UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
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Insmed
Incorporated
8720
Stony Point Parkway, Suite 200
Richmond,
VA 23235
ANNUAL
MEETING OF SHAREHOLDERS
April 17,
2009
To the
Shareholders:
We
cordially invite you to attend the 2009 Annual Meeting of Shareholders to be
held at the Hyatt Reston Town Center Hotel, 1800 Presidents Street, Reston,
Virginia, on May 20, 2009, at 9:00 a.m. local time. A formal notice
of the meeting, together with a proxy statement and proxy form, is enclosed with
this letter. The notice points out that you will be asked
to:
|
(i)
|
elect
three Class III directors
to serve until the
2012 Annual Meeting of
Shareholders;
|
|
(ii)
|
ratify
the selection of Ernst & Young LLP as our auditors for the fiscal year
ending December 31, 2009; and
|
|
(iii)
|
transact
such other business as may properly come before the
meeting.
|
Please
read the notice and proxy statement carefully, complete the proxy form and mail
it promptly. A postage-paid return envelope is enclosed for your
convenience.
Whether
or not you plan to attend the Annual Meeting in person and regardless of the
number of shares of common stock you own, please complete, sign, date and return
the enclosed proxy promptly in the accompanying prepaid envelope.
Sincerely
yours,
Geoffrey
Allan, Ph.D.
Chairman
of the Board
Chief
Executive Officer
President
INSMED
INCORPORATED
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS
HEREBY GIVEN that the 2009 Annual Meeting of Shareholders of Insmed Incorporated
will be held at the Hyatt Reston Town Center Hotel, 1800 Presidents Street,
Reston, Virginia, on May 20, 2009, at 9:00 a.m. local time, for the following
purposes:
1.
|
To
elect three Class III
directors to serve
until the 2012 Annual Meeting of
Shareholders;
|
2.
|
To
ratify the selection of Ernst & Young LLP as our auditors for the
fiscal year ending December 31, 2009;
and
|
3.
|
To
transact such other business as may properly come before the
meeting.
|
Holders
of record of shares of Insmed common stock at the close of business on March 27,
2009, will be entitled to vote at the meeting.
You are
requested to complete, sign, date and return the enclosed proxy promptly,
regardless of whether you expect to attend the Annual Meeting. A
postage-paid return envelope is enclosed for your convenience. If you
are present at the Annual Meeting, you may vote in person even if you already
have sent in your proxy.
By Order
of the Board of Directors
W.
McIlwaine Thompson, Jr.,
Corporate
Secretary
April 17,
2009
PROXY
STATEMENT
for
ANNUAL
MEETING OF SHAREHOLDERS
of
INSMED
INCORPORATED
To
be held May 20, 2009
Solicitation
of Proxies.
The Board
of Directors (the “Board”) of Insmed Incorporated (“Insmed”, which may be
referred to as the “Company”, “we”, “us” or “our”) is soliciting your proxy for
the Annual Meeting of Shareholders to be held at the Hyatt Reston Town Center
Hotel, 1800 Presidents Street, Reston, Virginia, on May 20, 2009, at 9:00
a.m., local time (the “Annual Meeting”). This proxy statement and the
accompanying proxy card are being mailed to our shareholders on or about April
17, 2009.
Information
about the Annual Meeting.
Who May
Vote
.
Shareholders of
record at the close of business on March 27, 2009 (the “Record Date”), will be
entitled to notice of and to vote at the Annual Meeting. As of the Record
Date, we had 122,494,010 outstanding shares of common
stock, $0.01 par value
per share. Each share of our common stock entitles the holder to one vote with
respect to all matters submitted to shareholders at the Annual
Meeting. Beneficial owners of shares of our common stock may direct
the record holder of the shares on how to vote the shares held on their
behalf.
Shareholders of
Record
.
If on the Record
Date, shares of our common stock were registered directly in your name with our
transfer agent, then you are a shareholder of record. As a
shareholder of record, you may vote in person or by proxy at the Annual
Meeting. Whether or not you plan to attend the Annual Meeting, we
urge you to fill out and return the enclosed proxy card or vote by proxy over
the telephone or on the Internet as instructed below to ensure your vote is
counted.
Beneficial Owners
of Shares
.
If on the Record
Date, your shares of our common stock were held, not in your name, but rather in
an account at a brokerage firm, bank, dealer, or other similar organization,
then you are the beneficial owner of shares held in “street name” and these
proxy materials have been forwarded to you by that organization. The
organization holding your account is considered to be the shareholder of record
for purposes of voting at the Annual Meeting. As a beneficial owner,
you have the right to direct your broker or other agent on how to vote the
shares in your account. You are also invited to attend the Annual
Meeting. However, since you are not the shareholder of record, you
may not vote your shares in person at the Annual Meeting unless you request and
obtain a valid proxy from your broker or other agent.
Quorum and Vote
Required to Approve Each Item on the Proxy
.
A majority of the
outstanding shares of our common stock represented in person or by proxy at the
Annual Meeting constitutes a quorum for the transaction of business at the
Annual Meeting.
Proposal
1, the election of the directors, requires the affirmative vote of the holders
of a plurality of the votes cast in the election of
directors. Signing and returning your proxy will constitute a vote
“for” the nominees unless your proxy specifies that you are withholding
authority to vote for the nominees or for a specific nominee. Any
votes that are withheld and any shares held in street name for customers who are
the beneficial owners of those shares that are not voted in the election of the
directors will not be included in determining the number of votes
cast. In the event that any of the nominees are unavailable for
election, the Board may either reduce the number of directors or choose a
substitute nominee. If the Board selects a substitute nominee, the
shares represented by proxy will be voted “for” the substitute nominee unless
other instructions are given in the proxy. The Board has no reason to
believe that the nominees will be unavailable.
Proposal
2, designation of auditors, does not require shareholder ratification under
Virginia law, our Articles of Incorporation, as amended (“Articles of
Incorporation”), or our Amended and Restated Bylaws (“Bylaws”). In
the event that a majority of the votes cast are against the ratification of
Ernst & Young LLP as our independent auditors for the fiscal year ending
December 31, 2009, the Audit Committee of the Board will consider the vote and
the reasons therefore in future independent auditor selection
decisions.
Revoking a
Proxy
.
Anyone giving a
proxy may revoke it at any time before it is voted by voting in person at the
Annual Meeting or by delivering a later dated proxy or written notice of
revocation to our Corporate Secretary. Attendance at the Annual
Meeting will not itself revoke a proxy. A proxy, if executed and not
revoked, will be voted at the Annual Meeting. If a proxy contains any
specific instructions, the proxy will be voted in accordance with such
instructions.
Cost of
Soliciting Proxies.
We will pay the cost of soliciting
proxies. In addition to the use of mails, proxies may be solicited in
person or by telephone by our regular employees. We have engaged
Georgeson Inc. to assist in the solicitation of proxies from brokers, nominees,
fiduciaries and other custodians. We will pay that firm approximately
$6,500 for its services and reimburse its out-of-pocket expenses for such items
as mailing, copying, phone calls, faxes and other related items and will
indemnify Georgeson Inc. from any losses arising from that firm’s proxy
soliciting services on our behalf.
Principal
Executive Offices of Insmed Incorporated.
The
address of our principal executive offices is 8720 Stony Point Parkway,
Suite 200, Richmond, Virginia 23235.
PROPOSAL NO.
1
ELECTION
OF DIRECTORS
Information
Relating to the Election of Directors.
Nominees
.
The Board has nominated
three Class III directors whose term expires in 2009, Dr. Geoffrey Allan,
Dr. Melvin Sharoky and Dr. Randall Whitcomb (the “nominees” and each a
“nominee”), for reelection at the Annual Meeting for the term expiring at the
2012 Annual Meeting of Shareholders. Below is some information on the
nominees.
Geoffrey Allan, Ph.D
. – age
55. Dr. Allan has been Chairman of our Board and has served as
our President and Chief Executive Officer since our inception in November 1999.
Dr. Allan was President and a director of Insmed Pharmaceuticals Inc., our
predecessor, from January 1994 to 2000 and has 29 years of experience in
pharmaceutical drug development. Prior to joining Insmed
Pharmaceuticals, Dr. Allan served as Vice President, Drug Development at
Whitby Research, Inc., a pharmaceutical company. Before his
association with Whitby Research, Dr. Allan was the Head of the
Cardiovascular Section at Wellcome Research Laboratories. Dr. Allan
received his B.Sc. in pharmacology from the University of Sunderland, and his
Ph.D. in pharmacology from Cornell University Medical College.
Melvin Sharoky, M.D.
–
age 58. Dr. Sharoky has been a member of our Board since
May 2001. From January 2002 to March 2007, he was
President and CEO of Somerset Pharmaceuticals, Inc., a research and development
pharmaceutical company which markets Eldepryl
â
for the treatment of patients with late stage Parkinson’s disease and developed
EMSAM
®
, which
is licensed to Bristol-Myers Squibb, for a major depressive disorder. Dr.
Sharoky continued as a consultant to Somerset until December
2007. He previously served as President of Somerset
Pharmaceuticals from July 1995 to June 2001. From June 2001 to January 2002, Dr.
Sharoky was retired. From July 1995 through January 1998, Dr. Sharoky
was President of Watson Pharmaceuticals, Inc., a leading specialty
pharmaceutical company, and from February 1993 to January 1998 he was also
President and CEO of its wholly-owned subsidiary, Circa Pharmaceuticals, Inc.,
which develops, manufactures and markets solid dosage generic pharmaceutical
products to wholesale distributors. Dr. Sharoky joined Circa
Pharmaceuticals in July 1988 as Medical Director, served as Senior Vice
President and Director of Research and Development from April 1991 to August
1992, and as Executive Vice President and Director of Research and Development
from August 1992 to January 1993. Prior to this, from February 1986
to June 1988, he was Vice President and Chief Medical Officer of Pharmakinetics
Laboratories, Inc. He is currently a member of the Board of Directors
of Par Pharmaceuticals. Dr. Sharoky received a B.A. in biology from
the University of Maryland in Baltimore County and an M.D. from the University
of Maryland School of Medicine.
Randall W.
Whitcomb
, M.D.
– age
54. Dr. Whitcomb has been a member of our Board since
November 2001. Since late 2006, Dr. Whitcomb has served as a consultant to
several privately held biotechnology companies. He also serves
as a Senior Advisor to Frazier Healthcare Ventures, a dedicated healthcare
venture capital company.
From 2001 to 2006, Dr.
Whitcomb served as Chief Medical Officer at, and was a Founder of, Quatrx
Pharmaceuticals, Inc., a privately-held, drug development company focusing on
discovery, licensing, developing and commercializing compounds in the endocrine,
metabolic and cardiovascular areas. From 1992 through 2000, he held
various management positions with Parke-Davis Pharmaceutical Research, Inc., a
division of Warner Lambert Company, finally serving as Vice President of Drug
Development with particular responsibility for the development and approval of
products for women’s health care and diabetes. After the merger of
Warner Lambert into Pfizer, Inc., Dr. Whitcomb was Vice President, Global
Project Management for Pfizer Global Research and Development. From
1987 through 1992 he was on the faculty of the Massachusetts General Hospital
and Harvard Medical School. He received his B.A. degree from Tabor
College and his M.D. degree from the University of Kansas.
Vote Required for
Approval
.
The election of
each nominee for director requires the affirmative vote of the holders of a
plurality of the votes cast in the election of the directors. Signing
and returning your proxy will constitute a vote “for” all of the nominees unless
your proxy specifies that you are withholding authority to vote for either or
both of the nominees. Any votes that are withheld and any shares held
in street name for customers who are the beneficial owners of those shares that
are not voted in the election of the directors will not be included in
determining the number of votes cast. In the event that any of the
nominees is unavailable for election, the Board may either reduce the number of
directors or choose a substitute nominee. If the Board selects a
substitute nominee, the shares represented by proxy will be voted “for” the
substitute nominee unless other instructions are given in the
proxy. The Board has no reason to believe that the nominees will be
unavailable.
Recommendation.
THE
BOARD RECOMMENDS THAT YOU VOTE “FOR” ALL OF THE NOMINEES.
The
Board of Directors.
Our
Articles of Incorporation provide that our Board shall consist of not more than
12 directors, with the exact number to be prescribed by our
Bylaws. Our Bylaws provide that the number of directors constituting
our Board shall be designated by a resolution of the Board but shall be not less
than six nor more than ten. Our Board has adopted a resolution
designating seven directors. The directors are divided into three
classes – Class I, Class II and Class III. Each class
of directors serves for three years on a staggered term basis.
