SCHEDULE 14A
(Rule 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted
[X] Definitive Proxy Statement by Rule 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ALEXION PHARMACEUTICALS, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[_] Fee paid previously with preliminary materials:
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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ALEXION PHARMACEUTICALS, INC.
352 Knotter Drive
Cheshire, Connecticut 06410
(203) 272-2596
November 8, 2001
Dear Fellow Stockholder:
You are cordially invited to attend the Company's Annual Meeting of
Stockholders to be held at 10:00 a.m. on Wednesday December 12, 2001, at the
Park Avenue Room at the Hotel Inter-Continental, 111 East 48th Street, New York,
New York 10017.
This year, you are being asked:
(1) To elect seven directors to the Company's Board of Directors,
constituting the entire Board, to serve for the ensuing year; and
(2) To ratify the appointment of Arthur Andersen LLP as the Company's
independent public accountants.
In addition, I will be pleased to report on the affairs of the Company and
a discussion period will be provided for questions and comments of general
interest to stockholders.
We look forward to greeting personally those stockholders who are able to
be present at the meeting; however, whether or not you plan to be with us at the
meeting, it is important that your shares be represented. Accordingly, you are
requested to sign and date the enclosed proxy and mail it in the envelope
provided at your earliest convenience.
Thank you for your cooperation.
Very truly yours,
Leonard Bell, M.D.
President, Chief Executive Officer,
Secretary and Treasurer
ALEXION PHARMACEUTICALS, INC.
Cheshire, Connecticut
___________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
November 8, 2001
___________
Notice is hereby given that the Annual Meeting of Stockholders of Alexion
Pharmaceuticals, Inc. will be held on Wednesday, December 12, 2001, at 10:00
a.m. at the Park Avenue Room at the Hotel Inter-Continental, 111 East 48th
Street, New York, New York 10017 for the following purposes:
(1) To elect seven directors to the Company's Board of Directors,
constituting the entire Board, to serve for the ensuing year;
(2) To ratify the appointment of Arthur Andersen LLP as the Company's
independent public accountants; and
(3) To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
Stockholders of record at the close of business on November 7, 2001 will be
entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof.
All stockholders are cordially invited to attend the Annual Meeting in
person. Stockholders who are unable to attend the Annual Meeting in person are
requested to complete and date the enclosed form of proxy and return it promptly
in the envelope provided. No postage is required if mailed in the United States.
Stockholders who attend the Annual Meeting may revoke their proxy and vote their
shares in person.
Leonard Bell, M.D.
Secretary
ALEXION PHARMACEUTICALS, INC.
352 Knotter Drive
Cheshire, Connecticut 06410
____________
PROXY STATEMENT
____________
GENERAL INFORMATION
Proxy Solicitation
This Proxy Statement is furnished to the holders of common stock, par value
$.0001 per share (the "Common Stock"), of Alexion Pharmaceuticals, Inc. (the
"Company") in connection with the solicitation by the Board of Directors of the
Company of proxies for use at the Annual Meeting of Stockholders to be held on
Wednesday, December 12, 2001, at 10:00 a.m. at the Park Avenue Room at the Hotel
Inter-Continental, 111 East 48th Street, New York, New York 10017, or at any
adjournment thereof, pursuant to the accompanying Notice of Annual Meeting of
Stockholders. The purposes of the meeting and the matters to be acted upon are
set forth in the accompanying Notice of Annual Meeting of Stockholders. The
Board of Directors is not currently aware of any other matters which will come
before the meeting.
Proxies will be mailed to stockholders on or about November 8, 2001 and
will be solicited chiefly by mail. The Company will make arrangements with
brokerage houses and other custodians, nominees and fiduciaries to send proxies
and proxy materials to the beneficial owners of the shares and will reimburse
them for their expenses in so doing. Should it appear desirable to do so in
order to ensure adequate representation of shares at the meeting, officers,
agents and employees of the Company may communicate with stockholders, banks,
brokerage houses and others by telephone, facsimile, email or in person to
request that proxies be furnished. All expenses incurred in connection with this
solicitation will be borne by the Company. The Company has no present plans to
hire special employees or paid solicitors to assist in obtaining proxies, but
reserves the option of doing so if it should appear that a quorum otherwise
might not be obtained.
Revocability and Voting of Proxy
A form of proxy for use at the Annual Meeting of Stockholders and a return
envelope for the proxy are enclosed. Stockholders may revoke the authority
granted by their execution of
proxies at any time before their effective exercise by filing with the Secretary
of the Company a written notice of revocation or a duly executed proxy bearing a
later date, or by voting in person at the meeting. Shares of the Company's
Common Stock represented by executed and unrevoked proxies will be voted in
accordance with the choice or instructions specified thereon. If no
specifications are given, the proxies intend to vote the shares represented
thereby for all listed nominees for director, for ratification of the
appointment of Arthur Andersen LLP as the Company's independent public
accountants, and in accordance with their best judgment on any other matters
which may properly come before the meeting.
