and irrespective of any general
incorporation language in any such filing.
32
Table of
Contents
SIGNATURES
Pursuant to the requirements
of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
|
ALLOS THERAPEUTICS, INC.
|
|
|
Date:
September 1, 2010
|
By:
|
/s/
PAUL L. BERNS
|
|
|
Paul
L. Berns
|
|
|
President and Chief Executive Officer
|
|
|
|
Pursuant to
the requirements of the Securities Exchange Act of 1934, as amended, this
Amendment No. 1 to the report has been signed by the following persons on
behalf of the registrant on September 1
, 2010
, and in the capacities indicated:
Name
|
|
Title
|
|
|
|
*
|
|
Chairman of Board of
Directors and Director
|
Stephen J. Hoffman
|
|
|
|
|
|
/s/ PAUL L. BERNS
|
|
President, Chief Executive
Officer and Director (Principal Executive Officer)
|
Paul L. Berns
|
|
|
|
|
|
/s/ DAVID C. CLARK
|
|
Vice President, Finance
and Treasurer
|
David C. Clark
|
|
(Principal Financial Officer
and Principal Accounting Officer)
|
|
|
|
|
|
Director
|
Nishan de Silva
|
|
|
|
|
|
*
|
|
Director
|
Jeffrey R. Latts
|
|
|
|
|
|
*
|
|
Director
|
Jonathan S. Leff
|
|
|
|
|
|
*
|
|
Director
|
Timothy P. Lynch
|
|
|
|
|
|
*
|
|
Director
|
David M. Stout
|
|
|
|
|
|
*By: /s/ PAUL L. BERNS
|
|
|
Paul L. Berns, Attorney-in-Fact
|
|
|
33
Table of
Contents
EXHIBIT INDEX
Exhibit
No.
|
|
Description
|
31.01
|
|
Rule 13a-14(a)/15d-14(a) Certification.
|
31.02
|
|
Rule 13a-14(a)/15d-14(a) Certification.
|
32.01#
|
|
Section 1350
Certification.
|
#
The certifications attached as Exhibit 32.01 that accompany this
Amendment No. 1
to the Annual Report on Form 10-K/A
are not deemed filed with the Securities and Exchange Commission and are not to
be incorporated by reference into any filing of Allos Therapeutics, Inc.
under the Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended, whether made before or after the date of this Amendment
No. 1 to the Annual Report on Form 10-K/A, irrespective of any general incorporation language contained in such
filing.
34
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