The Board
has determined that the following members of the Board are independent, as that
term is defined under the general independence standards in listing standards of
the NASDAQ Marketplace Rules and our Corporate Governance
Guidelines: Mr. Kenneth G. Condon, Dr. Steinar J. Engelsen, Dr.
Melvin Sharoky, Dr. Graham K. Crooke and Dr. Randall W. Whitcomb. The
Board has adopted, as part of our Corporate Governance Guidelines, categorical
standards to assist it in making these independence
determinations. Our Corporate Governance Guidelines are available on
our website at
www.insmed.com
.
The Board
has nominated three Class III directors whose term of office expires in
2009, Dr. Geoffrey Allan, Dr. Melvin Sharoky and Dr. Randall Whitcomb, for
reelection at the Annual Meeting for the term expiring at the 2012 Annual
Meeting of Shareholders. The term of the Class I directors, Mr.
Condon and Dr. Engelsen, will expire at the 2010 Annual Meeting of
Shareholders. The term of the Class II directors, Dr. Crooke and Mr.
Lanfear, will expire at the 2011 Annual Meeting of Shareholders.
The
following table sets forth the directors nominated to be reelected at the Annual
Meeting and continuing directors and, for each director whose term of office
will extend beyond the Annual Meeting, the year such nominee or continuing
director was first elected as a director, the positions currently held by the
nominee and each continuing director, the year each nominee’s or continuing
director’s current term will expire and the current class of director of the
nominee and each continuing director:
Nominee’s
or Director’s Name
|
Age
|
Position(s) with the
Company
|
Year First Became Director
and Year Current Term Will Expire
|
Class
of Director
|
Nominees
for Class III Directors
|
|
|
|
|
Geoffrey
Allan, Ph.D.
|
55
|
President, Chief
Executive Officer, Chairman of the Board, Director
|
1999-2009
|
III
|
Melvin
Sharoky, M.D. (2)(3)
|
58
|
Director
|
2001-2009
|
III
|
Randall
W. Whitcomb, M.D. (2)(3)
|
54
|
Director
|
2001-2009
|
III
|
|
|
|
|
|
Continuing
Directors:
|
|
|
|
|
Kenneth
G. Condon, M.B.A. (1)(2)
|
61
|
Director
|
1999-2010
|
I
|
Steinar
J. Engelsen, M.D. (1)
|
58
|
Director
|
1999-2010
|
I
|
Graham
K. Crooke, MB.BS (1)(3)
|
50
|
Director
|
1999-2011
|
II
|
Dennis
M. Lanfear, M.B.A.
|
53
|
Director
|
2007-2011
|
II
|
|
(1)
Member of Audit Committee
|
|
(2)
Member of Nominations and Governance
Committee
|
|
(3)
Member of Compensation Committee
|
Directors
Whose Term Expires at the 2010 Annual Meeting of Shareholders (Class I
Directors):
Kenneth G. Condon, M.B.A.
–
age 61. Mr. Condon has been a member of our Board since our inception in
November 1999 and was a director of Insmed Pharmaceuticals, our predecessor
entity, from 1997 to 2000. Since October 2007, Mr. Condon
has been employed as the Chief Financial Officer and Assistant Secretary of
American International College. He joined Boston University in 1975 and served
as its Treasurer and Vice President for Financial Affairs from September 1986
until September 2007. He was also a Trustee of Newbury College. He
was formerly Chairman of the Board of BayFunds, a $1.8 billion mutual fund
family; a former director of BayBank Harvard Trust; a former member of the
BankBoston Advisory
Board; a former director
of the BayBank Trust Board; a former director of Seragen, Inc., a biotechnology
firm; a former director, Chapter Secretary, Treasurer and President of the
Financial Executives Institute of Massachusetts; and Director and Treasurer of
the Boston Municipal Research Bureau. Before 1975, Mr. Condon was a Senior
Accountant with the CPA firm of Arthur Andersen & Co. in
Boston. He received his B.A. degree in Economics and Mathematics from
Tufts University, and his M.B.A. in finance from the Wharton School of Finance,
University of Pennsylvania. Mr. Condon was both a Certified Public
Accountant and a Certified Financial Planner.
Steinar J. Engelsen, M.D.
–
age 58. Dr. Engelsen has been a member of our Board since our inception in
November 1999 and was a director of Insmed Pharmaceuticals, our predecessor
entity, from 1998 to 2000. Since November 1996, Dr. Engelsen has been
a partner of Teknoinvest Management AS, a venture capital firm based in
Norway. In addition, from January to November 2000, Dr. Engelsen was
acting Chief Executive Officer of Centaur Pharmaceuticals, Inc., a
biopharmaceutical company. From 1989 until October 1996, Dr. Engelsen
held various management positions within Hafslund Nycomed AS, a pharmaceutical
company based in Europe, and affiliated companies. He was responsible
for therapeutic research and development, most recently serving as Senior Vice
President, Research and Development of Nycomed Pharma AS from January 1994 until
October 1996. Dr. Engelsen received his M.Sc. in
nuclear chemistry and his M.D. from the University of Oslo, and is a Certified
European Financial Analyst.
Directors
Whose Term Expires at the 2011 Annual Meeting of Shareholders (Class II
Directors):
Graham K. Crooke, MB.BS
– age
50. Dr. Crooke has been a member of our Board since our inception in
November 1999 and was a director of Insmed Pharmaceuticals, our predecessor
entity, from 1996 to 2000. Dr. Crooke has been a partner of Asset
Management Company, a venture capital firm focusing on investments in early
stage information technology and life sciences companies since April
2000. Previously, from September 1997 through March 2000, Dr.
Crooke was a partner at Ticonderoga Capital, a venture capital firm, where he
focused on biotechnology and healthcare service investments. From
April 1992 until September 1997, Dr. Crooke was an associate, and later a Vice
President of Dillon Read Venture Capital, a venture capital firm and predecessor
to Ticonderoga. Prior to that, Dr. Crooke worked with the healthcare
practice of Booz, Allen & Hamilton, Inc., a management consulting firm, was
a product manager at Molecular Devices Corporation, a developer of bioanalytical
measurement systems, and, from 1984 to 1986, practiced medicine at major
teaching hospitals in Western Australia. He received his medical
degree from the University of Western Australia and his M.B.A. from Stanford
University’s Graduate School of Business.
Dennis M. Lanfear, M.B.A.
–
age 53. Mr. Lanfear has been a member of our Board since December
2007. He was a strategic consultant for us from 2005 until he
was appointed to our Board in December 2007. Since 2005, Mr. Lanfear
has been President and CEO of InteKrin Therapeutics, a clinical-stage, privately
held biopharmaceutical company focused on developing and commercializing
breakthrough therapeutics for neuroendocrine, metabolic, and immune
disorders. Mr. Lanfear was at Amgen Inc. from 1986 to 1999 where he
was a Corporate Officer and Vice President with broad operational, product
development and marketing responsibility. He also held senior leadership roles
in several product development programs including those for growth factors,
somatotrophins and neurotrophins, directing efforts from preclinical to Phase
III. In 1997, he was named Vice President, Market Development, where
he defined long term competitive and reimbursement strategies for Epogen™, a
multibillion dollar anemia drug. Prior to joining Amgen, Mr. Lanfear
held positions of increasing responsibility at Baxter International and was also
the founder and former CEO of Saronyx, Inc., a drug development software
services company. He is also an active life science investor through his firm,
Lanfear Capital Advisors, which invests in pharmaceutical and medical device
companies. Mr. Lanfear earned bachelor’s degrees in Biochemistry and
Chemical Engineering from Michigan State University and earned his M.B.A. from
the Anderson School at UCLA.
Executive
Officers.
The following table sets forth our
executive officers, their ages and the positions currently held by each such
person as of the date of this proxy statement
Name
|
Age
|
Position
|
Term
of Office
|
Geoffrey
Allan, Ph.D.
|
55
|
President,
Chief Executive Officer, Chairman of the Board
|
November 1999 -
Present
|
Kevin
P. Tully, C.G.A.
|
55
|
Executive
Vice President and Chief Financial Officer
|
February
2006 - Present
|
Steve
Glover
|
49
|
Chief
Business Officer (since March 31, 2009); President, Insmed
Therapeutic Proteins (until March 31, 2009)
|
June
2007 - Present
|
Glen
Kelley
|
41
|
Vice
President, Regulatory Affairs
|
February
2008 – Present
|
|
|
|
|
Executive
Officers (other than those who are also Directors):
Kevin P. Tully
,
C.G.A.
-
–
age 55. Mr.
Tully returned as our Executive Vice President and Chief Financial Officer in
February 2006, after having served as Chief Financial Officer at Bostwick
Laboratories, a private pathology laboratory from August 2005 until February
2006. From April 2005 to August 2005, Mr. Tully served as our Chief
Financial Officer, Treasurer and Controller. From January 2002 until
April 2005, Mr. Tully was our Treasurer, Controller and Principal Financial
Officer, and from August 2001 until his election as Treasurer, he served as our
Senior Director, Finance and Administration. Mr. Tully initially
joined us in March 2001 as Director of Finance and has over 30 years of
experience across Europe and the Americas covering the financial, marketing and
the manufacturing aspects of business with Tenneco and UCB. Mr. Tully
received his Ordinary National Certificate in Business and Administration from
St. Helens College in England and is a Certified General
Accountant.
Steve Glover
–
age 48. Mr.
Glover joined Insmed in June 2007 and served as President of Insmed
Therapeutic Proteins from June 2007 until March 2009. After the sale of the
follow-on biologics assets to Merck and Co. on March 31, 2009, Mr. Glover became
our Chief Business Officer. From January 2006, Mr. Glover was President and CEO
of ZyVer & Associates, a biopharmaceutical consulting firm, through which he
worked as a consultant to us on our follow-on biologics program from March 2007
to June 2007. From March 2003 to December 2006, Mr. Glover served as
Senior Vice President and General Manager of Andrx Therapeutics and Andrx
Laboratories
,
both
divisions of Andrx Corporation. From January 2001 to February 2003,
Mr. Glover served as Founder of Triangular Health Inc., a privately held venture
funded company. Prior to Triangular Health, he held various executive positions
at IMS Health, Amgen and Hoffman LaRoche. Mr. Glover has over 25 years of
business experience in bio-pharmaceuticals and life sciences. He received his
Bachelor of Science degree in Marketing/Management from Illinois State
University.
Glen Kelley
–
age 41. In
February 2008 Mr. Kelley was promoted to Vice President of Regulatory
Affairs. From April 2001 to December 2006 Mr. Kelley held positions of
management in Operations and Intellectual Property for Insmed. Prior to
joining Insmed, Mr. Kelley was in the external relations department of drug
discovery at R.W Johnson Pharmaceutical Research Institute from 1999 to 2001 and
worked in various roles with Ortho Clinical Diagnostics from 1990 to 1999.
Mr. Kelley has over 20 years of experience in the biotechnological and
pharmaceutical industry. He received his Bachelor of Science degree in
Biological Science from Rutgers College and was a Post-Qualifying PhD Candidate
in Microbiology and Molecular Genetics at Rutgers University.
Committees
of the Board.
Our Bylaws establish three standing
Committees of the Board: the Audit Committee, the Compensation
Committee, and the Nominations and Governance Committee.
Audit
Committee.
Our Audit Committee currently consists of Mr.
Condon (Chairman), Dr. Engelsen and Dr. Crooke. During the fiscal
year ended December 31, 2008 (“fiscal 2008”), the Audit Committee held five
meetings and Mr. Condon, Dr. Engelsen and Dr. Crooke attended all of these
meetings. The Audit Committee (i) recommends the selection of
independent accountants and auditors, (ii) reviews the scope of the
independent auditors’ audit and approves any non-audit services to be performed
by the independent auditors and (iii) reviews annual audits and accounting
practices. The Board has adopted a written charter for the Audit
Committee, which is available on our website at
www.insmed.com
.
Our
common stock is listed on the NASDAQ Capital Market and, as
such, we are governed by the listing standards of the NASDAQ Marketplace
Rules. Rule 4350(d)(2)(A) of the NASDAQ Marketplace Rules requires
that our Audit Committee be comprised of at least three members, each of whom
must be an “independent director” as defined in Rule 4200(a)(15) of the NASDAQ
Marketplace Rules. The Board has determined that all three of the
Audit Committee members, Mr. Condon, Dr. Crooke and Dr. Engelsen, are
independent directors as defined by Rule 4200(a)(15) of the NASDAQ
Marketplace Rules and our Corporate Governance Guidelines.