Record Date and Voting Rights
Only stockholders of record at the close of business on November 7, 2001
are entitled to notice of and to vote at the Annual Meeting or any and all
adjournments thereof. On November 7, 2001 there were 18,110,801 shares of Common
Stock outstanding; each such share is entitled to one vote on each of the
matters to be presented at the Annual Meeting. The holders of a majority of the
outstanding shares of Common Stock will constitute a quorum at the Annual
Meeting, present in person or by proxy and entitled to vote. Abstentions and
broker non-votes will be counted for purposes of determining the presence or
absence of a quorum. "Broker non-votes" are shares held by brokers or nominees
that are present in person or represented by proxy, but are not voted on a
particular matter because instructions have not been received from the
beneficial owner. Under applicable Delaware law, the effect of broker non-votes
on a particular matter depends on whether the matter is one as to which the
broker or nominee has discretionary voting authority under the applicable rule
of the New York Stock Exchange. The effect of broker non-votes on the specific
items to be brought before the Annual Meeting is discussed under each item.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information as of October 1, 2001
(except as otherwise noted) regarding the beneficial ownership (as defined by
the Securities and Exchange Commission (the "SEC")) of the Company's Common
Stock of: (i) each person known by the Company to own beneficially more than
five percent of the Company's outstanding Common Stock; (ii) each director;
(iii) each executive officer named in the Summary Compensation Table (see
"Proposal No.-1. Election of Directors"); and (iv) all directors and executive
officers of the Company as a group. Except as otherwise specified, the named
beneficial owner has the sole voting and investment power over the shares
listed.
-2-
Percentage of
Number of Shares Outstanding
Name and Address Beneficially Owned Shares of
of Beneficial Owner (1) (2) Common Stock
----------------------- ------------------ -------------
OppenheimerFunds, Inc.
Two World Trade Center, 34/th/ Floor
New York, NY 10048-0203 /(3)/.............................................. 2,000,000 11.0%
Fidelity Management & Research Company
82 Devonshire Street
Boston, MA 02109 /(4)/..................................................... 1,833,269 10.1%
Scudder Kemper Investments, Inc.
345 Park Avenue
New York, NY 10154-0010 /(5)/.............................................. 1,373,400 7.6%
OrbiMed Advisors, LLC
41 Madison Avenue, 40/th/ Floor
New York, NY 10010 /(6)/................................................... 950,000 5.2%
Leonard Bell, M.D. /(7)/.................................................... 772,016 4.1%
Stephen P. Squinto, Ph.D. /(8)/............................................. 225,590 1.2%
David W. Keiser /(9)/....................................................... 225,436 1.2%
John H. Fried, Ph.D. /(10)/................................................. 106,670 *
Joseph Madri, Ph.D., M.D. /(11)/............................................ 64,134 *
Max Link, Ph.D. /(12)/...................................................... 32,157 *
Christopher F. Mojcik, M.D., Ph.D. /(13)/................................... 30,076 *
Thomas I.H. Dubin, J.D. /(14)/.............................................. 11,624 *
Jerry T. Jackson /(15)/..................................................... 9,001 *
R. Douglas Norby /(16)/..................................................... 9,001 *
Alvin S. Parven /(17)/...................................................... 7,901 *
All Directors and Executive Officers as a group (17 persons) /[18)/......... 1,751,433 9.0%
______________
* Less than one percent.
(1) Unless otherwise indicated, the address of all persons is 352 Knotter
Drive, Cheshire, Connecticut 06410.
(2) To the Company's knowledge, except as set forth below, the persons named in
the table have sole voting and investment power with respect to all shares
of Common Stock shown as beneficially owned by them, subject to community
property laws where applicable and the information contained in the
footnotes in this table.
(3) This figure is based upon information set forth in Schedule 13G dated June
6, 2001.
(4) This figure is based upon information set forth in Schedule 13G dated May
10, 2001
(5) This figure is based upon information set forth in Schedule 13G dated
February 14, 2001.
(6) This figure is based upon information set forth in Schedule 13G dated
August 8, 2001.
(7) Includes 611,916 shares of Common Stock that may be acquired upon the
exercise of options within 60 days of October 1, 2001 and 300 shares, in
aggregate, held in the names of Dr. Bell's three minor children. Excludes
148,084 shares obtainable through the exercise of options, granted to Dr.
Bell, which are not exercisable within 60 days of October 1, 2001 and
90,000 shares held in trust for Dr. Bell's children of which Dr. Bell
disclaims beneficial ownership. Dr. Bell disclaims beneficial ownership of
the shares held in the name of his minor children.
-3-
(8) Includes 174,890 shares of Common Stock which may be acquired upon the
exercise of options within 60 days of October 1, 2001; 5,200 shares held in
trust for the benefit of Dr. Squinto's two minor children of which Dr.
Squinto's spouse is the trustee; and 10,000 shares held in a charitable
remainder trust of which Dr. Squinto and his spouse are the trustees and
income beneficiaries. Excludes 61,610 shares obtainable through the
exercise of options, granted to Dr. Squinto, which are not exercisable
within 60 days of October 1, 2001. Dr. Squinto disclaims beneficial
ownership of the shares held in the name of his minor children and the
foregoing trusts.
(9) Includes 189,136 shares of Common Stock which may be acquired upon the
exercise of options within 60 days of October 1, 2001 and 300 shares, in
aggregate, held in the names of Mr. Keiser's three children. Excludes
74,864 shares obtainable through the exercise of options, granted to Mr.
Keiser, which are not exercisable within 60 days of October 1, 2001. Mr.
Keiser disclaims beneficial ownership of the shares held in the name of his
children.
(10) Includes 4,001 shares of Common Stock, which may be acquired upon the
exercise of options that are exercisable within 60 days of October 1, 2001.
Excludes 16,166 shares obtainable through the exercise of options granted
to Dr. Fried, which are not exercisable within 60 days of October 1, 2001
(11) Includes 19,134 shares of Common Stock which may be acquired on the
exercise of options that are exercisable within 60 days of October 1, 2001.
