-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen
TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
GLwT9770IOo6mnaVOAcl6V+OmuodhamnQhtYFvuuAACJoYLGs3wthLxIYYcWU9kA
QV/rnHT18eKVOG9Du76i+g==
0001157523-09-003245.txt : 20090430
0001157523-09-003245.hdr.sgml : 20090430
20090430163217
ACCESSION NUMBER: 0001157523-09-003245
CONFORMED SUBMISSION TYPE: DEF 14A
PUBLIC DOCUMENT COUNT: 4
CONFORMED PERIOD OF REPORT: 20090619
FILED AS OF DATE: 20090430
DATE AS OF CHANGE: 20090430
EFFECTIVENESS DATE: 20090430
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: ARIAD PHARMACEUTICALS INC
CENTRAL INDEX KEY: 0000884731
STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836]
IRS NUMBER: 223106987
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: DEF 14A
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-21696
FILM NUMBER: 09784308
BUSINESS ADDRESS:
STREET 1: 26 LANDSDOWNE ST
CITY: CAMBRIDGE
STATE: MA
ZIP: 02139
BUSINESS PHONE: 6174940400
MAIL ADDRESS:
STREET 1: 26 LANDSDOWNE
CITY: CAMBRIDGE
STATE: MA
ZIP: 02139
DEF 14A
1
a5951071.htm
ARIAD PHARMACEUTICALS, INC. DEF 14A
a5951071.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
(Amendment
No. )
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 by Rule
14a-6(e)(2))
|
[X]
|
Definitive
Proxy Statement
|
[
]
|
Definitive
Additional Materials
|
[
]
|
Soliciting
Material Under Rule
14a-12
|
ARIAD
Pharmaceuticals, Inc.
|
(Name
of Registrant as Specified In Its Charter)
|
|
|
(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
|
Payment
of Filing Fee (Check the appropriate box):
|
[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:
|
|
|
_______________________________
|
|
|
|
|
2)
|
Aggregate
number of securities to which transaction applies:
|
|
|
_______________________________
|
|
|
|
|
3)
|
Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
|
|
|
_______________________________
|
|
|
|
|
4)
|
Proposed
maximum aggregate value of transaction:
|
|
|
_______________________________
|
|
|
|
|
5)
|
Total
fee paid:
|
|
|
_______________________________
|
[
]
|
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:
|
|
|
______________________________
|
|
|
|
|
2)
|
Form,
Schedule or Registration Statement No:
|
|
|
______________________________
|
|
|
|
|
3)
|
Filing
party:
|
|
|
|
|
4)
|
Date
Filed:
|
Notice
of 2009 Annual Meeting
and
Proxy
Statement
www.ariad.com
|
HARVEY
J. BERGER, M.D.
|
|
|
|
CHAIRMAN
AND
|
|
|
|
CHIEF
EXECUTIVE OFFICER
|
April 29,
2009
Dear
Fellow Investor,
I am
pleased to invite you to attend our 2009 Annual Meeting of Stockholders, which
will be held on Friday, June 19, 2009, beginning at 10:00 a.m., Eastern Time, at
our corporate offices in Cambridge, Massachusetts.
This year,
you are being asked to vote on four proposals: to elect two directors nominated
by the Board of Directors upon the recommendation of our Nominating and
Corporate Governance Committee; to approve an amendment to our Long-Term
Incentive Plan to increase the number of shares of common stock available for
issuance under the plan and to remove the limitation on the number of full-value
awards issuable under the plan; to approve an amendment to our Employee Stock
Purchase Plan to increase the number of shares of common stock available for
issuance under the plan; and to ratify the selection of Deloitte & Touche
LLP as our independent registered public accounting firm. Your Board
of Directors urges you to read the accompanying proxy statement carefully and
recommends that you vote “FOR” each of these proposals.
At the
meeting, we also will report on ARIAD’s development and business plans for the
coming year. We will provide you with an opportunity to meet members
of our management team and Board of Directors and will respond to questions that
you may have.
We hope
that you will be able to join us at our Annual Meeting. Whether or
not you expect to attend, please be sure to vote your shares using any of the
following methods: vote by telephone or the Internet as described in the
instructions included on the proxy card; vote by signing, dating, and returning
the proxy card in the envelope provided; or vote by attending the meeting in
person.
To
register for the meeting, please contact our investor relations office at
617-494-0400, extension 2208, or send an e-mail to
investor@ariad.com. Directions to our offices can be found on our
website at www.ariad.com.
I look
forward to seeing you at this year’s Annual Meeting.
Sincerely
yours,
Harvey J.
Berger, M.D.
ARIAD
PHARMACEUTICALS, INC.
26
LANDSDOWNE STREET • CAMBRIDGE, MASSACHUSETTS 02139-4234 • TELEPHONE 617 494 0400
• FACSIMILE 617 494 1828
ARIAD
PHARMACEUTICALS, INC.
26
Landsdowne Street
Cambridge,
Massachusetts 02139-4234
__________________
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD JUNE 19, 2009
Notice is
hereby given that the Annual Meeting of Stockholders (the “Annual Meeting”) of
ARIAD Pharmaceuticals, Inc. will be held on Friday, June 19, 2009, at 10:00
a.m., Eastern Time, at our offices at 26 Landsdowne Street, Cambridge,
Massachusetts 02139-4234, for the following purposes:
1.
|
To
elect two Class 3 directors to hold office until the 2012 Annual Meeting
and until their successors are duly elected and
qualified.
|
2.
|
To
approve an amendment to our 2006 Long-Term Incentive Plan to increase the
number of shares of common stock available for issuance under the plan and
to remove the limitation on the number of full-value awards issuable under
the plan.
|
3.
|
To
approve an amendment to our Amended and Restated 1997 Employee Stock
Purchase Plan to increase the number of shares available for issuance
under the plan.
|
4.
|
To
ratify the selection of Deloitte & Touche LLP as our independent
registered public accounting firm for the year ending December 31,
2009.
|
5.
|
To
transact such other business as may properly come before the Annual
Meeting and any adjournments or postponements
thereof.
|
Only those
holders of our common stock of record as of the close of business on April 24,
2009 are entitled to notice of, and to vote at, the Annual Meeting and at any
adjournments thereof. A total of 86,850,616 shares of our common
stock were issued and outstanding as of that date. Each share of
common stock entitles its holder to one vote. Cumulative voting of
shares of common stock is not permitted.