The Board
has determined that Mr. Condon is an “audit committee financial expert,” as that
term is defined in the rules promulgated by the Securities and Exchange
Commission pursuant to the Sarbanes-Oxley Act of 2002.
The Board
has determined that each of the members of the Audit Committee is able to read
and understand fundamental financial statements, including our balance sheet,
consolidated statement of operations and consolidated statement of cash flows,
and has accounting or related financial management expertise, as such terms are
interpreted by the Board.
The Audit
Committee’s pre-approval policies and procedures are detailed in the Audit
Committee Report, which is included in this proxy statement.
Compensation
Committee.
Our Compensation
Committee currently consists of Dr. Whitcomb (Chairman), Dr. Sharoky and Dr.
Crooke. During fiscal 2008, the Compensation Committee held eight
meetings and Dr. Whitcomb, Dr. Sharoky and Dr. Crooke attended all of these
meetings. The Compensation Committee reviews and makes
recommendations to the Board regarding the compensation and benefits of all of
our officers and reviews policy matters relating to compensation and benefits of
our employees. The Board has adopted a written charter for the
Compensation Committee, a copy of which is available on our website at
www.insmed.com
. The
Board has determined that each of the members of our Compensation Committee is
independent as defined in Rule 4200(a)(15) of the NASDAQ Marketplace Rules and
our Corporate Governance Guidelines.
Nominations and
Governance Committee.
Our
Nominations and Governance Committee currently consists of Dr. Sharoky
(Chairman), Dr. Whitcomb and Mr. Condon. During fiscal 2008, the
Nominations and Governance Committee held three meetings and Dr. Sharoky, Dr.
Whitcomb and Mr. Condon attended all of these meetings. The
Nominations and Governance Committee (i) assists the Board by identifying and
recruiting individuals qualified to become Board members and recommending to the
Board the director nominees for the next annual meeting of shareholders; (ii)
recommends to the Board director nominees for each committee; (iii) oversees our
governance, including recommending to the Board Corporate Governance Guidelines;
(iv) leads the Board in its annual review of the Board’s performance and
oversees the evaluation of each of the Board’s committees; and (v) oversees the
management continuity planning process. The Board has adopted a written
charter for the Nominations and Governance Committee, a copy of which is
available on our website at
www.insmed.com
. The
Board has determined that each of the members of our Nominations and Governance
Committee is independent as defined in Rule 4200(a)(15) of the NASDAQ
Marketplace Rules and our Corporate Governance Guidelines.
Corporate
Governance Matters.
Meetings of the
Board
.
The Board held
fourteen meetings during fiscal 2008, including five regularly scheduled
meetings and nine specially called telephonic meetings. Dr. Allan,
Dr. Engelsen, Dr. Crooke, and Dr. Whitcomb attended or participated in all of
the Board meetings held in fiscal 2008. Mr. Condon and Mr. Lanfear
attended all five of the regularly scheduled Board meetings held in fiscal 2008
and participated in eight of the nine special Board meetings held in fiscal
2008. Dr. Sharoky attended all five of the regularly scheduled Board
meetings held in fiscal 2008 and participated in seven of the nine special Board
meetings held in fiscal 2008.
Director Nominating
Process
.
The Nominations and Governance
Committee
. Our Nominations and Governance Committee performs
the functions of a nominating committee and will actively seek, identify and
recommend to the Board individuals qualified to become Board members, consistent
with criteria approved by the Board, and establish such criteria based on
factors it considers appropriate. These factors include strength of
character, maturity of judgment, career specialization, relevant technical
skills, diversity and the extent to which the candidate would fill a present
need on the Board. The Nominations and Governance Committee’s Charter
describes the Committee’s responsibilities, including seeking, screening and
recommending director candidates for nomination by the Board. The
Nominations and Governance Committee Guidelines also contain information
concerning the responsibilities of the Nominations and Governance Committee with
respect to identifying and evaluating the director candidates. The
Nominations and Governance Committee Charter and the Corporate Governance
Guidelines are both available on our website at
www.insmed.com
. All
members of the Nominations and Governance Committee are independent as defined
in Rule 4200(a)(15) of the NASDAQ Marketplace Rules and our Corporate Governance
Guidelines.
Director Candidate Recommendations
and Nominations By Shareholders
. The Nominations and
Governance Committee’s Charter provides that the Committee will consider
director candidate recommendations by shareholders. Shareholders
should submit any such recommendations for the Nominations and Governance
Committee through the method described under “Communications With the
Board.” In addition, in accordance with our Bylaws, any shareholder
of record entitled to vote for the election of directors at the applicable
meeting of shareholders may nominate persons for election to the Board if such
shareholder complies with the notice procedures set forth in the Bylaws and
summarized in this proxy statement under the heading “Proposals for 2010 Annual
Meeting.”
Nominations and Governance Committee
Process For Identifying and Evaluating Director
Candidates
. The Nominations and Governance Committee evaluates
all director candidates in accordance with the director qualification standards
described in the Corporate Governance Guidelines. The Nominations and
Governance Committee evaluates a candidate’s qualifications to serve as a member
of the Board based on the skills and characteristics of individual Board members
as well as the composition of the Board as a whole. In addition, the
Nominations and Governance Committee will evaluate a candidate’s independence,
diversity, age, skills and experience in the context of the Board’s
needs.
Communications
With the Board
.
The Board has
approved unanimously a process for shareholders to send communications to the
Board. Shareholders can send communications to the Board and, if
applicable, to the Nominations and Governance Committee or to specified
individual directors in writing c/o Mr. W. McIlwaine Thompson, Corporate
Secretary, Insmed Incorporated, 8720 Stony Point Parkway, Suite 200, Richmond,
VA 23235. All letters sent to Mr. Thompson will be forwarded, as
appropriate, to the Board, the Nominations and Governance Committee or any
specified individual directors. The Company screens mail for security
purposes.
Director
Attendance at Annual Meeting
.
Our policy is
that directors attend the annual meeting of shareholders. All
directors attended the 2008 Annual Meeting of Shareholders.
AUDIT
COMMITTEE REPORT*
The
Audit Committee of the Board (the “Audit Committee”) is composed of three
independent directors and operates under a written charter adopted by the
Board. The Audit Committee reviews and reassesses the adequacy of the
charter at least annually. The Audit Committee approves and
recommends to the Board, subject to shareholder ratification, the selection of
the Company’s independent auditors. In this context, the Audit
Committee has met and held discussions with management and Ernst & Young
LLP, the Company’s independent auditors.
The Audit
Committee oversees the Company’s financial reporting process on behalf of the
Board. Management has the primary responsibility for the financial
statements and the reporting process including the systems of internal
controls. In fulfilling its oversight responsibilities, the Audit
Committee reviewed the audited financial statements in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2008 (the “Annual Report”)
with management including a discussion of the quality, not just the
acceptability, of the accounting principles, the reasonableness of significant
judgments, and the clarity of disclosures in the financial
statements.
The Audit
Committee reviewed with the independent auditors, who are responsible for
expressing an opinion on the conformity of those audited financial statements
with generally accepted accounting principles, its judgments as to the quality,
not just the acceptability, of the Company’s accounting principles and such
other matters as are required to be discussed with the Audit Committee by
Statement on Auditing Standards No. 61, as amended by Statement on Auditing
Standards No. 90,
Communication With Audit
Committees
. In addition, the Audit Committee has discussed
with the independent auditors the auditors’ independence from management and the
Company, including the matters in the written disclosures required by
Independence Standards Board Standard No. 1,
Independence Discussions with Audit
Committees
, and considered the compatibility of non-audit services with
the auditors’ independence.
In
reliance on the reviews and discussions referred to above, the Audit Committee
recommended to the Board (and the Board approved) that the audited financial
statements be included in the Annual Report, which was filed with the Securities
and Exchange Commission on March 31, 2009. The Audit Committee and
the Board have also recommended, subject to shareholder approval, the selection
of the Company’s independent auditors.
THE
AUDIT COMMITTEE
Kenneth
G. Condon, M.B.A., Chairman
Steinar
J. Engelsen, M.D.
Graham K.
Crooke, MB.BS
March 4,
2009
*
|
The
foregoing report of the Audit Committee is not to be deemed “soliciting
material” or deemed to be “filed” with the Securities and Exchange
Commission (irrespective of any general incorporation language in any
document filed with the Securities and Exchange Commission) or subject to
Regulation 14A of the Securities Exchange Act of 1934, as amended, or
to the liabilities of Section 18 of the Securities Exchange Act of 1934,
except to the extent we specifically incorporate it by reference into a
document filed with the Securities and Exchange
Commission.
|
Audit
Committee Pre-Approval Policy
The Audit Committee has adopted an
Audit Committee Pre-Approval Policy for the pre-approval of audit services and
permitted non-audit services by the Company’s independent auditors in order to
assure that the provision of such services does not impair the independent
auditors’ independence from Insmed. Unless a type of service to be
provided by the independent auditor has received general pre-approval, it will
require specific approval by the Audit Committee. Any proposed
services exceeding pre-approved fee levels also will require specific
pre-approval by the Audit Committee. In all pre-approval instances,
the Audit Committee will consider whether such services are consistent with the
Securities and Exchange Commission’s rules on auditor independence.
The Audit Committee has designated in
the Audit Committee Pre-Approval Policy specific services that have the
pre-approval of the Audit Committee and has classified these pre-approved
services into one of four categories: Audit, Audit-Related, Tax and All
Other. The term of any pre-approval is 12 months from the date of
pre-approval, unless the Audit Committee specifically provides for a different
period. The Audit Committee will revise the list of pre-approved
services from time to time, based on subsequent determinations.
Pre-approval fee levels for all
services to be provided by the independent auditor will be established
periodically by the Audit Committee. Any proposed services exceeding
these levels will require specific pre-approval by the Audit
Committee. The Audit Committee recognizes the overall relationship of
fees for audit and non-audit services in determining whether to pre-approve any
such services. For each fiscal year, the Audit Committee may
determine the appropriate ratio between the total amount of fees for Audit,
Audit-Related, and Tax, and the total amount of fees for services classified as
permissible All Other services.
The Audit Committee has designated the
Chief Financial Officer of the Company to monitor the performance of the
services provided by the independent auditor and to determine whether such
services are in compliance with the Audit Committee Pre-Approval
Policy. Both the Chief Financial Officer and management will
immediately report to the Chairman of the Audit Committee any breach of the
Audit Committee Pre-Approval Policy that comes to the attention of the Chief
Financial Officer or any member of management.
Fees
Billed by Ernst & Young LLP
The following table lists fees billed
by Ernst & Young LLP, for services rendered in the fiscal years ended
December 31, 2007 and 2008. The Audit Committee reviewed the
aggregate fees billed by Ernst & Young LLP for professional services
rendered for the fiscal year ended December 31, 2008, which were as
follows.
|
|
Fiscal
Year Ended
December
31,
|
|
|
|
2007
|
|
|
2008
|
|
Audit
Fees
|
|
$
|
357,453
|
|
|
$
|
350,000
|
|
Audit-Related
Fees
|
|
|
-
|
|
|
|
-
|
|
Tax
Fees
|
|
|
-
|
|
|
|
-
|
|
All
Other Fees
|
|
|
-
|
|
|
|
-
|
|
Total
Ernst & Young LLP Fees
|
|
$
|
357,453
|
|
|
$
|
350,000
|
|
“Audit
Fees” include fees for services performed to comply with Generally Accepted
Auditing Standards. These services include the recurring audit of our
consolidated financial statements, as well as audits provided in connection with
statutory filings, related reserves, and review of documents filed with the
Securities and Exchange Commission.
“Tax
Fees” primarily include fees associated with the preparation of the Company’s
annual U.S. federal and state income tax returns together with tax compliance
and domestic and international tax planning.
The Audit
Committee has determined that the services performed by Ernst & Young LLP
during the fiscal year ended December 31, 2008 is compatible with maintaining
Ernst & Young LLP’s independence from Insmed.