Excludes 16,166 shares obtainable through the exercise of options granted
to Dr. Madri, which are not exercisable within 60 days of October 1, 2001.
(12) Includes 4,001 shares of Common Stock which may be acquired upon the
exercise of options within 60 days of October 1, 2001. Excludes 16,166
shares obtainable through the exercise of options granted to Dr. Link,
which are not exercisable within 60 days of October 1, 2001.
(13) Includes 30,076 shares of Common Stock, which may be acquired upon the
exercise of options within 60 days of October 1, 2001. Excludes 52,924
shares obtainable through the exercise of options granted to Dr. Mojcik,
which are not exercisable within 60 days of October 1, 2001.
(14) Includes 11,624 shares of Common Stock which may be acquired on the
exercise of options that are exercisable within 60 days of October 1, 2001.
Excludes 59,376 shares obtainable through the exercise of options granted
to Mr. Dubin, which are not exercisable within 60 days of October 1, 2001.
(15) Includes 9,001 shares of Common Stock which may be acquired on the exercise
of options that are exercisable within 60 days of October 1, 2001. Excludes
17,999 shares obtainable through the exercise of options granted to Mr.
Jackson, which are not exercisable within 60 days of October 1, 2001.
(16) Includes 9,001 shares of Common Stock which may be acquired on the exercise
of options that are exercisable within 60 days of October 1, 2001. Excludes
17,999 shares obtainable through the exercise of options granted to Mr.
Norby, which are not exercisable within 60 days of October 1, 2001.
(17) Includes 7,901 shares of Common Stock which may be acquired on the exercise
of options that are exercisable within 60 days of October 1, 2001. Excludes
17,999 shares obtainable through the exercise of options granted to Mr.
Parven, which are not exercisable within 60 days of October 1, 2001.
(18) Consists of shares beneficially owned by Drs. Bell, Fried, Link, Madri,
Mojcik, and Squinto and Messrs. Dubin, Jackson, Keiser, Norby, and Parven,
and certain other officers. Includes 1,264,712 shares of Common Stock,
which may be acquired upon the exercise of options within 60 days of
October 1, 2001.
-4-
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
Seven directors (constituting the entire Board) are to be elected at the
Annual Meeting. Unless otherwise specified, the enclosed proxy will be voted in
favor of the persons named below to serve until the next annual meeting of
stockholders and until their successors shall have been duly elected and
qualified. In the event any of these nominees shall be unable to serve as a
director, the shares represented by the proxy will be voted for the person, if
any, who is designated by the Board of Directors to replace the nominee. All
nominees have consented to be named and have indicated their intent to serve if
elected. The Board of Directors has no reason to believe that any of the
nominees will be unable to serve or that any vacancy on the Board of Directors
will occur.
The nominees, their ages, the year in which each first became a director
and their principal occupations or employment during the past five years are:
Year First
Became
Director Age Director Principal Occupation During The Past Five Years
------------------------------------ ----- ---------- ----------------------------------------------------------
John H. Fried, Ph.D./(1)/(2)/(3)/ 71 1992 Chairman of the Board of Directors of the Company since
April 1992; President of Fried & Co., Inc. since 1992;
Chairman of the Board of Corvas International Inc. from
1997 to 1999; Vice Chairman of Syntex Corp. from 1985 to
January 1993 and President of the Syntex Research
Division from 1976 to 1992.
Leonard Bell, M.D./(1)/ 43 1992 President, Chief Executive Officer, Secretary, Treasurer
and director of the Company since January 1992; Assistant
Professor of Medicine and Pathology and Co-Director of
the Program in Vascular Biology at the Yale University
School of Medicine from 1991 to 1992; Attending Physician
at the Yale-New Haven Hospital and Assistant Professor of
the Department of Internal Medicine at the Yale
University School of Medicine from 1990 through 1992.
Jerry T. Jackson/(3)/ 60 1999 Retired since 1995; Executive Vice President of Merck
from 1993 to 1995; serves as director of Cor
Therapeutics, Inc. and M.D. Edge, Inc.
Max Link, Ph.D./(1)/(2)/(3)/ 61 1992 Retired; Chief Executive Officer of Corange (Bermuda)
from May 1993 to June 1994; Chairman of the Board of
Sandoz Pharma, Ltd. From 1992 to 1993 and Chief Executive
Officer of Sandoz Pharma, Ltd. from 1987 to 1992; serves
as director of Protein Design Labs, Inc., Cell
Therapeutics, Inc., Human Genome Sciences, Inc., Access
Pharmaceuticals, Inc., Discovery Labs, Inc., Celsian
Corporation, and Sulzer Medica, Ltd.
-5-
Year First
Became
Director Age Director Principal Occupation During The Past Five Years
------------------------------------ ----- ---------- ----------------------------------------------------------
Joseph A. Madri, Ph.D., M.D. 55 1992 Faculty Member of the Yale University School of Medicine
since 1980.
R. Douglas Norby/(2)/ 66 1999 Senior Vice President and Chief Financial Officer of
Novalux, Inc. since January 2001, Executive Vice
President and Chief Financial Officer of LSI Logic
Corporation from 1996 to 2000; serves as a director of
LSI.
Alvin S. Parven/(3)/ 61 1999 President of ASP Associates since 1997; Vice President at
various operating subsidiaries of Aetna Insurance
Corporation from 1987 to 1997.
_____________
(1) Member of the Nominating Committee of the Board of Directors.
(2) Member of the Audit Committee of the Board of Directors.