For the
ten-day period immediately prior to the Annual Meeting, the list of stockholders
entitled to vote will be available for inspection at our offices, for such
purposes as are set forth in the General Corporation Law of the State of
Delaware.
|
By
Order of the Board of Directors,
|
|
|
|
|
|
|
|
Raymond
T. Keane, Esq.
|
|
Secretary
|
April
29, 2009
|
|
Your
vote is important. You may vote your shares in person at the Annual
Meeting. If you do not expect to attend the Annual Meeting or if you
do plan to attend but wish to vote by proxy, you may vote by: (1) dating,
signing and promptly mailing the enclosed proxy card in the return envelope
provided, (2) calling the toll-free number listed on the proxy card, or (3)
using the Internet as indicated on the proxy card.
TABLE OF
CONTENTS
|
Page
|
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
3
|
|
|
4
|
|
|
4
|
|
|
4
|
|
|
5
|
|
|
5
|
|
|
5
|
|
6
|
|
|
6
|
|
|
6
|
|
|
7
|
|
|
7
|
|
|
8
|
|
16
|
|
18
|
|
20
|
|
22
|
|
|
22
|
|
|
22
|
|
|
23
|
|
|
23
|
|
|
24
|
|
|
25
|
|
|
27
|
|
|
30
|
|
32
|
|
|
33
|
|
|
34
|
|
|
36
|
|
|
37
|
|
|
37
|
|
|
39
|
|
45
|
|
46
|
|
47
|
|
47
|
|
47
|
-i-
TABLE OF
CONTENTS
(continued)
|
Page
|
|
|
|
48
|
|
|
48
|
|
|
49
|
|
|
55
|
|
|
58
|
|
60
|
|
60
|
|
|
60
|
|
|
60
|
|
|
61
|
-ii-
ARIAD
PHARMACEUTICALS, INC.
26
Landsdowne Street
Cambridge,
Massachusetts 02139-4234
____________________
PROXY
STATEMENT
____________________
This proxy
statement and the accompanying Notice of Annual Meeting and form of proxy are
furnished in connection with the solicitation of proxies by the Board of
Directors (the “Board of Directors”) of ARIAD Pharmaceuticals, Inc. to be used
at our 2009 Annual Meeting of Stockholders (the “Annual Meeting”) to
be held on Friday, June 19, 2009, at 10:00 a.m., Eastern Time, at our offices at
26 Landsdowne Street, Cambridge, Massachusetts 02139-4234, and at any
adjournments or postponements thereof for the purposes set forth in the Notice
of Annual Meeting. These proxy materials are being mailed to all
stockholders entitled to notice of and to vote at the Annual Meeting on or about
May 8, 2009.
Important Notice Regarding the
Availability of Proxy Materials for the Annual Meeting of Stockholders to be
Held on June 19, 2009. The proxy statement and annual report to
security holders are available at www.proxyvote.com.
Although
not part of this proxy statement, we are also sending along with this proxy
statement our 2008 Annual Report, which includes our financial statements for
the fiscal year ended December 31, 2008. You can also find a copy of
our 2008 Annual Report on Form 10-K on the Internet through the electronic data
system of the Securities and Exchange Commission (“SEC”) called EDGAR at
www.sec.gov or through the investor relations section of our website at
www.ariad.com.
Proposal
1: Election of two Class 3
Directors to Hold Office Until the 2012 Annual Meeting
Our Board
of Directors is divided into three classes of directors. Each class
is elected to serve for a staggered three-year term. This year, two current Class 3
directors have been nominated to serve until the 2012 Annual Meeting and until
their successors have been duly elected and qualified. The nominated
directors are listed below, and their biographies can be found elsewhere in this
proxy statement:
|
Harvey
J. Berger, M.D., our Chairman and Chief Executive Officer, who has served
on our Board of Directors since April 1991,
and
|
|
Wayne
Wilson, who has served on our Board of Directors since October
2008.
|
For
additional information, please see the full text of Proposal 1 located elsewhere
in this proxy statement.
The
Board of Directors recommends that stockholders vote “FOR” Proposal
1.
Proposal
2:
|
Approval
of an Amendment to the ARIAD Pharmaceuticals, Inc. 2006 Long-Term
Incentive Plan
|
The ARIAD
Pharmaceuticals, Inc. 2006 Long-Term Incentive Plan (the “2006 Plan”) allows us,
under the direction of the Compensation Committee of our Board of Directors, to
make grants of stock options, restricted stock, restricted stock units,
performance-based stock awards and stock appreciation rights to employees,
directors and consultants. Our Board of Directors believes that the
effective use of stock-based long-term incentive compensation is vital to
ARIAD’s ability to attract and retain talented employees, directors and
consultants and to achieve strong performance in the future.