Related
Party Transactions
The Audit Committee reviews all
transactions required to be disclosed in the Company’s filings with the
Securities and Exchange Commission pursuant to Item 404 of Regulation S-K
for potential conflict of interest situations on an ongoing
basis. All such transactions must be approved by the Audit
Committee. There were no such transactions during the fiscal year
ended December 31, 2008.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
All of
our directors and officers complete a directors and officers questionnaire at
the beginning of each year, in which they are asked to disclose family
relationships and other related party transactions. Our Audit
Committee must review and approve all related party transactions, as defined in
Item 404 of Regulation S-K. In examining related party
transactions, our Audit Committee considers whether any of our directors,
officers, holders of more than five percent of our voting stock, or any
immediate family members of the foregoing persons and any other persons whom the
Audit Committee determines to be related parties, have a conflict of interest
where an individual may have a private interest which interferes with or appears
to interfere with our interests. In determining whether to approve or ratify a
related party transaction, the Audit Committee will take into account, among
other factors it deems appropriate, whether the related party transaction is on
terms no less favorable to us than terms generally available to us from an
unaffiliated third-party under the same or similar circumstances, and the extent
of the related party’s interest in the transaction. Any transaction which is
deemed to be a related party transaction requires the approval, initially by a
majority of the non-interested Audit Committee members, and finally by a
majority of the non-interested Board members. Our Audit Committee’s
procedures for reviewing related party transactions are not in
writing. In fiscal 2008, there were no related party
transactions.
SECTION
16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a)
of the Securities Exchange Act of 1934, as amended requires that our directors,
officers and persons who own more than ten percent of a registered class of our
equity securities file reports of ownership and changes in ownership of such
securities with the Securities and Exchange Commission and the NASDAQ Capital
Market. Directors, officers and beneficial owners of more than ten
percent of our common stock are required by applicable regulations to furnish us
with copies of all Section 16(a) forms they file. Based solely
upon a review of the copies of the forms and information furnished to us, we
believe that during fiscal 2008 all filing requirements applicable to our
directors, officers and beneficial owners of more than ten percent of our common
stock were satisfied.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of the Record Date there was no
person (including any “group” as that term is used in Section 13(d)(3) of the
Exchange Act) known by us to be the beneficial owner of more than five percent
of our common stock then outstanding.
SECURITY
OWNERSHIP OF MANAGEMENT
The following table sets forth the
beneficial ownership of our common stock as of
the Record Date
by each “named executive
office
r” as defined in
Item 402(a)(3) of Regulation S-K and all directors and named executive officers
as a group.
The
total number of shares of our common stock outstanding as of the Record Date was
121,904,312
.
Name
of Beneficial Owner
|
|
Shares
of Common Stock Beneficially Owned (1)
|
|
|
Percent
of Class
|
|
Geoffrey
Allan, Ph.D. (2)
|
|
|
2,153,056
|
|
|
|
1.7
|
%
|
Kevin
P. Tully (3)
|
|
|
538,594
|
|
|
|
*
|
|
Steve
Glover (4)
|
|
|
484,613
|
|
|
|
*
|
|
Doug
Farrar (5)
|
|
|
379,555
|
|
|
|
*
|
|
Kenneth
G. Condon (6)
|
|
|
227,600
|
|
|
|
*
|
|
Graham
K. Crooke, MB.BS (7)
|
|
|
387,500
|
|
|
|
*
|
|
Steinar
J. Engelsen, M.D. (8)
|
|
|
325,625
|
|
|
|
*
|
|
Dennis
M. Lanfear (9)
|
|
|
262,500
|
|
|
|
*
|
|
Melvin
Sharoky, M.D. (10)
|
|
|
614,600
|
|
|
|
*
|
|
Randall
W. Whitcomb, M.D. (11)
|
|
|
268,500
|
|
|
|
*
|
|
All
directors and executive officers as a group (10 persons)
(12)
|
|
|
5,642,143
|
|
|
|
4.5
|
%
|
*
|
Denotes
ownership of less than 1% of the outstanding shares of our common
stock.
|
|
(1)
|
Except
as indicated otherwise in the footnotes, shares shown as beneficially
owned are those to which the individual has sole voting and investment
power. Shares subject to options that are exercisable within 60
days of the Record Date are deemed to be outstanding and to be
beneficially owned by the person holding such options for the purpose of
computing the percentage ownership of such person and of the directors and
executive officers as a group, but are not treated as outstanding for the
purpose of computing the percentage ownership of any other
person.
|
|
(2)
|
Includes
437,499 shares of our common stock issuable upon exercise of options,
which options are exercisable within 60 days of the Record
Date.
|
|
(3)
|
Includes
161,250 shares of our common stock issuable upon exercise of options,
which options are exercisable within 60 days of the Record
Date.
|
|
(4)
|
Includes
112,500 shares of our common stock issuable upon exercise of options,
which options are exercisable within 60 days of the Record
Date. 50,000 of these options are held by ZyVer &
Associates, of which Mr. Glover is the President and CEO. ZyVer
& Associates is wholly owned by Mr.
Glover.
|
|
(5)
|
Includes
87,500 shares of our common stock issuable upon exercise of options, which
options are exercisable within 60 days of the Record Date. Mr.
Farrar has 90 days from the date of his termination of employment on March
31, 2009, to exercise these
options.
|
|
(6)
|
Includes
107,500 shares of our common stock issuable upon exercise of options,
which options are exercisable within 60 days of the Record
Date.
|
|
(7)
|
Includes
207,500 shares of our common stock issuable upon exercise of options,
which options are exercisable within 60 days of the Record
Date.
|
|
(8)
|
Includes
107,500 shares of our common stock issuable upon exercise of options,
which options are exercisable within 60 days of the Record
Date.
|
|
(9)
|
Includes
142,500 shares of our common stock issuable upon exercise of options,
which options are exercisable within 60 days of the Record
Date.
|
(10)
|
Includes
97,500 shares of our common stock issuable upon exercise of options, which
options are exercisable within 60 days of the Record Date. The
number of shares listed opposite Dr. Sharoky’s name includes 210 shares of
our common stock which are owned by his minor son, 620 shares of our
common stock which are owned by his minor daughter and 3,600 shares of our
common stock which are owned by his spouse. Dr. Sharoky
disclaims beneficial ownership of the shares of our common stock held by
his minor daughter, minor son and his
spouse.
|
(11)
|
Includes
97,500 shares of our common stock issuable upon exercise of options, which
options are exercisable within 60 days of the Record Date. The
number of shares listed opposite Dr. Whitcomb’s name includes 21,000
shares of our common stock which are owned by the Randall W. Whitcomb
Living Trust. Dr. Whitcomb and his spouse, Rita K. Whitcomb,
are trustees of the Randall W. Whitcomb Living
Trust.
|
(12)
|
Represents
the sum of the shares of our common stock beneficially owned by all
directors, nominees and named executive officers named in the table
above. Includes 1,558,749
shares of our
common stock issuable upon the exercise of options, which options are
exercisable within 60 days of the Record
Date.
|
COMPENSATION
DISCUSSION AND ANALYSIS (THE “CDA”)
Philosophy
and Overview.
Our
guiding philosophy is to establish executive compensation policies that are
linked to the sustained creation of shareholder value. The following
objectives serve as the guiding principles for all of our compensation
decisions:
·
|
to
provide a competitive total compensation opportunity that will enable us
to attract, retain and motivate highly qualified
executives;
|
·
|
to
align
compensation
opportunities with shareholder interests by making the executive
compensation program highly sensitive to our performance, which is defined
in terms of milestones associated with achieving long-term profitability
and creating shareholder value; and
|
·
|
to
provide
a
strong emphasis on equity-based compensation and equity ownership,
creating a direct link between shareholder and management
interests.
|
Role
of Compensation Committee in Making Decisions.
Our
Compensation Committee has been delegated the authority to determine and make
recommendations for all forms of compensation to be granted to our executive
officers in furtherance of our compensation objectives. In assessing
and determining our compensation programs, our Compensation Committee conducts a
peer group review, engages outside consultants to assess competitiveness and
meets in executive session.
Compensation Evaluation Processes
and Criteria
. The compensation packages for executive officers
are reviewed by our Compensation Committee, including an analysis of all
elements of compensation separately and in the aggregate. In
establishing compensation levels for each of our executive officers, our
Compensation Committee consults on an informal basis with other members of the
Board and, with respect to officers other than the Chief Executive Officer,
reviews the recommendations of the Chief Executive Officer. The
Compensation Committee also has the authority to engage the services of outside
experts to assist it in making compensation-related decisions.
Given the
high demand for the experienced and well-qualified executives we seek to employ,
the Compensation Committee reviews data obtained from outside surveys of
compensation and benefits for executive officers in the biotechnology industry
including the Radford Global Life Sciences Survey prepared by Aon Consulting for
a general understanding of compensation trends and practices, an internally
prepared survey on executive compensation based on peer biotechnology companies’
proxy statements, and personal knowledge regarding executive compensation at
comparable companies. In addition, during fiscal year
2008,
Towers
Perrin, an independent compensation consulting firm, was engaged to conduct a
complete analysis of our executive compensation, including salary, bonus and
equity-based long-term incentives and to make recommendations on market-based
ranges for base salary, target bonus and equity-based long-term incentive
grants.
Based on
the information it gathers, the Compensation Committee establishes benchmarks
used for the purpose of evaluating appropriate compensation ranges for base
salary, cash bonus and long-term incentives. Our Compensation
Committee uses the benchmarks in various combinations in an effort to obtain
comparative compensation information that reflects our particular facts and
circumstances. When reviewing benchmark data, our Compensation
Committee targets our compensation at the 50
th
percentile for companies of similar size and stage of
development. Our Compensation Committee will continue to conduct
similar annual reviews of our executive compensation practices and anticipates
that it may use the services of independent outside consultants for similar
services in the future.
In
determining the amount and mix of compensation elements, our Compensation
Committee relies upon its judgment about the performance of each individual
executive officer – and not on rigid formulas or short-term changes in business
performance. In setting final compensation levels for our executive
officers for fiscal 2008, our Compensation Committee considered many factors,
including, but not limited to:
·
|
our
achievement of certain product development, corporate partnering,
financial, strategic planning and other
goals;
|
·
|
each
officer’s individual performance using certain subjective criteria,
including an evaluation of each officer’s initiative, contribution to
overall corporate performance and managerial
ability;
|
·
|
the
scope and strategic impact of our executive officer’s
responsibilities;
|
·
|
our
past business performance and future
expectations;
|
·
|
our
long-term goals and strategies;
|
·
|
the
performance and experience of each
individual;
|
·
|
past
salary levels of each individual and of the executives as a
group;
|
·
|
relative
levels of pay among the officers;
|
·
|
the
amount of base salary in the context of the executive officer’s total
compensation and other benefits;
|
·
|
for
each executive officer, other than the Chief Executive Officer, the
evaluations and recommendations of our Chief Executive Officer;
and
|
·
|
the
competitiveness of our compensation packages relative to the selected
benchmarks.
|
In
general, under Section 162(m) of the Internal Revenue Code of 1986, as
amended (the “Code”), we cannot deduct, for federal income tax purposes,
compensation in excess of $1,000,000 paid to certain executive
officers. This deduction limitation does not apply, however, to
certain “performance-based compensation” within the meaning of
Section 162(m) of the Code and the regulations promulgated
thereunder. We have considered the limitations on deductions imposed
by Section 162(m) of the Code and it is our present intention, for so long
as it is consistent with our overall compensation objective, to structure
executive compensation to minimize application of the deduction limitations of
Section 162(m) of the Code.
Selection
of Peer Companies/Benchmarks.
When
determining the compensation of our executive officers, the Compensation
Committee reviewed, as one part of the benchmarking process, the analysis
conducted by Towers Perrin in fiscal 2008 based on publicly available salary
data pulled from the proxy statements of 32 peer companies. The peer
group for fiscal 2008 consisted of the following companies:
Adolor
Corporation
|
Immunogen
Inc.
|
Advanced
Life Sciences
|
Introgen
Therapeutics Inc.
|
Allos
Therapeutics
|
ISTA
Pharmaceuticals Inc.
|
Anadys
Pharmaceuticals Inc.
|
La
Jolla Pharmaceutical Co.
|
Antigenics
Inc.
|
Middlebrook
Pharmaceuticals
|
Ariad
Pharmaceuticals
|
Novacea,
Inc.
|
Avant
Immunotherapeutics Inc.
|
NPS
Pharmaceuticals Inc.
|
Avigen
|
Oxigene
Inc.
|
Cell
Therapeutics
|
Pozen
|
Curis
Inc.
|
Renovis,
Inc.
|
Discovery
Laboratories Inc.
|
Sangamo
Biosciences
|
EntreMed
Inc.
|
Tapestry
Pharmaceuticals
|
Genitope
Corp.
|
Tercica
Inc.
|
Genta
Incorporated
|
Trimeris
Inc.
|
GenVec,
Inc.
|
Vical
Inc.
|
GTC
BioTherapeutics, Inc.
|
Vion
Pharmaceuticals Inc.
|
Components
of Compensation.