(3) Member of the Compensation Committee of the Board of Directors.
In February 1993, the Board formed an Audit Committee, which was
established to review the internal accounting procedures of the Company and to
consult with and review the Company's independent public accountants and the
services provided by such independent public accountants. Drs. Fried, Link, and
Mr. Norby are the current members of the Audit Committee. During the fiscal year
ended July 31, 2001, the Audit Committee held one meeting.
In February 1993, the Board formed a Compensation Committee, which was
established to review compensation practices, to recommend compensation for
executives and key employees, and to administer the Company's non-formula based
Stock Option Plans. Drs. Fried and Link, and Messrs. Jackson and Parven are the
current members of the Compensation Committee. During the fiscal year ended July
31, 2001, the Compensation Committee held two meetings.
In June 1999, the Board formed a Nominating Committee, which was
established to review and recommend new directors to the Board. The nominating
committee will consider nominees recommended by stockholders; such nominees
should be recommended in accordance with the procedures for submission of
stockholder proposals. Drs. Bell, Fried, and Link are the current members of the
Nominating Committee. During the fiscal year ended July 31, 2001, the Nominating
Committee did not hold a meeting.
During the fiscal year ended July 31, 2001, the Board of Directors held
four meetings and acted by unanimous written consent in lieu of a meeting twice.
Each incumbent director attended at least 75% of the meetings of the Board of
Directors, since the prior annual meeting of stockholders and all committees of
the Board of Directors on which he served.
-6-
Certain Relationships and Related Transactions
In June and October 1992, the Company entered into patent licensing
agreements with Oklahoma Medical Research Foundation ("OMRF") and Yale
University ("Yale"). The agreements provide that the Company will pay to these
institutions royalties based on sales of products incorporating technology
licensed thereunder and also license initiation fees, including annual minimum
royalties that increase in amount based on the status of product development and
the passage of time. Under policies of OMRF and Yale, the individual inventors
of patents are entitled to receive a percentage of the royalties and other
license fees received by the licensing institution. Some of the Company's
founders and scientific advisors are inventors under patent applications with
respect to patent applications licensed from Yale and, therefore, entitled to
receive a portion of such royalties and other fees payable by the Company.
Included are Dr. Bell, a director and the Company's President and Chief
Executive Officer, Dr. Madri, a director, Dr. Squinto, Executive Vice President
and Head of Research, and Dr. Rollins, Vice President of Drug Development and
Project Management.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who beneficially own more than ten percent of the
Company's Common Stock, to file initial reports of ownership and reports of
changes in ownership with the SEC. Executive officers, directors and greater
than ten percent beneficial owners are required by the SEC to furnish the
Company with copies of all Section 16(a) forms they file.
Based upon a review of the copies of such forms furnished to the Company
and written representations from the Company's executive officers and directors,
the Company believes that during fiscal 2001 all Section 16(a) filing
requirements applicable to its executive officers, directors and greater than
ten percent beneficial owners were complied with on a timely basis, except that
a Form 5 was filed one day late for each of the Company's officers and
directors, a Form 4 was filed late for each of Drs. Link and Rollins, and a Form
3 was filed late for Dr. Chu.
Vote Required
The seven nominees receiving the highest number of affirmative votes of the
shares present in person or represented by proxy and entitled to vote, a quorum
being present, shall be elected as directors. Only votes cast for a nominee will
be counted, except that the accompanying proxy will be voted for all nominees in
the absence of instruction to the contrary. A share will not be voted in favor
of a nominee in the event of abstention, broker non-vote and instructions on the
accompanying proxy card to withhold authority to vote for such nominee.
THE BOARD OF DIRECTORS DEEMS "PROPOSAL NO. 1 - ELECTION OF DIRECTORS" TO BE IN
THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE
"FOR" EACH NOMINEE.
-7-
EXECUTIVE COMPENSATION
The following table shows all the cash compensation paid by the Company as
well as certain other compensation paid during the fiscal years indicated to the
Chief Executive Officer of the Company and each of the four other most highly
compensated executive officers of the Company for such period in all capacities
in which they served.
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation
------------------------------- --------------
Options
Fiscal Bonus Other (number of
Name and Principal Position Year Base Salary Compensation Compensation shares)
--------------------------------------- --------- ------------- -------------- -------------- --------------
Leonard Bell, M.D. 2001 $ 332,000 $ 100,000 $ 4,903/(1)/ 75,000
President, Chief Executive Officer, 2000 303,167 100,000 4,065/(1)/ 100,000
Secretary and Treasurer 1999 275,000 70,000 4,167/(1)/ 40,000
David W. Keiser 2001 $ 230,381 $ 50,000 $ 4,903/(1)/ 37,500
Executive Vice President and Chief 2000 205,697 50,000 4,065/(1)/ 30,000
Operating Officer 1999 190,460 50,000 4,102/(1)/ 22,500
Stephen P. Squinto, Ph.D. 2001 $ 206,000 $ 35,000 - 34,000
Executive Vice President and Head of 2000 187,720 35,000 - 20,000
Research 1999 165,000 25,000 - 17,500
Christopher Mojcik, M.D., Ph.D. 2001 $ 188,790 $ 30,000 $ 5,570/(1)/ 26,000
Vice President of Clinical 2000 162,750 30,000 $ 2,441/(1)/ 17,500
Development 1999 155,000 25,000 - 25,000
Thomas I.H. Dubin, J.D. 2001 $ 110,833/(2)/ $ 20,000 $25,000/(3)/ 71,000
Vice President and General Counsel 2000 - - - -
1999 - - - -
_______________
(1) Represents the Company's matching contribution pursuant to its 401(k)
defined contribution plan.