The
Compensation Committee is responsible for administering the 2006 Plan and for
overseeing and approving all officer and director compensation. The
Compensation Committee has utilized equity-based compensation as a key component
of each individual’s total compensation. The Committee has sought to
align the interests of our directors and officers with those of our stockholders
while seeking to preserve available cash in the Company through application of
the following principles:
|
A
substantial portion of total compensation awarded to officers and
directors is in the form of equity under our incentive plans and/or
deferred compensation under our unfunded deferred compensation
plans. As a result, while we believe that total compensation
for our officers and directors is comparable to that of other companies in
our peer group, the cash component of such compensation is below that of
the mean of our peer group. In addition, our chief executive officer has
never received any cash bonus or deferred compensation
awards.
|
|
Using
a mix of stock options and restricted stock (or restricted stock units) to
manage the number of shares available for grant, the mean annual burn rate
for equity (which we define as the number of shares granted divided by
total common shares outstanding) is maintained at a level significantly
below the mean for other companies in our industry group. For
the period of 2006 to 2008, our mean annual burn rate was 2.63%, compared
to 3.70% for Russell 3000 companies in our industry
group.
|
Of the
4,500,000 shares initially authorized under the 2006 Plan and 1,714,627 shares
transferred into the 2006 Plan from our 2001 Stock Plan, as of April 24, 2009,
541,060 shares were available for future grants as of April 24,
2009. Our Board of Directors has determined that, in order to
continue to attract and retain talented employees, the number of shares
available for issuance under the 2006 Plan should be increased. In
addition, the 2006 Plan currently provides that not more than 1,800,000 of the
total number of shares reserved for issuance may be granted as awards of
restricted stock, restricted stock units, unrestricted grants of shares or other
similar awards (“full-value awards”). As noted in the Compensation
Discussion and Analysis section of this proxy statement, we have used these
types of awards as a component of total compensation for our directors and
officers, and we may issue such awards to our other employees in the future if
doing so will further our compensation objectives and philosophy. The
Board proposes to remove this limit to allow greater flexibility in the types of
grants that can be made in the future.
Therefore,
the Compensation Committee of our Board of Directors has recommended, and our
Board of Directors has approved, subject to and effective upon stockholder
approval, an amendment to the 2006 Plan to reserve an additional 7,000,000
shares of common stock for issuance under the 2006 Plan and to remove the
limitation on the number of full-value awards issuable under the 2006
Plan. We estimate that these shares and the shares currently
available for grant will be sufficient to meet our needs for three years based
on our projection of the number of employees and directors of the Company over
that time period. For additional information, please see the full
text of Proposal 2 located elsewhere in this proxy statement.
The
Board of Directors recommends that stockholders vote “FOR” Proposal
2.
Proposal
3:
|
Approval
of an Amendment to the Amended and Restated ARIAD Pharmaceuticals, Inc.
1997 Employee Stock Purchase Plan
|
The
Amended and Restated ARIAD Pharmaceuticals, Inc. 1997 Employee Stock Purchase
Plan (the “ESPP”) provides our eligible employees with the opportunity to
purchase shares of our common stock through payroll deductions. As of
April 24, 2009, we had issued and employees had purchased 730,890 shares of the
total of 1,000,000 shares authorized under the ESPP. Our Board of
Directors has determined that, in order to continue to allow participation in
the ESPP as a means to attract and retain talented employees, the number of
shares available for issuance under the ESPP should be
increased. Therefore, the Compensation Committee of our Board of
Directors has recommended, and our Board of Directors has approved, subject to
stockholder approval, an amendment to the ESPP to reserve an additional 750,000
shares of common stock for issuance under the ESPP, effective July 1,
2009. For additional information, please see the full text of
Proposal 3 located elsewhere in this proxy statement.
The
Board of Directors recommends that stockholders vote “FOR” Proposal
3.
Proposal
4:
|
Ratification
of Selection of Independent Registered Public Accounting
Firm
|
The Audit
Committee of our Board of Directors has selected Deloitte & Touche LLP to be
our independent registered public accounting firm for the year ending December
31, 2009. Our Board of Directors has ratified this
selection. Deloitte & Touche LLP has served as our independent
registered public accounting firm since 1991. For additional
information, please see the full text of Proposal 4 located elsewhere in this
proxy statement.
The
Board of Directors recommends that stockholders vote “FOR” Proposal
4.
Whether
you plan to attend the Annual Meeting or not, we urge you to vote by
proxy. Voting by proxy will not affect your right to attend the
annual meeting. If your shares are registered directly in your name
through our stock transfer agent, Computershare Trust Company, N.A., or you have
stock certificates, you may vote:
|
By
mail. Complete and mail the enclosed proxy card in the
enclosed postage prepaid envelope. Your proxy will be voted in
accordance with your instructions. If you sign the proxy card
but do not specify how you want your shares voted, they will be voted as
recommended by our Board of
Directors.
|
|
By Internet or by
telephone. Follow the instructions attached to the proxy
card to vote by Internet or
telephone.
|
|
In person at the
meeting. If you attend the meeting, you may deliver your
completed proxy card in person or you may vote by completing a ballot,
which will be available at the
meeting.
|
If your
shares are held in “street name” (held in the name of a bank, broker or other
nominee), you must provide the bank, broker or other nominee with instructions
on how to vote your shares and can do so as follows:
|
By Internet or by
telephone. Follow the instructions you receive from your
broker to vote by Internet or
telephone.
|
If your
shares are registered in your name or if you have stock certificates, they will
not be voted if you do not return your proxy card by mail or vote at the meeting
as described above. If your shares are held in street name and you do
not provide voting instructions to the bank, broker or other nominee that holds
your shares as described above, the bank, broker or other nominee has the
authority to vote your unvoted shares on both Proposals 1 and 4 even if it does
not receive instructions from you. We encourage you to provide voting
instructions. This ensures your shares will be voted at the meeting
in the manner you desire. If your broker cannot vote your shares on a
particular matter because it has not received instructions from you and does not
have discretionary voting authority on that matter or because your broker
chooses not to vote on a matter for which it does have discretionary voting
authority, this is referred to as a “broker non-vote”.