Our
executive compensation packages generally include three components: base salary,
a cash bonus and equity-based awards.
Base Salary
. The
Compensation Committee seeks to establish base salaries that are competitive for
each position and level of responsibility with those of executive officers at
various other biotechnology companies of comparable size and stage of
development. The Compensation Committee intends base salary to
provide our executive officers with a level of stability and certainty each year
and intends that this component of compensation not be affected to any
significant degree by our performance factors. The Compensation
Committee typically reviews and sets base salaries for executives on an annual
basis during the first quarter of each fiscal year. Salary levels for
each of our executive officers are generally targeted near the 50
th
percentile of salaries that our Compensation Committee believes are paid to
executive officers with comparable qualifications, experience and
responsibilities at the benchmarked companies. On average the actual
compensation for executives for fiscal 2008 was at the 52
nd
percentile of the benchmarked companies. Each year our Compensation
Committee reviews variances between the salary levels for each of our executive
officers and those of the companies included in the selected benchmarks and
determines, in its discretion, individual salary adjustments after considering
the factors described above, although no relative weights or rankings are
assigned to these factors. In setting the base salary for our
executive officers other than our Chief Executive Officer, the Compensation
Committee also considers the recommendations of our Chief Executive
Officer.
Cash Bonuses.
The
Compensation Committee believes that cash bonuses are useful on a case by case
basis to motivate and reward executive officers and are largely dependent on
each such officer’s performance in relation to overall corporate
results. Bonuses for executive officers are not guaranteed, but to
date have been awarded from time to time, generally annually, only in the
discretion of the Compensation Committee. Cash incentives are
generally targeted at the 50
th
percentile of cash incentives provided to officers in similar positions at
companies included in the selected benchmarks.
At the
beginning of each fiscal year, management proposes the annual corporate
objectives to the Board for approval. These objectives serve as the
basis for determining our performance. When determining if a bonus
will be paid for the fiscal year, the Compensation Committee takes into account
the overall financial condition and performance of the Company at the time and,
in addition, each executive officer is evaluated by the Compensation Committee
and the Board on our overall performance and his or her individual performance,
level of responsibility and leadership in relation to our overall
performance. Additionally, the Compensation Committee sets guidelines
for the bonuses potentially payable to our officers. These
guidelines, which are currently up to 50% of the Chief Executive Officer’s
annual salary and up to 35% of each other individual officer’s annual salaries,
can be increased beyond these guideline levels at the Compensation Committee’s
discretion, for example, in the event of exceptional performance by an
individual officer. In the past, criteria for bonuses for executive
officers ranged from success in attracting capital to success in conducting
clinical trials, obtaining FDA approvals, entering into new and expanded
collaborations and establishing and expanding our manufacturing
capabilities. During fiscal 2008, the corporate objectives were as
follows:
·
|
Complete
ongoing “proof of concept” studies for IPLEX™ in myotonic muscular
dystrophy and HIV adipose redistribution syndrome (the
“Indications”);
|
·
|
Prepare
detailed project plan for the Indications and assess development risk,
commercial risk and cost to develop the
Indications;
|
·
|
Make
go/no go decision regarding development of IPLEX™ for the
Indications;
|
·
|
In-license
a new protein therapeutic
candidate;
|
·
|
Establish
a detailed business plan for entry into the follow-on biologics
market;
|
·
|
Develop
a follow-on biologics business partnership;
and
|
·
|
Improve
financial position of the Company.
|
When
evaluating our performance for fiscal 2008, the Compensation Committee reviewed
the above corporate objectives and, as appropriate, discussed them with our
Chief Executive Officer. For the in-license a new protein therapeutic
candidate objective, it was determined that a protein therapeutic candidate was
analyzed and considered. However, it was not in-licensed as it would not have
been monetarily beneficial for the Company. Taking into account the recent sale
of the follow-on biologics business to Merck & Co., which was well underway
at the end of 2008, the Compensation Committee recommended, and the Board of
Directors approved, that bonuses for the named executive officers for the fiscal
year ended December 31, 2008 (“fiscal 2008”) be awarded in accordance with
company guidelines at the levels of 50% for the Chief Executive Officer and 35%
for the other named executives.
Equity-Based Long-Term
Incentives.
The Compensation
Committee believes that stock ownership by management is beneficial for aligning
the interests of management and shareholders, enhancing shareholder value and
attracting and retaining talented employees. In accordance with such
belief, the Compensation Committee to date has sought to motivate and reward
superior results by providing a significant portion of executive compensation as
equity, in the form of stock options, restricted stock and restricted stock
units.
When
granting stock options, restricted stock or restricted stock units, the
Compensation Committee considers the existing levels of stock ownership among
the executive officers relative to each other and to our employees as a whole,
previous grants of stock options, restricted stock or restricted stock units to
such executive officers, vesting schedules of previously granted stock options,
restricted stock and restricted stock units, the performance of the executives
and their contributions to our overall performance, information with regard to
awards at comparable companies, comparable data provided by independent
compensation consultants (if retained), an outside survey of stock option grants
and restricted common stock awards in the biotechnology industry, an internally
prepared survey of peer biotechnology companies’ proxy statements and personal
knowledge of the Compensation Committee members regarding executive stock
options and restricted stock awards at comparable
companies. Consideration is also given to the impact of stock option,
restricted stock and restricted stock unit awards on our results of
operations.
Prior to
May 29, 2008, stock options were awarded to all of our new employees upon their
commencement of employment. Shares of our common stock underlying
these stock options typically vested over a four year period, with 25% of the
shares vesting on each of the first four anniversaries of the date of
grant. Those options typically expired ten years from the date of
grant. The exercise price was equal to the fair market value of our
common stock on the date of grant. Beginning with June 1, 2008 we
began issuing restricted stock and restricted stock unit awards to all of our
new employees upon their commencement of employment. Shares of our
common stock underlying these awards typically vest over a four year period,
with 25% of the shares vesting on each of the first four anniversaries of the
date of grant.
The
Compensation Committee also grants stock options to officers from time to time,
if an officer’s percentage of ownership has fallen below the industry averages
or in recognition of such officer’s expanded duties and responsibilities or
exceptional performance.
During
fiscal 2008, restricted stock and restricted stock units were granted to all
officers and every employee of the company. The terms of the grants
to officers are disclosed in the Grants of Plan-Based Awards table.
Other Benefits.
We
maintain a benefits plan provided to all employees, that includes coverage for
health insurance, dental insurance, life and disability insurance, an Employee
Stock Purchase Plan (as described under the heading “Equity Compensation Plan
Information”) and a 401(k) Plan. We also provide Dr. Allan with a
Company car for business and personal use.
Compensation
of Executive Officers.
The
Compensation Committee uses a formal evaluation process, which includes meetings
held in executive session, to help assess the performance of our executive
officers. Typically, during the first quarter of each fiscal year,
the Committee evaluates the Chief Executive Officer based on our overall
performance, Dr. Allan’s individual performance, his level of responsibility and
leadership ability. Following an assessment of Dr. Allan’s
performance, our Compensation Committee reviews his total compensation package,
including base salary, cash bonus and equity-based compensation, as described
below. Dr. Allan makes recommendations to the Compensation Committee
regarding the performance and related compensation of our other executive
officers. The Board actively participates in the process of assessing
the other executive officers’ performance and in setting their compensation
based on Dr. Allan’s and the Compensation Committee’s assessments.
The
elements of our compensation program for each named executive officer are
summarized below:
Geoffrey Allan, Ph.D.
-
President and Chief Executive
Officer
. Dr. Allan is responsible for developing, in
connection with the Board, our corporate mission and objectives and providing
direction and leadership to ensure the execution of our corporate objectives and
strategy. His total compensation was comprised of the following
elements:
·
|
Base
Salary: Dr. Allan’s base salary for fiscal 2008 increased to
$450,000 as of March 1, 2008, which followed the review of data reported
in the Towers Perrin study. This 14% increase from fiscal 2007
was implemented to align Dr. Allan’s base salary with the competitive
market salary range provided by Towers
Perrin.
|
·
|
Cash
Bonus: Dr. Allan is eligible for an annual, discretionary bonus
of up to 50% of his annual salary based on the Company's overall financial
condition and performance and the achievement of performance objectives
established by the Compensation Committee. Based on the degree
of achievement of the corporate objectives for 2008 and for Dr. Allan’s
key leadership in bringing about the sale of the follow-on biologics
assets to Merck & Co., the Compensation Committee and the Board
awarded Dr. Allan a bonus for fiscal 2008 of $225,000 which represents 50%
of his annual salary.
|
·
|
Stock
Grants: Dr Allan received 660,218 shares of restricted stock
and 386,295 restricted stock units during fiscal
2008.
|
·
|
Other
Compensation: We provide Dr. Allan with a Company car for
business and personal use. We pay the lease payments, taxes and auto
insurance associated with the car.
|
Kevin P. Tully, C.G.A. – Executive
Vice President and Chief Financial Officer.
Mr. Tully directs
all financial and administration activities, including internal and external
reporting, treasury, accounting, human resources and information
technology. His total compensation was comprised of the following
elements:
·
|
Base
Salary: Mr. Tully’s base salary for fiscal 2008 increased to
$275,000 as of March 1, 2008, which followed the review of data reported
in the Towers Perrin study. This 22% increase from fiscal 2007
was implemented to align Mr. Tully’s base salary with the competitive
market salary range provided by Towers
Perrin.
|
·
|
Cash
Bonus: Mr. Tully is eligible for an annual, discretionary bonus
of up to 35% of his annual salary based on the Company's overall financial
condition and performance and the achievement of performance objectives
established by the Compensation Committee. Based on the degree
of achievement of the corporate objectives for 2008 and for Mr. Tully’s
key role in bringing about the sale of the follow-on biologics assets to
Merck & Co., the Compensation Committee and the Board awarded Mr.
Tully a bonus for fiscal 2008 of $96,250 which represents 35% of his
annual salary.
|
·
|
Stock
Grants: Mr. Tully received 252,166 shares of restricted stock
and 147,543 restricted stock units during fiscal
2008.
|
Steve Glover – President, Insmed
Therapeutic Proteins.
Mr. Glover directs all activities
related to our follow-on biologics program. His total compensation
was comprised of the following elements:
·
|
Base
Salary: Mr. Glover’s base salary for fiscal 2008 increased to
$315,000 as of March 1, 2008, which followed the review of data reported
in the Towers Perrin study. This 5% increase from fiscal 2007
was implemented to align Mr. Glover’s base salary with the competitive
market salary range provided by Towers
Perrin.
|
·
|
Cash
Bonus: Mr. Glover is eligible for an annual, discretionary
bonus of up to 35% of his annual salary based on the Company's overall
financial condition and performance and the achievement of performance
objectives established by the Compensation Committee. Based on
the degree of achievement of the corporate objectives for 2008 and for Mr.
Glover’s key role in bringing about the sale of the follow-on biologics
assets to Merck & Co., the Compensation Committee and the Board
awarded Mr. Glover a bonus for fiscal 2008 of $110,250 which represents
35% of his annual salary.
|
·
|
Stock
Grants: Mr. Glover received 288,845 shares of restricted stock
and 169,004 restricted stock units during fiscal
2008.
|
Doug Farrar – Former Vice President,
Insmed Therapeutic Proteins.
On March 31, 2009 Mr. Farrar
transitioned his employment from Insmed to Merck as part of the asset purchase
agreement between Insmed Incorporated and Merck Bioventures. During
fiscal 2008 Mr. Farrar had management oversight and directed the day to day
activities of our former subsidiary, Insmed Therapeutic Proteins, manufacturing
facility. His total compensation was comprised of the following
elements:
·
|
Base
Salary: Mr. Farrar’s base salary for fiscal 2008 increased to
$225,000 as of March 1, 2008, which followed the review of data reported
in the Towers Perrin study. This 11% increase from fiscal 2007
was implemented to align Mr. Farrar’s base salary with the competitive
market salary range provided by Towers
Perrin.
|
·
|
Cash
Bonus: Mr. Farrar is eligible for an annual, discretionary
bonus of up to 35% of his annual salary based on the Company's overall
financial condition and performance and the achievement of performance
objectives established by the Compensation Committee. Based on
the degree of achievement of the corporate objectives for 2008 and for Mr.