(2) Mr. Dubin joined Alexion on January 2, 2001 and his annual salary is
$190,000 as of July 31, 2001.
(3) Mr. Dubin received a sign-on bonus when he joined Alexion.
-8-
The following table sets forth information with respect to option grants in
fiscal year ended July 31, 2001 to the persons named in the Summary Compensation
Table.
OPTION GRANTS IN LAST FISCAL YEAR
% of Total
Number of Options Market
Securities Granted to Exercise Price Potential Realized Value at
Underlying Employees in or Base on Assumed Annual Rates of
Options Fiscal Price Date of Expiration Stock Price Appreciation for
Name Granted/(1)/ Year/(2)/ ($/sh) Grant Date Option Term/(3)/
----------------------------------- -------------- ------------- ---------- ---------- ------------ -----------------------------
5%($) 10%($)
---------- ----------
Leonard Bell, M.D. 75,000/(4)/ 6.1 $21.00 $21.00 06/14/11 $ 990,509 $ 2,510,144
David W. Keiser 37,500 3.0 21.00 21.00 06/14/11 495,255 1,255,072
Stephen P. Squinto, Ph.D. 34,000 2.8 21.00 21.00 06/14/11 449,031 1,137,932
Christopher F. Mojcik, M.D., Ph.D. 26,000 2.1 21.00 21.00 06/14/11 343,376 870,183
Thomas I.H. Dubin, J.D. 45,000/(5)/ 3.6 35.38 35.38 02/09/11 1,001,122 2,537,039
26,000 2.1 21.00 21.00 06/14/11 343,376 870,183
___________
(1) Options vest in 1/16th installments every 3 months commencing on the date of
the grant unless otherwise indicated.
(2) Based upon options to purchase 1,230,164 shares granted to all employees
during fiscal year 2001.
(3) The 5% and 10% assumed rates of appreciation are specified by the rules of
the Securities and Exchange Commission and do not represent the Company's
estimate or projection of the future Common Stock price. There can be no
assurance that any of the values reflected in the table will be achieved.
(4) These options vest in 1/12th installments every 3 months commencing on the
date of the grant.
(5) 10,000 options vested immediately on date of grant.
The following table sets forth information with respect to (i) stock
options exercised in fiscal 2001 by the persons named in the Summary
Compensation Table and (ii) unexercised stock options held by such individuals
at July 31, 2001.
AGGREGATED OPTION EXERCISES
IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
Shares Value Number of Unexercised Value of Unexercised, In-the-
Acquired on Realized Options Held at Fiscal Year Money Options at Fiscal Year
Exercise (#) ($) End End ($)(1)
-------------- --------- ----------------------------- ------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
------------------------------------ ----------- ------------- ----------- -------------
Leonard Bell, M.D. 0 0 605,667 154,333 $ 6,454,470 $ 120,130
David W. Keiser 1,000 $17,813 186,500 77,500 2,099,415 160,800
Stephen P. Squinto, Ph.D. 0 0 172,500 64,000 1,990,113 138,275
Christopher F. Mojcik, M.D., Ph.D. 0 0 28,250 54,750 217,358 127,013
Thomas I.H. Dubin, J.D. 0 0 10,000 61,000 0 0
___________
(1) Based on the average of the high and low sale price of the Common Stock on
July 31, 2001 of $19.24.
-9-
Employment Agreements
Dr. Leonard Bell, President, Chief Executive Officer, Secretary and
Treasurer of the Company, has a three-year employment agreement with the Company
which commenced on April 1, 2000. The agreement provides that Dr. Bell will be
employed as the President and Chief Executive Officer of the Company and that
the Company will use its best efforts to cause Dr. Bell to be elected to the
Board of Directors for the term of the agreement. Dr. Bell currently receives an
annual base salary of $345,280. The contract provides that if (i) Dr. Bell is
dismissed for any reason other than cause (as defined in the employment
agreement) or (ii) Dr. Bell terminates the employment agreement for certain
reasons including (a) certain changes in control of the Company, (b) Dr. Bell's
loss of any material duties or authority, (c) if the Chief Executive Officer is
not the highest ranking officer of the Company, (d) an uncured material breach
of the employment agreement by the Company and (e) the retention of any senior
executive officer by the Company or an offer to pay compensation to any senior
executive of the Company that in either case is unacceptable to Dr. Bell, in his
reasonable judgment, then Dr. Bell shall be entitled to receive a lump sum cash
payment equal to Dr. Bell's annual salary then in effect multiplied by the
number of years remaining in the term of the employment agreement. In addition,
upon such termination, all stock options and stock awards vest and become
immediately exercisable and remain exercisable through their original terms. If,
upon the termination of the employment agreement on April 1, 2003, Dr. Bell
shall cease to be employed by the Company in the capacity of Chief Executive
Officer by reason of the Company's decision not to continue to employ Dr. Bell
as Chief Executive Officer on terms at least substantially similar to those set
forth in the existing employment agreement, then Dr. Bell will be entitled to a
severance payment equal to his annual salary during the final year of such
employment agreement. Similarly, if Dr. Bell is not able to continue his
employment due to a physical or mental incapacity or disability, all stock
options and stock awards held by Dr. Bell prior to his disability will vest and
become immediately exercisable.