Holders of
our common stock who are entitled to vote are urged to sign the enclosed proxy
card and return it promptly in the return envelope provided or to vote by
telephone or the Internet by following the instructions on the enclosed proxy
card. Shares represented by valid proxies, received in time for the
Annual Meeting and not revoked prior to the meeting, will be voted at the
meeting. Proxies will be voted in accordance with each such holder’s
directions. If no directions are given, proxies will be voted “FOR”
the election as Class 3 directors of the nominees named herein, “FOR” approval
of the amendment to our 2006 Plan, “FOR” approval of the amendment to our ESPP
and “FOR” ratification of the selection of Deloitte & Touche LLP as our
independent registered public accounting firm, and, as to any other business
that may come before the Annual Meeting, in accordance with the judgment of the
person or persons named in the proxy. The Board of Directors knows of
no other business to be presented at the Annual Meeting. The proxy
may be revoked at any time prior to the voting thereof by providing written
notice of revocation to us at 26 Landsdowne Street, Cambridge, Massachusetts
02139-4234, Attention: Raymond T. Keane, Esq., Secretary. The proxy
may also be revoked by submitting to us prior to the Annual Meeting a more
recently dated proxy; if your shares are held in street name, by re-voting by
Internet or by telephone as instructed above (only your latest Internet or
telephone vote will be counted); or by attending the Annual Meeting and voting
in person.
The
solicitation of proxies in the enclosed form is made on behalf of the Board of
Directors. The entire cost of soliciting these proxies, including the
costs of preparing, printing and mailing to stockholders this proxy statement
and accompanying materials, will be borne by us. In addition to use
of the mails, proxies may be solicited personally or by telephone or otherwise
by our officers, directors and employees, who will receive no additional
compensation for such activities. We have engaged The Altman Group to
act as our proxy solicitor in connection with this Annual Meeting and will pay
them a fee of $25,000 and reimburse their expenses in connection with such
services. Arrangements may also be made with brokerage houses and
other custodians, nominees and fiduciaries to forward solicitation materials to
the beneficial owners of shares held of record by such institutions and
persons. Such parties will be reimbursed for their reasonable
expenses incurred in connection with these activities.
Only
stockholders of record at the close of business on April 24, 2009 are entitled
to notice of, and to vote at, the Annual Meeting and any adjournment
thereof. On that date, there were 86,850,616 shares of common stock
outstanding. Each share of common stock is entitled to one
vote. Accordingly, a total of 86,850,616 votes are entitled to be
cast on each matter submitted to a vote at the Annual Meeting.
One-third
of the shares of outstanding common stock entitled to vote, whether present in
person or represented by proxy at the Annual Meeting, will constitute a quorum
for the transaction of business at the Annual Meeting. Broker
non-votes will be considered present at the Annual Meeting for the purpose of
determining the presence of a quorum. Proxies marked as abstaining on
any matter to be acted on by the stockholders will be treated as present at the
Annual Meeting for purposes of determining a quorum.
|
Proposal
1: The affirmative vote of a plurality of the shares of
common stock cast by the stockholders present in person or represented by
proxy at the Annual Meeting is required to elect the nominees for election
as Class 3 directors. Thus, broker non-votes and withholding
authority will have no effect on the outcome of the vote for the election
of directors. Brokers do, however, have discretionary authority
to vote shares held in their accounts for the ultimate beneficial owner on
this proposal, even if they do not receive instructions from the
beneficial owner.
|
|
Proposal
2: The affirmative vote of a majority of votes cast by
the stockholders entitled to vote and who are present in person or
represented by proxy at the Annual Meeting is required to approve the
amendment to the ARIAD Pharmaceuticals, Inc. 2006 Long-Term Incentive
Plan. Brokers do not have discretionary authority to vote
shares held in their accounts on this proposal if they do not receive
instructions from the beneficial owner. However, because broker
non-votes and abstentions are not considered to be votes cast, they will
have no effect on the vote for this
proposal.
|
|
Proposal
3: The affirmative vote of a majority of votes cast by
the stockholders entitled to vote and who are present in person or
represented by proxy at the Annual Meeting is required to approve the
amendment to the Amended and Restated ARIAD Pharmaceuticals, Inc. 1997
Employee Stock Purchase Plan. Brokers do not have discretionary
authority to vote shares held in their accounts on this proposal if they
do not receive instructions from the beneficial owner. However,
because broker non-votes and abstentions are not considered to be votes
cast, they will have no effect on the vote for this
proposal.
|
|
Proposal
4: The affirmative vote of a majority of votes cast by
the stockholders entitled to vote and who are present in person or
represented by proxy at the Annual Meeting is required to ratify the
selection of Deloitte & Touche LLP as our independent registered
public accounting firm for 2009. Because broker non-votes and
abstentions are not considered to be votes cast, they will have no effect
on the vote for this proposal. Brokers do, however, have
discretionary authority to vote shares held in their accounts on this
proposal, even if they do not receive instructions from the beneficial
owner. We are not required to obtain the approval of our
stockholders to select our independent registered public accounting
firm. However, if our stockholders do not ratify the selection
of Deloitte & Touche LLP as our independent registered public
accounting firm for 2009, the Audit Committee of our Board of Directors
will reconsider, but not necessarily rescind, the retention of Deloitte
& Touche LLP.
|
We are
pleased to offer two options for our 2009 Annual Meeting: (1) viewing
a live Webcast at www.ariad.com, or (2)
attending in person. The Annual Meeting will be held on Friday, June
19, 2009, beginning at 10:00 a.m., Eastern Time, at our corporate offices in
Cambridge, Massachusetts. When you arrive, signs will direct you to
the appropriate meeting room. If you choose to view the Webcast, go
to www.ariad.com shortly
before the meeting time, and follow the instructions for downloading the
Webcast. If you miss the Annual Meeting, you can view a replay of the
Webcast at www.ariad.com until July 3,
2009. You need not attend the Annual Meeting in order to
vote.
The Board
of Directors currently consists of six members classified into three
classes. The number of directors is subject to increase or decrease
by action of the Board of Directors. At each annual meeting of
stockholders, the term for one class of directors expires, and directors are
elected for a full term of three years to succeed the directors of such
class. Set forth below is certain biographical information for the
two individuals nominated by the Board of Directors for election as Class 3
directors at this Annual Meeting, as well as for each of the continuing Class 1
and Class 2 directors whose terms expire at the annual meeting in either 2010 or
2011, respectively, or at such time as such director’s successor is duly elected
and qualified.