Farrar’s key role in establishing the follow-on biologics capability at
our Boulder Colorado facility, the Compensation Committee and the Board
awarded Mr. Farrar a bonus for fiscal 2008 of $87,500 which represents 35%
of his annual salary..
|
·
|
Stock
Grants: Mr. Farrar received 229,242 shares of restricted stock
and 134,130 restricted stock units during fiscal
2008.
|
Compensation
Committee Report
* The
Compensation Committee has reviewed and discussed the CDA with management and
based on the review and discussions with managment of the CDA, the Compensation
Committee recommended to the Board that the CDA be included in this proxy
statement on Schedule 14(A).
THE COMPENSATION
COMMITTEE
Randall W. Whitcomb, M.D.,
Chairman
Graham K. Crooke, MB.BS
Melvin Sharoky, M.D.
March 4,
2009
*
|
The
foregoing report of the Compensation Committee is not to be deemed
“soliciting material” or deemed to be “filed” with the Securities and
Exchange Commission (irrespective of any general incorporation language in
any document filed with the Securities and Exchange Commission) or subject
to Regulation 14A of the Securities Exchange Act of 1934, as amended,
or to the liabilities of Section 18 of the Securities Exchange Act of
1934, except to the extent we specifically incorporate it by reference
into a document filed with the Securities and Exchange
Commission.
|
Summary
Compensation Table.
The
following table sets forth information regarding compensation earned by the
named executive officers in fiscal 2008 and fiscal 2007. No other executive
officers who would have otherwise been includable in the following table on the
basis of salary and bonus earned for fiscal 2008 have been excluded by reason of
their termination of employment or change in executive status during that
year. The compensation in this table does not include certain
perquisites and other personal benefits received by the named executive officers
that did not exceed $10,000 in the aggregate in fiscal 2008 and fiscal
2007.
Summary
Compensation Table
|
|
Name
and Principal Position
|
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards ($) (1)
|
|
|
Option
Awards ($)
|
|
|
Non-Equity
Incentive Plan Compensation ($)
|
|
|
All
Other Compensation ($)
|
|
|
Total
($)
|
|
Geoffrey
Allan, Ph.D.
|
2008
|
|
|
438,408
|
|
|
|
225,000
|
|
|
|
577,689
|
|
|
|
91,246
|
(2)
|
|
|
-
|
|
|
|
23,798
|
(3)
|
|
|
1,264,895
|
|
Chairman of the Board,
Chief Executive Officer
and President
|
2007
|
|
|
395,200
|
|
|
|
-
|
|
|
|
-
|
|
|
|
97,834
|
(2)
|
|
|
-
|
|
|
|
20,414
|
(4)
|
|
|
513,448
|
|
|
2006
|
|
|
396,467
|
|
|
|
-
|
|
|
|
-
|
|
|
|
112,492
|
|
|
|
-
|
|
|
|
19,864
|
|
|
|
528,823
|
|
Kevin
P. Tully, C.G.A.
|
2008
|
|
|
264,423
|
|
|
|
96,250
|
|
|
|
220,645
|
|
|
|
77,118
|
(5)
|
|
|
-
|
|
|
|
-
|
|
|
|
581,318
|
|
Executive
Vice President and Chief Financial Officer
|
2007
|
|
|
225,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
77,088
|
(5)
|
|
|
-
|
|
|
|
-
|
|
|
|
225,000
|
|
|
2006
|
|
|
186,058
|
|
|
|
-
|
|
|
|
-
|
|
|
|
66,317
|
|
|
|
-
|
|
|
|
-
|
|
|
|
252,375
|
|
Steve
Glover
|
2008
|
|
|
311,827
|
|
|
|
110,250
|
|
|
|
252,739
|
|
|
|
28,472
|
(6)
|
|
|
-
|
|
|
|
-
|
|
|
|
674,816
|
|
President,
Insmed Therapeutic Proteins
|
2007
|
|
|
145,385
|
|
|
|
-
|
|
|
|
-
|
|
|
|
46,825
|
(6)
|
|
|
-
|
|
|
|
75,000
|
(8)
|
|
|
267,210
|
|
Doug
Farrar
|
2008
|
|
|
244,712
|
|
|
|
-
|
|
|
|
200,586
|
|
|
|
37,432
|
(7)
|
|
|
-
|
|
|
|
-
|
|
|
|
445,298
|
|
Vice
President, Insmed Therapeutic Proteins
|
2007
|
|
|
225,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
37,398
|
(7)
|
|
|
-
|
|
|
|
-
|
|
|
|
262,398
|
|
(1)
|
Amounts
calculated utilizing the provisions of Statement of Financial Accounting
Standards (“SFAS”) No. 123R, “Share-based Payments” (“SFAS 123R”) except
the assumptions of forfeitures is not made. See Note 5 of the
consolidated financial statements in the Company’s Form 10-K for fiscal
2007 and fiscal 2008 regarding assumptions underlying valuation of equity
awards.
|
(2)
|
Represents
the compensation expense recognized in fiscal 2008 and 2007 in connection
with grants of stock options to Dr. Allan to purchase 150,000 shares of
our common stock on February 14, 2003 and 312,500 shares of our common
stock on December 8, 2005.
|
(3)
|
Consists
of $16,663, related to the personal use of a vehicle provided by us and
$7,913 for tax gross-ups related to the
same.
|
(4)
|
Consists
of $13,257, related to the personal use of a vehicle provided by us and
$7,157 for tax gross-ups related to the
same.
|
(5)
|
Represents
the compensation expense recognized in fiscal 2008 and 2007 in connection
with a grant of stock options to Mr. Tully to purchase 215,000 shares of
our common stock on February 20,
2006.
|
(6)
|
Represents
the compensation expense recognized in fiscal 2008 and 2007 in connection
with a grant of stock options to Mr. Glover to purchase 250,000 shares of
our common stock on June 22, 2007.
|
(7)
|
Represents
the compensation expense recognized in fiscal 2008 and 2007in connection
with a grant of stock options to Mr. Farrar to purchase 175,000 shares of
our common stock on November 1,
2006.
|
(8)
|
The
other compensation relates to consulting fees paid to Mr. Glover in fiscal
2007. Upon Mr. Glover’s employment with us in June 2007, we
terminated the consulting agreements between Mr. Glover and the
Company.
|
Equity
Compensation Plan Information.
In fiscal 2008, we had two equity
compensation plans under which we were granting stock options and shares of
non-vested stock. We are currently granting stock-based awards from our 2000
Plan and Amended and Restated 2000 Employee Stock Purchase Plan (the
“2000 ESPP,” and together with the 2000 Plan, the “Plans”). The Plans
are administered by the Compensation Committee and the Board.
The 2000 Plan was originally adopted by
the Board and approved by our shareholders in 2000 and its original ten-year
term was extended to March 15, 2015 when it was last amended. Under
the terms of the 2000 Plan, we are authorized to grant a variety of incentive
awards based on our common stock, including stock options (both incentive stock
options and non-qualified stock options), performance shares and other stock
awards. The 2000 Plan currently provides for the issuance of a
maximum of 9,250,000 (adjusted for stock splits) shares of common
stock. These shares are reserved for awards to all participants in
the 2000 Plan, including non-employee directors.
The 2000 ESPP was adopted by the Board
on April 5, 2000, and was approved by our shareholders on the same
date. It was amended by the Board to increase the number of shares
available for issuance, and such amendment was approved by our shareholders on
May 11, 2005. The 2000 ESPP was subsequently amended and restated by
action of the Board on October 4, 2006 and the amendment and restatement was
approved by our shareholders on December 14, 2006. Under the terms of
the 2000 ESPP, eligible employees have the opportunity to purchase our common
stock through stock options granted to them. An option gives its
holder the right to purchase shares of our common stock, up to a maximum value
of $25,000 per year. The 2000 ESPP provides for the issuance of a
maximum of 1,500,000 shares of our common stock.
The following table presents
information as of December 31, 2008, with respect to the Plans.
|
|
Number of Securities to
Be Issued upon Exercise of Outstanding Options, Warrants
and Rights
|
|
|
Weighted Average
Exercise Price of Outstanding Options, Warrants and
Rights
|
|
|
Number of Securities
Remaining Available for Future Issuance Under Equity
Compensation Plans (2)
|
|
|
Plan Category (1)
|
|
|
|
|
|
|
|
|
|
|
Equity
Compensation Plans Approved by Shareholders:
|
|
|
|
|
|
|
|
|
|
|
Amended
and Restated 2000 Stock Incentive Plan (3)
|
|
|
7,437,783
|
|
|
$
|
1.21
|
|
|
|
986,561
|
(2
|
)
|
Amended
and Restated 2000 Employee Stock Purchase Plan
|
|
|
—
|
|
|
|
—
|
|
|
|
365,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
|
7,437,783
|
|
|
$
|
1.21
|
|
|
|
1,351,941
|
(3
|
)
|
(1)
|
We
do not have any equity compensation plans that have not been approved by
our shareholders.
|
(2)
|
Amounts
exclude any securities to be issued upon exercise of outstanding options,
warrants and rights.
|
(3)
|
To
the extent that stock options or stock appreciation rights granted under
the 2000 Plan terminate, expire, or are canceled, forfeited, exchanged or
surrendered without having been exercised, or if any shares of restricted
stock or performance units are forfeited, the shares of common stock
underlying such grants will again become available for purposes of the
2000 Plan.
|
Grants
of Plan-Based Awards.
The
following table sets forth certain information regarding the terms of grants of
our common stock and options to purchase shares of our common stock and awards
under our Plans made by us to our named executive officers during fiscal
2008.
Grants
of Plan-Based Awards in Fiscal 2008
|
|
|
Estimated
Possible Payouts Under Non-Equity Incentive Plan Awards
(1)
|
|
|
Estimated
Possible Payouts Under Equity Incentive Plan Awards (2)
|
|
|
Grant
Date Fair Value of Stock and Option Awards ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
Grant
Date
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
|
(#
|
)
|
|
|
(#
|
)
|
|
|
(#
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Geoffrey
Allan, Ph.D.
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
225,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/29/08(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
165,055
|
|
|
|
|
|
|
|
99,033
|
|
|
5/29/08(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
123,791
|
|
|
|
495,164
|
|
|
|
742,745
|
|
|
|
297,098
|
|
|
5/29/08(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
96,574
|
|
|
|
|
|
|
|
57,944
|
|
|
5/29/08(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72,430
|
|
|
|
289,721
|
|
|
|
434,582
|
|
|
|
173,833
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin
P. Tully, C.G.A.
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
137,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/29/08(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63,042
|
|
|
|
|
|
|
|
37,825
|
|
|
5/29/08(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
189,125
|
|
|
|
189,125
|
|
|
|
283,687
|
|
|
|
113,475
|
|
|
5/29/08(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,886
|
|
|
|
|
|
|
|
22,132
|
|
|
5/29/08(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,664
|
|
|
|
110,657
|
|
|
|
165,986
|
|
|
|
66,394
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steve
Glover
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
157,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/29/08(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72,211
|
|
|
|
|
|
|
|
43,327
|
|
|
5/29/08(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54,158
|
|
|
|
216,634
|
|
|
|
324,951
|
|
|
|
129,980
|
|
|
5/29/08(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,251
|
|
|
|
|
|
|
|
25,351
|
|
|
5/29/08(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,688
|
|
|
|
126,753
|
|
|
|
190,130
|
|
|
|
76,052
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Doug
Farrar
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
112,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/29/08(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57,311
|
|
|
|
|
|
|
|
34,387
|
|
|
5/29/08(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,983
|
|
|
|
171,932
|
|
|
|
257,897
|
|
|
|
103,159
|
|
|
5/29/08(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,533
|
|
|
|
|
|
|
|
20,120
|
|
|
5/29/08(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,149
|
|
|
|
100,598
|
|
|
|
150,896
|
|
|
|
60,359
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
_____________________
(1)
|
Our
cash bonus incentive plan provides a maximum amount, based upon a
percentage of salary that an executive can earn. This amount is
shown under the “Maximum ($)” column. Cash bonuses are
discretionary.
|
(2)
|
The
restricted stock and restricted stock units that are attributable to these
awards vested on March 31, 2009.
|
(3)
|
This
award of restricted stock vests in equal installments of 25% per year over
a four year period, beginning on June 1, 2009 based on continued
employment.
|
(4)
|
This
award of restricted stock vests based on the performance of the Company
over a four-year performance cycle as measured by total shareholder return
of the Company and total shareholder return of the Company compared to the
total shareholder return of the Company’s peer group. The
annualized total shareholder return for the Company must be at least 6%
for the threshold and for any payment to be made. The
performance for target is the Company’s total shareholder return at the
median for the peer group. The performance for maximum is the
Company’s total shareholder return at the 75
th
percentile for the peer group.
|
(5)
|
This
award of restricted stock units vests in equal installments of 25% per
year over a four year period, beginning on June 1, 2009 based on continued
employment.
|
(6)
|
This
award of restricted stock units vests based on the performance of the
Company over a four-year performance cycle as measured by total
shareholder return of the Company and total shareholder return of the
Company compared to the total shareholder return of the Company’s peer
group. The annualized total shareholder return for the Company
must be at least 6% for the threshold and for any payment to be
made. The performance for target is the Company’s total
shareholder return at the median for the peer group. The
performance for maximum is the Company’s total shareholder return at the
75
th
percentile for the peer group.
|
Outstanding
Equity Awards.