Mr. David W. Keiser, Executive Vice President and Chief Operating Officer,
has a two-year employment agreement with the Company which commenced on July 17,
2000. Mr. Keiser currently receives an annual base salary of $239,596.
Dr. Stephen P. Squinto, Executive Vice President and Head of Research, has
a five-year employment agreement with the Company which commenced in March 1997.
Dr. Squinto currently receives an annual base salary of $216,300.
Under the employment agreements for each of Mr. Keiser and Dr. Squinto, if
either of them is dismissed for any reason other than cause (as defined in the
employment agreement), death or disability, or if any of them terminates the
employment agreement because of an uncured material breach thereof by the
Company, he shall be entitled to receive a lump sum cash payment equal to the
greater of (a) the annual salary for the remainder of the then current year of
employment and (b) six months salary at the annual rate for the then current
year of employment. In addition, upon such termination, all stock options shall
accelerate vesting such that the number of such options vested on the day of
termination shall be equal to the number of such options
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vested if the executive were to have been continuously employed by the Company
until the date twelve months after the date of termination.
All the Company's employment agreements require acknowledgment of the
Company's possession of information created, discovered or developed by the
employee/executive and applicable to the business of the Company and any client,
customer or strategic partner of the Company. Each employee/executive also
agreed to assign all rights he may have or acquire in proprietary information
and to keep such proprietary information confidential and also agreed to certain
covenants not to compete with the Company.
Compensation of Directors
Under the Company's current compensation structure, all non-employees, non-
Chairman members of the Board are entitled, with 75% attendance at Board
meetings since the prior stockholders annual meeting, to receive $15,000. The
Chairman of the Board is entitled, with 75% attendance at Board meetings, to
receive $30,000. Each of Drs. Fried, Madri, and Link, and Messrs. Jackson, Norby
and Parven all attended at least 75% of the meetings of the Company's Board and
received their full annual director fee.
Members of the Board who serve as committee chairs will be entitled to an
additional $2,500 annually.
Under the 1992 Stock Option Plan for Outside Directors, as amended, the
("Outside Directors' Plan") each director of the Company who is not an officer,
nor employee nor consultant of the Company or any of its subsidiaries (other
than the Chairman of the Board of Directors of the Company, who shall be
eligible) ("Outside Directors") receives an option to purchase 12,000 shares of
Common Stock on the date of his or her election to the Board. In addition, on
the date of the Annual Meeting and on the date of each subsequent annual meeting
of stockholders at which a director is reelected, such director, if he or she is
still an Outside Director on such date and has attended, either in person or by
telephone, at least seventy-five percent (75%) of the meetings of the Board of
Directors that were held while he or she was a director since the prior annual
meeting of stockholders, will be granted an option to purchase an additional
7,500 shares of the Company's Common Stock. Upon their re-election to the Board
of the last Annual Meeting, each of Drs. Fried, Link and Madri and Messrs.
Jackson, Norby and Parven received options to purchase 7,500 shares of Common
Stock. All options granted under the Directors' Option Plan have an exercise
price equal to the fair market value on the date of grant and vest in three
equal annual installments beginning on the anniversary date of the grant.
Compensation Committee Report to Stockholders
The report of the Compensation Committee shall not be deemed incorporated
by reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933, as amended (the
"Securities Act") or under the Securities
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Exchange Act of 1934, as amended (the "Exchange Act"), except to the extent that
the Company specifically incorporates this information by reference, and shall
not otherwise be deemed filed under such Acts.
The Compensation Committee is currently comprised of four directors. As
members of the Compensation Committee, it is our responsibility to determine the
most effective total executive compensation strategy based on the Company's
business and consistent with stockholders' interests. Our specific duties
include reviewing the Company's compensation practices, recommending
compensation for executives and key employees, the making of recommendations to
the Board of Directors with respect to major compensation and benefit programs,
and administering the Company's stock option plans.
Compensation Philosophy
The Company's overall compensation philosophy is to offer competitive
salaries, cash incentives, stock options, and benefit plans consistent with the
Company's financial position. Rewarding capable employees who contribute to the
continued success of the Company plus equity participation and a strong
alignment to stockholder's interests are key elements of the Company's
compensation policy. One of the Company's strengths contributing to its success
is the strong management team, many of whom have been with the Company for a
significant period of time. The Company's executive compensation policy is to
attract and retain key executives necessary for the Company's short and long-
term success by establishing a direct link between executive compensation and
the performance of the Company by rewarding individual initiative and the
achievement of annual corporate goals through salary and cash bonus awards; and
by providing equity awards based upon present and expected future performance to
allow executives to participate in maximizing shareholder value.
In awarding salary increases and bonuses, the Compensation Committee did
not relate the various elements of corporate performance to each element of
executive compensation. Rather, the Compensation Committee considered whether
the compensation package as a whole adequately compensated each executive for
the Company's performance during the past year and each executive's contribution
to such performance.
Under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), publicly held companies may be prohibited from deducting as an expense
for federal income tax purposes total remuneration in excess of $1 million paid
to certain executive officers in a single year. However, Section 162(m) provides
an exception for "performance based" remuneration, including remuneration
attributable to certain stock options. The Company expects to keep
"nonperformance based" remuneration within the $1 million limit in order that
all executive compensation will be fully deductible. Nevertheless, although the
Compensation Committee considers the net cost to the Company in making all
compensation decisions (including, for this purpose, the potential limitation on
deductibility of executive compensation), there is no assurance that
compensation realized with respect to any particular award will qualify as
"performance based" remuneration.