Harvey J. Berger,
M.D., 58, who
has served on our Board of Directors since April 1991, is our principal founder
and has served as our Chairman of the Board and Chief Executive Officer since
April 1991, and served as our President from April 1991 to September 2003 and
from December 2004 to present. From 1986 to 1991, Dr. Berger held a
series of senior management positions at Centocor, Inc., a biotechnology
company, including Executive Vice President and President, Research and
Development Division. He also has held senior academic and
administrative appointments at Emory University, Yale University and the
University of Pennsylvania and was an Established Investigator of the American
Heart Association, Inc. Dr. Berger is a member of the Dean’s Council
of Yale University School of Medicine. Dr. Berger received his A.B.
degree in Biology from Colgate University and his M.D. degree from Yale
University School of Medicine and did further medical and research training at
the Massachusetts General Hospital and Yale-New Haven Hospital.
Wayne
Wilson, 60, one
of our directors since October 2008, has been an independent business advisor
since September 2002. From January 1998 to September 2002, Mr. Wilson
served as President and Chief Operating Officer and, from August 1995 to January
1998, he served as Senior Vice President, Chief Operating Officer and Chief
Financial Officer of PC Connection, Inc., a direct marketer of information
technology products and services. From June 1986 to August 1995, Mr.
Wilson was a partner in the assurance and advisory services practice of Deloitte
& Touche LLP. Mr. Wilson is a director of Edgewater Technology,
Inc., a technology management consulting company, and Hologic, Inc., a medical
diagnostics and device company. Mr. Wilson received an A.B. degree
from Duke University and an M.B.A. from the University of North Carolina at
Chapel Hill. He is a certified public accountant.
Athanase Lavidas,
Ph.D., 61, one of our Directors since September 2003 and our lead
director since November 2008, is the Chairman and Chief Executive Officer of
Lavipharm Group, a pharmaceutical, cosmetics and consumer-health products
company in Greece, a position he has held since 1976. Dr. Lavidas is
also Chairman of the Greece - U.S. Business Council and Secretary General of the
Federation of Greek Industries, responsible for International
Affairs. He received his B.S. and M.S. degrees from the University of
Munich, his M.B.A. from the Institut Superior de Marketing et de Management in
Paris, and his Ph.D. from the University of Athens.
Massimo Radaelli,
Ph.D., 51, one of our directors since October 2008, is the President and
Chief Executive Officer of Dompé International SA, the international
pharmaceutical company of the Dompé Group, where he is responsible for the
company’s global sales and export activities. He joined Dompé in 1996
as director of corporate business development and was responsible for the
initiation of Dompé’s global strategy in its Swiss subsidiary and for its
strategic planning, licensing, alliances and new-product opportunities in
Europe. Previously, Dr. Radaelli held various sales and marketing
positions at the Dupont-Merck Pharmaceutical Company from 1990 to 1996, the
Menarini Group from 1989 to 1990 and Hoffman-La Roche Ltd. from 1982 to
1989. Dr. Radaelli received a University Degree in pharmaceutical
sciences and a Ph.D. in clinical pharmacology from the University of Milan and
an Executive Master of Business from Bocconi University of Milan.
Jay R.
LaMarche, 62, one
of our Directors since January 1992, is a retired financial
executive. Previously, he served as our Chief Financial Officer and
Treasurer from January 1992 to November 2000 and as our Executive Vice President
from March 1997 to November 2000. Mr. LaMarche was our Senior Vice
President, Finance from January 1992 to February 1997. Prior to
joining us, he was Chief Financial Officer and a Director of ChemDesign
Corporation, a fine chemicals manufacturer. Previously, Mr. LaMarche
was a partner with Deloitte Haskins & Sells, a public accounting
firm. Mr. LaMarche received his B.B.A. degree in Public Accountancy
from the University of Notre Dame and served as an officer in the United States
Navy.
A. Collier Smyth,
M.D., 63, one
of our Directors since April 2009, is a retired pharmaceutical
executive. Most recently, Dr. Smyth served as Senior Vice President
of Medical Strategy – Oncology at Bristol-Myers Squibb Company (BMS), a
pharmaceutical company, from 2006 until March 2009. Previously, while
at BMS, Dr. Smyth was Senior Vice President, Medical Strategy –
Oncology/Immunoscience from 2004 to 2006, Senior Vice President, Oncology
Medical Affairs from 2000 to 2004, and Vice President, Oncology/Immunology
Medical Affairs from 1996 to 2000. Prior to joining BMS, Dr. Smyth
served as Vice President, Medical Affairs with American Oncology Resources,
Inc., now U.S. Oncology, a cancer health care network, and was the founder and
president of New Hampshire Oncology/Hematology, a medical oncology
practice. Dr. Smyth received a B.S. degree from Lehigh University and
an M.D. degree from Johns Hopkins School of Medicine. He completed
his residency in medicine at Beth Israel Hospital, Harvard Medical School and
his oncology fellowship at the National Cancer Institute.
The Board
of Directors has established a Nominating and Corporate Governance Committee,
along with general guidelines for corporate governance. These
guidelines address selection, composition and independence of the Board of
Directors, director compensation and evaluation of the performance of the Board
and its committees, the structure and operations of the committees of the Board,
the establishment and implementation of corporate governance guidelines,
principles and practices, leadership development and succession
planning.
Under our
corporate governance guidelines, as long as the Chief Executive Officer is also
Chairman of the Board, the Board shall appoint one of the independent directors
to serve in the role of lead director. His or her role is to support
the ability of the independent directors to perform their responsibilities as
independent directors. As such, he or she is responsible for
oversight of those processes of the Board which independent directors are
required to perform. In addition, he or she presides at meetings of
the non-management directors. The lead director also meets and
consults regularly with the Chairman and Chief Executive Officer. Dr.
Lavidas has been appointed to fill this role by the Board of
Directors.