The following table sets forth certain
information regarding the stock option grants, restricted stock and restricted
stock units to our named executive officers as of the end of December 31,
2008.
Outstanding
Equity Awards at Fiscal Year-End 2008
|
|
|
|
|
|
|
|
|
|
|
Option
Awards
|
Name
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
Number
of Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
|
Restricted
Stock
|
Restricted
Stock Units
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Geoffrey
Allan, Ph.D.
|
125,000
|
|
0
|
|
0
|
|
$ 3.05
|
1/30/2009
|
|
125,000
|
|
0
|
|
0
|
|
$ 3.05
|
1/30/2009
|
|
25,000
|
|
0
|
|
0
|
|
$ 2.73
|
5/2/2009
|
|
25,000
|
|
0
|
|
0
|
|
$ 2.73
|
5/2/2009
|
|
25,000
|
|
12,500
|
(1)
|
0
|
|
$ 1.00
|
2/14/2012
|
|
25,000
|
|
12,500
|
(1)
|
0
|
|
$ 1.50
|
2/14/2012
|
|
37,500
|
|
0
|
|
0
|
|
$ 1.00
|
2/14/2010
|
|
37,500
|
|
0
|
|
0
|
|
$ 1.50
|
2/14/2010
|
|
208,334
|
|
0
|
|
0
|
|
$ 1.43
|
12/8/2011
|
|
0
|
|
0
|
|
660,218
|
386,295
|
$ -
|
12/31/2011
|
Kevin
P. Tully, C.G.A.
|
107,500
|
|
107,500
|
(2)
|
0
|
|
$ 2.18
|
2/20/2012
|
|
0
|
|
0
|
|
252,166
|
147,543
|
$ -
|
12/31/2011
|
Doug
Farrar
|
87,500
|
|
87,500
|
(3)
|
0
|
|
$ 1.30
|
11/1/2012
|
|
0
|
|
0
|
|
229,242
|
134,130
|
$ -
|
12/31/2011
|
Steve
Glover
|
62,500
|
|
187,500
|
(4)
|
0
|
|
$ 0.72
|
6/22/2017
|
|
50,000
|
(5)
|
0
|
|
0
|
|
$ 1.01
|
3/26/2013
|
|
0
|
|
0
|
|
288,845
|
169,004
|
$ -
|
12/31/2011
|
Glen
Kelley
|
34,200
|
|
1,800
|
|
0
|
|
$ 0.50
|
11/12/2011
|
|
25,000
|
|
0
|
|
0
|
|
$ 1.18
|
11/2/2011
|
|
35,000
|
|
25,000
|
|
0
|
|
$ 2.25
|
7/31/2012
|
|
0
|
|
0
|
|
229,242
|
134,130
|
$ -
|
12/31/2011
|
(1)
|
The
unvested shares of our common stock underlying this option will vest at
the end of seven years from the date of grant, on February 10,
2010.
|
(2)
|
The
unvested shares of our common stock underlying this option vest in equal
annual increments over a four year period on February 20 of each year,
vesting began on February 20, 2007 and will end on February 20,
2010.
|
(3)
|
The
unvested shares of our common stock underlying this option vest in equal
annual increments over a four year period on November 1 of each year,
vesting began on November 1, 2007 and will end on November 1,
2010.
|
(4)
|
The
unvested shares of our common stock underlying this option vest in equal
annual increments over a four year period on June 22 of each year, vesting
will begin on June 22, 2009 and will end on June 22,
2011.
|
(5)
|
This
option is held by ZyVer & Associates, a company wholly owned by Mr.
Glover.
|
Option
Exercises and Stock Vested.
None of
our named executive officers exercised options in fiscal 2008.
Potential
Payments Upon Termination or Change in Control.
We have
Change in Control Agreements in place with all of our named executive officers
which entitle them to receive additional benefits in the event of their
termination following a change in control of our company. We believe
that the existence of these potential benefits will discourage turnover and
cause such executives to be better able to respond to the possibility of a
change in control without being influenced by the potential effect of a change
in control on their job security.
For
purposes of these agreements, the term “change in control” generally
includes:
|
(a)
|
the
acquisition by another person of beneficial ownership of 40% or more of
our common stock;
|
|
(b)
|
a
proxy contest that results in the replacement of a majority of the members
of our Board;
|
|
(c)
|
a
merger after which our shareholders own less than 60% of the surviving
corporation’s stock; or
|
|
(d)
|
approval
by our shareholders of a complete liquidation or dissolution of our
company.
|
If,
during the one year period following a change in control or six months prior to
a change in control, we or our successor terminates the executive’s employment
other than for “cause” or the executive voluntarily terminates employment after
the executive’s compensation or duties are changed in any material respect from
what they were immediately prior to the change in control, a Qualified
Termination as defined in these agreements, the executive shall receive a
lump-sum cash payment equal to the sum of the executive’s highest annual salary
rate while an employee plus a prorated maximum potential bonus. Dr. Allan
will receive a lump sum cash payment equal to one and a half times the sum of
his highest annual salary plus his prorated maximum bonus
potential. In addition, we shall continue to provide to the executive
health, dental, and life insurance, continuation of directors’ and officers’
insurance and the other fringe benefits that the executive received prior to
termination for the 18 month period immediately following the change in
control.
The
severance payment and benefit continuation is conditioned on the executive
signing a release of employment related claims.
In the
event the executive is terminated by us, other than for cause, disability or
death, or the executive voluntarily terminates employment for the reasons set
forth above, within 12 months following the change in control, we will provide
outplacement services in an amount not to exceed $10,000, until the earlier of
(i) 12 months following termination of the executive’s employment or (ii) the
date that the executive secures full time employment.
To
protect our business and goodwill, for a period of 12 months (18 months in the
case of Dr. Allan) after the termination of executive’s employment with us, the
executive agrees that he will not:
1.
engage in
any business that competes directly with the products or services provided by us
at the time of termination or for which definitive plans then existed to so
provide such products or services;
2.
directly
or indirectly recruit or solicit any person who is then an employee of us or was
an employee of us at any time within six months prior to such solicitation;
or
3.
solicit,
divert or take away, or attempt to divert or to take away, the business or
patronage of any of our clients, customers or accounts, or prospective clients
customers or accounts.
Under
these agreements with the executives, all stock options
held by the
executives
at the
time of a change in control will
become fully exercisable
and the restrictions imposed on any restricted stock and restricted stock units
held by such executives shall lapse.
However, after a change
in control all of the stock options held by Dr. Allan will become
exercisable and remain exercisable until the earlier to occur of (a) the end of
the regular option term and (b) five years from the date of the change in
control.
The
severance benefits that executives may be entitled to receive under these
agreements and other benefits that the executives are entitled to receive under
other plans, may constitute parachute payments that are subject to the “golden
parachute” rules of Section 280G of the Code and the excise tax of Code Section
4999. If these payments are determined to be parachute payments, as
calculated by our independent auditors, the parachute payments will be reduced
if, and only to the extent that, a reduction will allow the executives to
receive a greater net after tax amount than the executives would receive absent
a reduction.
The table below summarizes the
hypothetical payments that would have been incurred for each of the named
executive officers at the time assuming that a Qualified Termination occurred on
December 31, 2008 as a result of a change in control.
Change
in Control Payments
|
|
|
|
Cash
Severance (1)
|
|
|
Prorata
Bonus (1)
|
|
|
Benefits
(1) (2)
|
|
|
Outplacement
Assistance (1)
|
|
|
Value
of Accelerated Stock (3)
|
|
|
Other
Perquisites (1) (4)
|
|
|
Total
|
|
Geoffrey
Allan, Ph.D.
|
|
$
|
675,000
|
|
|
$
|
337,500
|
|
|
$
|
71,181
|
|
|
$
|
10,000
|
|
|
$
|
513,501
|
|
|
$
|
24,318
|
|
|
$
|
1,631,500
|
|
Kevin
P. Tully, C.G.A.
|
|
$
|
275,000
|
|
|
$
|
96,250
|
|
|
$
|
74,123
|
|
|
$
|
10,000
|
|
|
$
|
224,657
|
|
|
|
-
|
|
|
$
|
680,030
|
|
Doug
Farrar
|
|
$
|
250,000
|
|
|
$
|
87,500
|
|
|
$
|
78,194
|
|
|
$
|
10,000
|
|
|
$
|
196,129
|
|
|
|
-
|
|
|
$
|
621,824
|
|
Steve
Glover
|
|
$
|
315,000
|
|
|
$
|
110,250
|
|
|
$
|
78,592
|
|
|
$
|
10,000
|
|
|
$
|
178,299
|
|
|
|
-
|
|
|
$
|
692,141
|
|
(1)
|
These
payments and other benefits would be payable to the executive upon a
Qualified Termination.
|
(2)
|
The
cost of benefits disclosed includes the extension of medical, dental, and
life insurance and directors’ and officers’ insurance for a period of 18
months post termination. The cost for directors’ and officers’
insurance is assumed at 150% of current annual premium and allocated
equally among the executive
officers.
|
(3)
|
The
unvested shares underlying such stock grants would become fully vested as
of a change in control. Calculated based upon the difference of
the option exercise price and the closing market price of our common stock
on the NASDAQ Global Market on December 31, 2008, (valued at a price of
$0.47/share) multiplied by the number of unvested shares. As of
February 29, 2009, our common stock was listed on the NASDAQ Capital
Market. All unvested shares for Dr. Allan, Mr. Tully and Mr. Farrar had
exercise prices above $0.47/share, therefore, there is no value recognized
for accelerating the vesting of the unvested
shares.
|
(4)
|
Other
perquisites for Dr. Allan relate to the personal use of an automobile that
we provide him.
|
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is comprised
entirely of independent directors and none of our executive officers served on
the compensation committee or on the board of any company that employed any
member of our Compensation Committee or our Board of Directors.
DIRECTOR
COMPENSATION
Our
non-employee directors receive an annual director’s fee of $15,000 plus $2,000
and reimbursement of expenses for each meeting of the Board attended in person,
$500 for each Board meeting attended by telephone, $1,000 for each Compensation
and Nominations and Governance Committee meeting attended in person or by
telephone, and $1,500 for each Audit Committee attended in person or by
telephone. In addition, each non-employee director receives an option
to purchase 25,000 shares of our common stock upon initial election to the Board
and options to purchase 17,500 shares of our common stock annually, which
options vest one year from the date of grant if the director attends at least
75% of the Board meetings in the preceding fiscal year. Our officers
and employees, who are also directors, do not receive any additional
compensation for their services as directors.