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Base Salary
Base salary represents the fixed component of the executive compensation
program. The Company's philosophy regarding base salaries is conservative,
maintaining salaries at approximately competitive industry average.
Determinations of base salary levels are established on an annual review of
marketplace competitiveness with similar biopharmaceutical companies and on
internal relationships. Periodic increases in base salary relate to individual
contributions to the Company's overall performance, relative marketplace
competitiveness levels, length of service and the industry's annual competitive
pay practice movement. Some of the evaluation criteria used by the Compensation
Committee for determining salary increases awarded during fiscal year 2001
included, but were not limited to, the following: maintaining adequate cash
reserves, broadening drug development pipeline, timely completion of on-going
clinical trials, broadening clinical development capacity, appropriate
representation of firm in various public settings, and growth and enhancement of
the Company's operating structure towards pre-commercialization. In determining
appropriate levels of base salary, the Compensation Committee relied in part on
several biopharmaceutical industry compensation surveys.
Bonus
Bonuses represent the variable component of the executive compensation
program that is tied to the Company's performance and individual achievement.
The Company's policy is to base a significant portion of its senior executives'
cash compensation on bonuses. In determining bonuses, the Compensation Committee
considers factors such as relative performance of the Company during the year
and the individual's contribution to the Company's performance.
Stock Options
The Compensation Committee, which administers the Company's stock option
plans, believes that one important goal of the executive compensation program
should be to provide executives, key employees and consultants who have
significant responsibility for the management, growth and future success of the
Company with an opportunity to increase their ownership and potentially gain
financially from the Company's stock price increases. This approach ensures that
the best interests of the stockholders, executives, employees, and consultants
will be closely aligned. Therefore, executive officers, other key employees, and
consultants of the Company are granted stock options from time to time, giving
them a right to purchase shares of the Company's Common Stock at a specified
price in the future. The grant of options is based primarily on an employee's or
consultants potential contribution to the Company's growth and financial
results. In determining the size of option grants, the Compensation Committee
considers the number of options owned by such employee or consultant, the number
of options previously granted and currently outstanding, and the aggregate size
of the current option grants. Options generally are granted at the prevailing
market value of the Company's Common Stock and will only have value if the
Company's stock price increases. Generally, grants of options vest over four
years and the individual must be employed by the Company, as an employee or
consultant for such options to vest.
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2001 Compensation to Chief Executive Officer
In reviewing and recommending Dr. Bell's salary and bonus and in awarding
him stock options for fiscal year 2001 and for his future services, the
Compensation Committee followed its compensation philosophy. Under the terms of
his employment agreement, commencing on April 1, 2000, Dr. Bell's annual salary
was increased to $345,280. For the 2001 fiscal year, Dr. Bell earned a $100,000
bonus, which was paid in August 2001. The Compensation Committee recommended
this salary and bonus in recognition of Dr. Bell's achievements. In fiscal year
2001, Dr. Bell was granted options, to purchase 75,000 shares of the Company's
Common Stock at an exercise price of $21.00, the fair market value on the date
of grant, under the terms of the 2000 Stock Option Plan. The options will become
exercisable in 1/12 installments every three months over three years commencing
on the date of grant. The Compensation Committee recommended this option grant
to secure the long-term services of the Company's chief executive officer and to
further align the chief executive officer's compensation with stockholder
interests.
Compensation Committee
John H. Fried, Ph.D., Jerry T. Jackson,
Max Link, Ph.D., and Alvin S. Parven
The Company's Stock Performance
The following Stock Price Performance Graph shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, except to the
extent the Company specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such acts. The following graph
compares cumulative total return of the Company's Common Stock with the
cumulative total return of (i) the Nasdaq Stock Market-United States, and (ii)
the Chase H&Q Biotechnology Index. The graph assumes (a) $100 was invested on
July 31, 1996 in each of the Company's Common Stock, the stocks comprising the
NASDAQ Stock Market-United States and the stocks comprising the JP Morgan H&Q
Biotechnology Index, and (b) the reinvestment of dividends.
$100 INVESTED ON JULY 31, 1996 IN STOCK OR INDEX INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDING JULY 31, 2001.
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COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG ALEXION PHARMACEUTICALS, INC.,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE JP MORGAN H & Q BIOTECHNOLOGY INDEX
[Graph Appears Here]
7/96 7/97 7/98 7/99 7/00 7/01
Alexion Pharmaceuticals, Inc....................... 100 175 174 173 1076 309
Nasdaq Stock Market (U.S.)......................... 100 148 174 248 353 190
JP Morgan H&Q Biotechnology Index.................. 100 114 122 226 377 290
* $100 INVESTED ON 7/31/1996 IN STOCK OR INDEX INCLUDING REINVESTMENT OF
DIVIDENDS.
FISCAL YEAR ENDING JULY 31.
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Audit Committee Report
The Audit Committee of the Board of Directors reviews the financial
reporting process, the system of internal control, the audit process and the
process for monitoring compliance with laws and regulations. All of the Audit
Committee members satisfy the definition of an independent director as
established in the National Association of Securities Dealers Listing Standards.
The Board of Directors adopted a written charter for the Audit Committee on
September 18, 2000.
The Audit Committee reviewed the Company's financial statements with the
Board of Directors and discussed with Arthur Andersen LLP, the Company's
independent auditors during fiscal 2001, the matters required to be discussed by
Statement of Auditing Standard No. 61. The Audit Committee received from Arthur
Andersen LLP the written disclosures required by Independence Standards Board
Standard No. 1 and discussed with them their independence. After reviewing and
discussing the financial statements the Audit Committee recommended that they be
included in the Company's annual report on Form 10-K.