The
Nominating and Corporate Governance Committee is responsible for the
establishment, implementation and oversight of the Corporate Code of Conduct and
Ethics, the Board’s Conflict of Interest Policy and specific corporate
governance guidelines, policies and practices. The charter of the
Nominating and Corporate Governance Committee, as well as our Code of Conduct,
Conflict of Interest Policy for the Board of Directors and our Corporate
Governance Guidelines are publicly available on the Investor Relations section
of our website at www.ariad.com under the heading “Corporate
Governance.”
Meeting
Attendance
Our Board
of Directors held seven meetings in 2008. Our Board of Directors has
four standing committees, (1) the Executive Committee, (2) the Compensation
Committee, (3) the Audit Committee and (4) the Nominating and Corporate
Governance Committee. These committees held a total of twelve meetings during fiscal
year 2008. No director during the time in which such director served
as our director attended fewer than 75% of the aggregate number of meetings held
during the fiscal year by our Board of Directors and the committees of the Board
on which he or she served. For purposes of this measurement, meetings
do not include actions taken by written consent.
Changes
in our Board of Directors
In August
2008, Peter J. Nelson resigned from our Board of Directors due to other work
commitments in California. Mr. Nelson served on our Audit Committee,
as its chairperson.
In October
2008, Massimo Radaelli and Wayne Wilson were appointed to our Board of
Directors. Their biographies can be found elsewhere in this proxy
statement.
In
December 2008, Michael D. Kishbauch, Sandford D. Smith, Burton E. Sobel and
Elizabeth H. S. Wyatt resigned from our Board of Directors, citing differences
with the Chairman and Chief Executive Officer and the other members of the Board
of Directors. Mr. Kishbauch had served on the Audit Committee and the
Compensation Committee. Mr. Smith had served on the Compensation
Committee and the Nominating and Corporate Governance Committee. Dr.
Sobel had served on the Compensation Committee, as its
chairperson. Ms. Wyatt had served on the Executive Committee and the
Audit Committee. All committees of the Board of Directors were
reconstituted at that time and meet the requirements of The NASDAQ Stock Market
LLC (“NASDAQ”) and the SEC.
At a
meeting of the Board of Directors held on December 10, 2008, the Board approved
a decrease in the size of the Board to five members.
At a
meeting of the Board of Directors held on March 10, 2009, the
Board determined to move one of the directors from Class 1 into Class 3 to
achieve a more equal balance of membership among the classes of
directors. Accordingly, at the March 10, 2009 meeting, Wayne Wilson
agreed to resign as a Class 1 director, and he was immediately reappointed to
the Board as a Class 3 director. Mr. Wilson continues to serve on the
Company’s Audit, Nominating and Corporate Governance and Executive Committees
and as the chair of the Audit Committee. The resignation and
reappointment of Mr. Wilson was effected solely to satisfy certain legal
requirements under the Delaware General Corporation Law and the Company’s
charter and bylaws in order to rebalance the Board classes, and for all other
purposes, including vesting and other compensation matters, Mr. Wilson’s service
on the Board is deemed to have continued uninterrupted.
At a
meeting of the Board of Directors held on April 3, 2009, upon the recommendation
of the Nominating and Corporate Governance Committee, the Board approved an
increase in the size of the Board to six members and elected A. Collier Smyth,
M.D. as a Class 2 director to fill that vacancy. His biography can be
found elsewhere in this proxy statement.
Director
Independence
Our Board
of Directors has determined that each of our directors except Harvey J. Berger,
M.D. is an “independent director” as such term is defined by
NASDAQ.
The Board
of Directors has also determined that each member of the Compensation Committee,
the Audit Committee and the Nominating and Corporate Governance Committee meets
the independence requirements applicable to each such committee prescribed by
NASDAQ and the SEC. The Board of Directors has further determined
that Mr. Wilson and Mr. LaMarche are “audit committee financial experts” as
defined in the rules of the SEC.
The
Nominating and Corporate Governance Committee has reviewed each director’s
status by applying the legal standards for director independence and the
criteria applied to determine “audit committee financial expert” status and by
evaluating self-evaluation questionnaires and other information obtained
independently and/or supplied by each director. On the basis of this
review, the Nominating and Corporate Governance Committee delivered a report to
our Board of Directors upon which our Board of Directors made its determinations
of each director’s status.
The
Executive Committee
The
current members of our Executive Committee are Dr. Berger, who is the
chairperson, Dr. Lavidas and Mr. Wilson. Mr. LaMarche also served on
the Executive Committee until December 2008. For the other directors
who served on the Executive Committee during 2008, please see “Changes in our
Board of Directors” located above. The Executive Committee has and
may exercise certain powers and authority of the Board of Directors in
connection with the management and affairs of ARIAD. The Executive
Committee held no meetings in
2008.
The
Compensation Committee
The
current members of our Compensation Committee are Dr. Radaelli, who is the
chairperson, Dr. Lavidas and Dr. Smyth. Drs. Radaelli and Lavidas
have served on the Compensation Committee since December 2008. Dr.
Smyth was appointed to serve on the Compensation Committee upon his election to
the Board of Directors on April 3, 2009. For the other directors who
served on the Compensation Committee during 2008, please see “Changes in our
Board of Directors” located above. The Compensation Committee held
two meetings in 2008.
The Board
has adopted a written charter for the Compensation Committee, which is available
on the Investor Relations section of our website at www.ariad.com under the
heading “Corporate Governance”. The Compensation Committee and the
Board periodically review and revise this charter as appropriate.
The
Compensation Committee’s responsibilities include, among other duties, the
responsibility to establish compensation levels for our Chief Executive Officer
and review his performance, review and approve compensation levels recommended
by Dr. Berger for our other executive officers and review their performance,
approve and administer our equity and executive compensation plans and grants
thereunder and discharge the duties imposed on the Compensation Committee by the
terms of those plans, consider management succession and related matters, and
review the Compensation Discussion and Analysis (“CD&A”) for inclusion in
our proxy statement.