The
following table sets forth a summary of the compensation we paid to our
non-employee directors in fiscal 2008.
|
|
Fees
Earned or Paid in Cash
|
|
|
Stock
Awards ($)
|
|
|
Option
Awards ($) (1)(2)
|
|
|
Non-Equity
Incentive Plan Compensation
|
|
|
Change
in Pension or Nonqualified Deferred Compensation Earnings
($)
|
|
|
All
Other Compensation ($)
|
|
|
Total
|
|
Graham
Crooke (3)
|
|
|
44,000
|
|
|
|
-
|
|
|
|
8,339
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
52,339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth
Condon (4)
|
|
|
39,500
|
|
|
|
-
|
|
|
|
8,339
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
47,839
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steinar
Engelsen (5)
|
|
|
37,000
|
|
|
|
-
|
|
|
|
8,339
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
45,339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denny
Lanfear (6)
|
|
|
29,000
|
|
|
|
-
|
|
|
|
30,599
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
59,599
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mel
Sharoky (7)
|
|
|
39,500
|
|
|
|
-
|
|
|
|
8,339
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
47,839
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Randy
Whitcomb (8)
|
|
|
39,000
|
|
|
|
-
|
|
|
|
8,339
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
47,339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$
|
228,000
|
|
|
$
|
-
|
|
|
$
|
72,293
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
300,293
|
|
(1)
|
Amounts
calculated utilizing the provisions of SFAS 123R, “Share-based
Payment.” See Note 5 of the consolidated financial statements
in the Company’s Form 10-K for fiscal 2008 regarding the assumptions
underlying valuation of equity
awards.
|
(2)
|
Each
non-employee director received an option on May 7, 2008 for 17,500 shares
of our common stock at an exercise price of $0.65/share. The
shares of our common stock underlying these options will vest in one year,
if the director attends at least 75% of the meetings of the Board held
during our preceding fiscal year while he was a director. The
grant date fair value of this option as computed in accordance with SFAS
123R is $8,339.
|
(3)
|
As
of December 31, 2008, Mr. Condon had 100,000 outstanding options to
purchase shares of our common
stock.
|
(4)
|
As
of December 31, 2008, Dr. Crooke had 200,000 outstanding options to
purchase shares of our common
stock.
|
(5)
|
As
of December 31, 2008, Dr. Engelsen had 100,000 outstanding options to
purchase shares of our common
stock.
|
(6)
|
As
of December 31, 2008, Mr. Lanfear had 125,000 outstanding options to
purchase shares of our common stock, including 125,000 outstanding options
held by Lanfear Capital Advisors,
LLC.
|
(7)
|
As
of December 31, 2008, Dr. Sharoky had 90,000 outstanding options to
purchase shares of our common
stock.
|
(8)
|
As
of December 31, 2008, Dr. Whitcomb had 90,000 outstanding options to
purchase shares of our common
stock.
|
PROPOSAL NO.
2
DESIGNATION
OF AUDITORS
Information
Relative to Designation of Auditors.
The Audit
Committee has designated Ernst & Young LLP, independent registered public
accounting firm, as our independent auditors for the fiscal year ending December
31, 2009, subject to shareholder ratification. A representative of
Ernst & Young LLP is expected to be present at the Annual Meeting and will
have an opportunity to make a statement and respond to appropriate
questions.
Ernst
& Young LLP’s principal function is to audit our consolidated financial
statements and, in connection with that audit, to review certain related filings
with the Securities and Exchange Commission and to conduct limited reviews of
the consolidated financial statements included in each of our quarterly
reports. The aggregate fees billed for each of the last two fiscal
years for professional services rendered by Ernst & Young LLP, as well as
information relating to the Audit Committee’s pre-approval policies and
procedures, are detailed in the “Audit Committee Report.”
Vote
Not Required for Approval.
Shareholder
ratification of our independent auditors is not required under Virginia law, our
Articles of Incorporation or our Bylaws. In the event that a majority
of the votes cast are against the ratification of Ernst & Young LLP as our
independent auditors for the fiscal year ending December 31, 2009, the Audit
Committee will consider the vote and the reasons therefore in future decisions
on the selection of our independent auditors.
Recommendation.
THE BOARD RECOMMENDS
THAT
YOU
VOTE “FOR” THE RATIFICATION OF ERNST
& YOUNG LLP AS OUR INDEPENDENT AUDITORS.
PROPOSALS
FOR 2010 ANNUAL MEETING
The
regulations of the Securities and Exchange Commission require any shareholder
wishing to make a proposal to be acted upon at the 2010 Annual Meeting of
Shareholders to present the proposal to us at our principal office in Richmond,
Virginia, no later than December 18, 2009 or, if the date of the 2010
Annual Meeting is more than 30 days from May 20, 2010 (the anniversary of this
year’s Annual Meeting), then the deadline is a reasonable time before we begin
to print and mail our proxy materials for the 2010 Annual Meeting of
Shareholders. We will consider written proposals received by that
date for inclusion in our proxy statement in accordance with regulations
governing the solicitation of proxies.
In
addition to the requirements of the Securities and Exchange Commission, a
shareholder must meet to have a proposal included in our proxy statement, our
Bylaws contain certain requirements that a shareholder must meet to nominate one
or more persons for election as directors at an annual meeting or to make any
other proposal to be acted upon at an annual meeting.
Article I,
Section 10 of our Bylaws allows any shareholder entitled to vote in the
election of directors generally to nominate one or more persons for election as
directors at an annual meeting only if written notice of such shareholder’s
intent to make such nomination or nominations has been given, either by personal
delivery or by United States registered or certified mail, postage prepaid, to
our Corporate Secretary not later than 120 days nor more than 150 days before
the anniversary of the date of the first mailing of our proxy statement for the
immediately preceding year’s annual meeting. Because this proxy
statement was first mailed to our shareholders on or about April 17, 2009, our
Corporate Secretary must receive written notice of a shareholder’s intent to
make such nomination or nominations at the 2010 Annual Meeting of Shareholders
not later than the close of business on December 18, 2009 and not earlier
than the close of business on November 18, 2009. Each such
notice must set forth:
·
|
the
name and address of the shareholder who intends to make the nomination and
any other person on whose behalf the nomination is being made, and of the
person or persons to be nominated,
|
·
|
the
class and number of shares of our common stock that are owned by the
shareholder and any other person on whose behalf the nomination is being
made,
|
·
|
a
representation that the shareholder is a holder of record of our common
stock entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to nominate the person or persons specified in the
notice,
|
·
|
a
description of all arrangements or understandings between the shareholder
and each nominee and any other person or persons (naming such person or
persons) pursuant to which the nomination or nominations are to be made by
the shareholder, and
|
·
|
such
other information regarding each nominee proposed by such shareholder as
would be required to be disclosed in solicitations of proxies for election
of directors in an election contest, or is otherwise required to be
disclosed, pursuant to the proxy rules of the Securities and Exchange
Commission had the nominee been nominated or intended to be nominated by
the Board, and shall include a consent signed by each such nominee to
being named in the proxy statement as a nominee and to serve as a one of
our directors if so elected.
|
Article I,
Section 9 of our Bylaws requires any shareholder wishing to make any other
proposal to be acted on at an annual meeting to give written notice, either by
personal delivery or by United States registered or certified mail, postage
prepaid, to our Corporate Secretary no later than 120 days nor more than 150
days before the anniversary of the date of the first mailing of our proxy
statement for the immediately preceding year’s annual
meeting. Because this proxy statement was first mailed to our
shareholders on April 17, 2009, our Corporate Secretary must receive written
notice of a shareholder’s proposal to be acted upon at the 2010 Annual Meeting
of Shareholders not later than the close of business on December 18, 2009
and not earlier than the close of business on November 18,
2009. Each such notice must set forth as to each matter the
shareholder proposes to bring before the annual meeting:
·
|
a
brief description of the business desired to be brought before the annual
meeting, including the complete text of any resolutions to be presented at
the annual meeting with respect to such business, and the reasons for
conducting such business at the annual
meeting,
|
·
|
the
name and address of record of the shareholder proposing such business and
any other person on whose behalf the proposal is being
made,
|
·
|
the
class and number of shares of our common stock that are beneficially owned
by the shareholder and any other person on whose behalf the proposal is
made,
|
·
|
a
representation that the shareholder is a holder of record of our common
stock entitled to vote at such annual meeting and intends to appear in
person or by proxy at the annual meeting to propose such business,
and
|
·
|
any
material interest of the shareholder, and any other person on whose behalf
the proposal is made, in such
business.
|
If a
shareholder wishes to make a proposal to be acted upon at the 2010 Annual
Meeting of Shareholders that has not been included in the proxy statement and
such proposal is made at the 2010 Annual Meeting of Shareholders, the management
proxies will be allowed to use their discretionary voting authority to vote on
the proposal unless notice of the proposal has been received by us no later than
December 18, 2009 or, if the date of the 2010 Annual Meeting of
Shareholders is more than 30 days from May 20, 2010 (the anniversary of this
year’s Annual Meeting), then the deadline is a reasonable time before we begin
to mail our proxy materials for the 2010 Annual Meeting of
Shareholders.
Our
Bylaws are available on our website at
www.insmed.com
. We
will furnish a copy of our Bylaws without charge to any shareholder desiring a
copy upon written request to Mr. W. McIlwaine Thompson, Corporate
Secretary, Insmed Incorporated, 8720 Stony Point Parkway, Suite 200, Richmond,
Virginia 23235. Our Bylaws are also available at the Securities and
Exchange Commission’s website (
www.sec.gov
) as
Exhibit 3.2 to our Quarterly Report on Form 10-Q for the period ended
March 31, 2004 and filed on May 10, 2004.
INTERNET
AVAILABILITY OF PROXY MATERIALS
Under
rules adopted by the securities and exchange commission, we are now furnishing
proxy materials on the internet in addition to mailing paper copies of the
materials to each shareholder. instructions on how to access and
review the proxy materials on the internet can be found at the end of
this proxy statement.
ANNUAL
REPORT ON FORM 10-K
We will
provide without charge to each person to whom this proxy statement has been
delivered, on the written request of any such person, a copy of our Annual
Report,
including
the financial statements and financial statement schedules. Requests
should be directed to Mr. W. McIlwaine Thompson, Corporate Secretary,
Insmed Incorporated, 8720 Stony Point Parkway, Suite 200, Richmond, Virginia
23235. A list of exhibits to the Annual Report, showing the cost of
each, will be delivered with the copy of the Annual Report. Any of
the exhibits will be provided upon payment of the charge noted on the
list.
SEPARATE
COPIES FOR BENEFICIAL HOLDERS
Institutions
that hold shares in street name for two or more beneficial owners with the same
address are permitted to deliver a single proxy statement and annual report to
that address. Any such beneficial owner can request a separate copy
of this proxy statement or the Annual Report by contacting our Corporate
Secretary as described above.
OTHER
MATTERS
The Board
is not aware of any matters to be presented for action at the Annual Meeting
other than as set forth herein. However, if any other matters
properly come before the meeting, or any adjournment thereof, the person or
persons voting the proxies will vote them in accordance with their best
judgment.
By Order
of the Board of Directors
W.
McIlwaine Thompson, Jr.,
Corporate
Secretary
April 17,
2009
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE INSMED INCORPORATED
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 20, 2009:
The
proxy statement and annual report are available at
http://investor.insmed.com/sec.cfm
NOTICE
and
PROXY
STATEMENT
for
ANNUAL
MEETING
of
SHAREHOLDERS
MAY
20, 2009
8720
STONY POINT PARKWAY, SUITE 200
RICHMOND,
VIRGINIA 23235
INSMED
INCORPORATED
Richmond
,
Virginia
PROXY
FOR ANNUAL MEETING OF SHAREHOLDERS
TO
BE HELD MAY 20, 2009
The
undersigned hereby appoints Geoffrey Allan, Ph.D. and W. McIlwaine Thompson,
Jr., or either of them, with full power of substitution in each, proxies (and if
the undersigned is a proxy, substitute proxies) to vote all shares of common
stock of Insmed Incorporated that the undersigned is entitled to vote at the
Annual Meeting
of
Shareholders to be held May 20, 2009 at 9:00 a.m., at the Hyatt Reston Town
Center Hotel, 1800 Presidents Street, Reston, Virginia, and at any and all
adjournments or postponements thereof. In their discretion, the
proxies are authorized to vote upon such other business and matters incident to
the conduct of the meeting as may properly come before the meeting.
This
Proxy is solicited on behalf of the Board of Directors. This Proxy,
when properly executed, will be voted in the manner directed in this Proxy by
the undersigned shareholder. If no direction is made, this Proxy will
be voted “for” Proposals 1 and 2.
1. Election
of directors:
[ ] FOR
ALL [
] WITHHOLD
ALL [
] FOR ALL EXCEPT
Nominees:
Geoffrey Allan,
Ph.D.
Randall W. Whitcomb,
M.D.
Melvin Sharoky,
M.D.
Instruction:
To withhold authority to vote for any such nominee(s), write the name(s) of the
nominee(s) in the space provided below.
________________________________________________________________________
2.
|
Ratification
of the selection of Ernst & Young LLP as the independent auditors for
Insmed for the fiscal year ending December 31,
2009:
|
[
] FOR [
] AGAINST [
] ABSTAIN
Dated
_____________________, 2009
Print
Name:
Signature:
Please
print and sign your name exactly as it appears on the stock
certificate. Only one of several joint owners or co-owners need
sign. Fiduciaries should give full title.
PLEASE
COMPLETE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
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