This report of the Audit Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such acts.
Audit Committee
R. Douglas Norby
John H. Fried, Ph.D.
Max Link, Ph.D.
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PROPOSAL NO. 2 - RATIFICATION OF APPOINTMENT OF INDEPENDENT
PUBLIC ACCOUNTANTS
The appointment of Arthur Andersen LLP as the independent public
accountants of the Company has been recommended by the Audit Committee of the
Board. Arthur Andersen LLP served as the independent public accountants to audit
the Company's consolidated financial statements for the fiscal year ended July
31, 2001. Subject to stockholder approval, the Board of Directors has appointed
Arthur Andersen LLP as the Company's independent public accountants for fiscal
year 2002. Representatives of Arthur Andersen LLP are expected to attend the
Annual Meeting. They will have an opportunity to make a statement if they desire
to do so and will be available to respond to appropriate stockholder questions.
Vote Required
The affirmative vote of holders of a majority of the aggregate voting power
of Common Stock present or represented and entitled to vote at the meeting, a
quorum being present, is required for the adoption of this proposal. Abstentions
and broker non-votes have the same legal effect as a vote cast against the
proposal.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 2 TO BE IN THE BEST INTEREST OF THE
COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL THEREOF.
STOCKHOLDER PROPOSALS
All stockholder proposals which are intended to be presented at the 2002
Annual Meeting of Stockholders of the Company must be received by the Company no
later than July 2, 2002 for inclusion in the Board of Directors' proxy statement
and form of proxy relating to that meeting.
INFORMATION CONCERNING AUDITORS
The firm of Arthur Andersen LLP examined the Company's financial statements
for the fiscal year ended July 31, 2001. The Board of Directors has appointed
Arthur Andersen LLP to
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serve as the Company's independent auditors for its fiscal year ending July 31,
2002. Representatives of Arthur Andersen LLP are expected to attend the Annual
Meeting to respond to appropriate questions, and will have the opportunity to
make a statement if they desire.
The fees for services provided by Arthur Andersen LLP to the Company in
2001 were as follows:
Audit Fees: $ 83,100
All Other Fees: $240,955
Financial Information Systems Design and Implementation Fees: $ 0
All Other fees consisted of services related to tax preparation and review,
SEC filings and review, and acquisition accounting and review. The Audit
committee has considered whether the provision of services related to "All Other
Fees" and "Financial Information Systems Design and Implementation Fees" is
compatible with maintaining the independence of Arthur Andersen LLP.
OTHER BUSINESS
The Board of Directors knows of no other business to be acted upon at the
Annual Meeting. However, if any other business properly comes before the Annual
Meeting, it is the intention of the persons named in the enclosed proxy to vote
on such matters in accordance with their best judgment.
The prompt return of your proxy will be appreciated and helpful in
obtaining the necessary vote. Therefore, whether or not you expect to attend the
Annual Meeting, please sign the proxy and return it in the enclosed envelope.
By Order of the Board of Directors
Leonard Bell, M.D.
Secretary
Dated: November 8, 2001
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10K WILL BE SENT
WITHOUT CHARGE TO ANY STOCKHOLDER REQUESTING IT IN WRITING
FROM: ALEXION PHARMACEUTICALS, INC., 352 KNOTTER DRIVE, CHESHIRE,
CONNECTICUT 06410, ATTENTION: PRESIDENT.
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ALEXION PHARMACEUTICALS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON DECEMBER 12, 2001.
Leonard Bell, M.D. and David W. Keiser, and each of them, as the true and
lawful attorneys, agents and proxies of the undersigned, with full power of
substitution, are hereby authorized to represent and to vote all shares of
Common Stock of Alexion Pharmaceuticals, Inc. held of record by the undersigned
on November 7, 2001, at the Annual Meeting of Stockholders to be held at
10:00 a.m. on Wednesday, December 12, 2001, at the Park Avenue Room at the
Hotel Inter-Continental, 111 East 48th Street, New York, New York 10017 and any
adjournment thereof. Any and all proxies heretofore given are hereby revoked.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DESIGNATED BY THE
UNDERSIGNED. IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED FOR EACH OF THE
NOMINEES FOR DIRECTOR LISTED BELOW.
1. Proposal--Election of Directors--Nominees are:
John H. Fried, Leonard Bell, Jerry T. Jackson, Max Link, Joseph A. Madri,
R. Douglas Norby and Alvin S. Parven.
[_] FOR all listed nominees (except do not vote for the nominee(s) whose
name(s) appears(s) below):
----------------------------------------------------------------------------
[_] WITHHOLD AUTHORITY to vote for the listed nominees.
2. Proposal No. 2--Ratification of Arthur Andersen LLP as the Company's
independent public accountants.
[_] FOR [_] AGAINST [_] ABSTAIN
Discretionary authority in hereby granted with respect to such other matters
as may properly come before the meeting.
IMPORTANT: Please sign exactly as name appears below. Each joint owner shall
sign. Executors, administrators, trustees, etc. should give full title as such.
If signor is a corporation, please give full corporate name by duly authorized
officer. If a partnership, please sign in partnership name by authorized
person.
Dated ____________________, 2001
--------------------------------
Signature
--------------------------------
Signature if held jointly
The above-signed acknowledges
receipt of the Notice of Annual
Meeting of Stockholders and the
Proxy Statement furnished
therewith.
PLEASE SIGN, DATE AND RETURN
THIS PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.