As Chief
Executive Officer, Dr. Berger recommends compensation decisions involving our
other officers and discusses these recommendations and related matters,
including reviewing these officers’ performance, with the Compensation
Committee. During Compensation Committee meetings at which
compensation actions involving the Chief Executive Officer’s direct reports are
discussed, Dr. Berger has taken an active part in those
discussions. The Compensation Committee determines Dr. Berger’s
compensation in executive session without Dr. Berger present.
The agenda
for meetings of the Compensation Committee is determined by its Chair with the
assistance of Dr. Berger. Compensation Committee meetings are
regularly attended by Dr. Berger. At each meeting, the Compensation
Committee has the opportunity to meet in executive session and does so when the
Committee deems it necessary or appropriate. The Compensation
Committee’s Chair reports the Committee’s recommendations on executive
compensation to the Board. How the Compensation Committee reviews and
sets executive compensation is described in more detail in the CD&A located
elsewhere in this proxy statement.
The
Company, with the Compensation Committee’s approval, retains an outside
compensation consultant to provide competitive information to management and the
Compensation Committee regarding officer and director compensation, including
evaluation of peer compensation practices and general industry best practices,
and its view regarding management compensation proposals. Decisions
regarding executive compensation made in 2008 were informed by the analysis and
input of W. T. Haigh and Company, who served as outside compensation consultant
from 2005 to 2008. AON/Radford has served as outside compensation
consultant since September 2008. The outside consultant provides no
services to the Company other than relating to compensation advisory
services.
Please
also see the Compensation Committee Report, located elsewhere in this proxy
statement.
The
Audit Committee
The
current members of our Audit Committee are Mr. Wilson, who is the chairperson,
Mr. LaMarche and Dr. Radaelli. Mr. Wilson has served on the Audit
Committee and as its chairperson since October 2008. Mr. LaMarche and
Dr. Radaelli have served on the Audit Committee since December
2008. For the other directors who served on the Audit Committee
during 2008, please see “Changes in our Board of Directors” located
above. The Audit Committee held six meetings in 2008.
The Audit
Committee serves as the representative of the Board of Directors in overseeing
and monitoring the processes management has in place to maintain the reliability
and integrity of our accounting policies and financial reporting processes, to
ensure the adequacy of internal accounting, financial reporting and disclosure
controls, and to comply with legal and regulatory requirements that may impact
our financial reporting and disclosure obligations. The Audit
Committee is also responsible for reviewing the qualifications, independence and
performance of, and selecting or replacing, if necessary, our independent
registered public accounting firm and approving all audit and non-audit services
and fees related thereto.
In
addition, the Audit Committee is responsible for reviewing, in consultation with
our management and independent registered public accounting firm, the scope and
results of (1) reviews of our quarterly financial statements, (2) audits of our
annual financial statements, and (3) audits of our system of internal control
over financial reporting. The Audit Committee also performs other
duties and responsibilities, including reviewing, evaluating and approving
related-person or similar transactions or relationships and/or recommending
approval of such transactions to the disinterested and independent members of
the full Board.
The Audit
Committee maintains a written charter that outlines its responsibilities, which
it reviews and reassesses annually and recommends any changes to the Board of
Directors for approval. A copy of the Audit Committee’s charter is
publicly available on the Investor Relations section of our website at www.ariad.com under
the heading “Corporate Governance.”
Please
also see the Report of the Audit Committee, located elsewhere in this proxy
statement.
The
Nominating and Corporate Governance Committee
The
current members of our Nominating and Corporate Governance Committee are Dr.
Lavidas, who is the chairperson, and Messrs. LaMarche and Wilson. Dr.
Lavidas and Mr. LaMarche served on the Nominating and Corporate Governance
Committee throughout 2008, while Mr. Wilson has served on the Committee since
December 2008. For the other directors who served on the Nominating
and Corporate Governance Committee during 2008, please see “Changes in our Board
of Directors” located above. The Nominating and Corporate Governance
Committee held four meetings in 2008.
The
functions of the Nominating and Corporate Governance Committee include making
recommendations to the Board of Directors as to particular nominees for election
or appointment to the Board of Directors; making recommendations to the Board of
Directors as to the membership, structure and operations of the committees of
the Board; reviewing and assessing the adequacy of our corporate governance
guidelines, principles and practices and recommending changes to the Board of
Directors for approval; monitoring compliance with our Corporate Code of Conduct
and Ethics and our Board Conflict of Interest Policy; and reviewing and
maintaining oversight of matters relating to the independence (including
potential conflicts of interest), education, operation and effectiveness of the
Board and committee members, both individually and collectively.
The
Nominating and Corporate Governance Committee may consider candidates
recommended by stockholders, as well as from other sources such as other
directors or officers or other appropriate sources. For all potential
candidates, the Nominating and Corporate Governance Committee may consider any
factors it deems relevant, including, among other factors, a candidate’s
personal integrity and judgment, business and professional skills and
experience, independence, knowledge of our industry and applicable laws,
regulations and guidelines governing U.S. public companies, possible conflicts
of interest, diversity, the extent to which the candidate would fill a priority
need on the Board, the willingness of the candidate to commit sufficient time
and attention to his or her duties or responsibilities as a director of a public
company, and concern for the long-term interests of our
stockholders. The factors generally considered by the Nominating and
Corporate Governance Committee are set out in the charter of the Nominating and
Corporate Governance Committee, which is publicly available on the Investor
Relations section of our website at www.ariad.com under
the heading “Corporate Governance.”
In
general, persons recommended by stockholders will be considered on the same
basis as candidates from other sources.
If a
stockholder wishes to recommend a candidate for director for election at our
2010 Annual Meeting of Stockholders, such a recommendation should be submitted
in writing to the Nominating and Corporate Governance Committee, c/o Raymond T.
Keane, Esq., Secretary, ARIAD Pharmaceuticals, Inc., 26 Landsdowne Street,
Cambridge, Massachusetts 02139-4234. Any such written recommendation
should include a minimum of the following: (a) all information relating to such
person that would be required to be disclosed pursuant to Regulation 14A under
the Securities Exchange Act of 1934, as amended (including such person’s consent
to being named in the proxy statement as a nominee and to serving as a director,
if elected); (b) the name(s) and address(es) of the stockholder(s) making the
recommendation; and (c) appropriate biographical information and a statement as
to the qualifications for service on our Board of Directors of the recommended
person. Any such recommendation should be submitted in the time frame
for stockholder proposals which are to be included in proxy materials for the
Annual Meeting to be held in 2010 under the caption “Stockholders’ Proposals and
Nominations for Director for 2010 Annual Meeting” set forth elsewhere in this
proxy statement.
Independent
and Disinterested Directors with Respect to ARIAD Gene Therapeutics,
Inc.
In
September 2008, ARIAD and ARIAD Gene Therapeutics, Inc., or AGTI, entered into
an agreement pursuant to which AGTI was merged with and into ARIAD, with ARIAD
as the surviving company. Prior to the merger, AGTI was an
eighty-percent owned subsidiary of ARIAD. In connection with the
merger, the shares of AGTI common stock owned by the minority stockholders were
acquired by ARIAD for a combination of ARIAD common stock and cash with a total
value of approximately $5.9 million. The minority stockholders of
AGTI included, among others, Dr. Berger and Mr. LaMarche.
The merger
of and the acquisition of the minority interest in AGTI was the result of a
process whereby the independent and disinterested directors (all of ARIAD’s
Board members through September 2008 other than Dr. Berger and Mr. LaMarche)
evaluated, in a series of meetings, a variety of alternatives and concluded that
the structure of the transaction and the value assigned to the twenty-percent
minority interest in AGTI was fair and in the best interest of ARIAD’s
stockholders. Their evaluation included input from independent legal
counsel and financial consultants. Dr. Berger and Mr. LaMarche also
engaged independent legal counsel and financial consultants in their individual
capacities as stockholders of AGTI to assist them in evaluating the proposal
made by the independent and disinterested members of the Board. The
Board of Directors approved the merger of and the acquisition of the
twenty-percent minority interest in AGTI on September 11, 2008 with Dr. Berger
and Mr. LaMarche abstaining from the vote due to their financial interest in the
transaction.
Compensation
Committee Interlocks and Insider Participation
During the
fiscal year ended December 31, 2008, Dr. Radaelli and Dr. Lavidas, as well as
former directors, Burton E. Sobel, M.D., Sandford D. Smith and Michael D.
Kishbauch, served as members of our Compensation Committee. In 2008,
none of our executive officers served on the board of directors or compensation
committee of any entity that had one or more executive officers serving as a
member of our Board of Directors or Compensation Committee. There is
no family relationship between or among the members of our Board of Directors or
executive officers.
Director
Compensation
Our
compensation policy for non-management members of our Board of Directors during
2008 was as follows:
|
A
one-time stock option award to purchase 25,000 shares of common stock when
first elected to the Board. These options vest one-third on
each anniversary of the award date while the director remains in service
with us. The exercise price is the closing price of our common
stock as quoted on The NASDAQ Global Market on the date of
grant. This award has a term of ten years subject to earlier
termination.
|
|
A
stock option award to purchase 20,000 shares of common stock upon
re-election to the Board. These options vest one-third on each
anniversary of the award date while the director remains in service with
us. The exercise price is the closing price of our common stock
on the date of grant. This award has a term of ten years
subject to earlier termination.
|
|
An
annual award of 10,000 shares of restricted stock or 10,000 restricted
stock units, as elected by each director in his or her
discretion. Directors may select future payment dates for the
shares issued upon the settlement of restricted stock units, subject to
compliance with Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”). All restricted stock and restricted stock
units are fully vested on the date of grant and are subject to the terms
and conditions of the 2006 Plan.
|
|
A
stock option award to purchase 20,000 shares and 25,000 shares of common
stock upon reaching ten and fifteen years, respectively, of service to the
Company.
|
No other
compensation, in the form of cash or otherwise, was paid to non-management
directors other than reimbursement of their reasonable expenses incurred in
attending Board and committee meetings. Management directors do not
receive any compensation for their service as directors.
Set forth
below is information concerning the compensation paid to or earned by our
non-management directors during 2008.
Name
|
|
Fees
Earned or
Paid
in Cash
|
|
Stock
Awards
(2)
|
|
Option
Awards
(3)
|
|
Total
|
Athanase
Lavidas, Ph.D.
|
|
---
|
|
$ 38,900
|
|
$ 12,322
|
|
$ 51,222
|
Peter
J. Nelson (1)
|
|
---
|
|
$ 38,900
|
|
$ 35,343
|
|
$ 74,243
|
Jay
R. LaMarche
|
|
---
|
|
$ 38,900
|
|
$ 6,622
|
|
$ 45,522
|
Sandford
D. Smith (1)
|
|
---
|
|
$ 38,900
|
|
---
|
|
$ 38,900
|
Elizabeth
H. S. Wyatt (1)
|
|
---
|
|
$ 38,900
|
|
---
|
|
$ 38,900
|
Michael
D. Kishbauch (1)
|
|
---
|
|
$ 38,900
|
|
$ 32,187
|
|
$ 71,087
|
Burton
E. Sobel, M.D. (1)
|
|
---
|
|
$ 38,900
|
|
$ 13,123
|
|
$ 52,023
|
Massimo
Radaelli, Ph.D.
|
|
---
|
|
---
|
|
$ 1,853
|
|
$ 1,853
|
Wayne
Wilson
|
|
---
|
|
---
|
|
$ 1,853
|
|
$ 1,853
|
_______________
(1)
|
Mr.
Nelson resigned from our Board of Directors effective August 30,
2008. Messrs. Smith and Kishbauch, Dr. Sobel and Ms. Wyatt
resigned from our Board of Directors effective December 1,
2008. Dr. Radaelli and Mr. Wilson were appointed to our Board
of Directors in October 2008.
|
(2)
|
On
January 18, 2008, each non-management director was awarded either 10,000
shares of restricted stock or 10,000 restricted stock units with a grant
date fair value per share of $3.89. These awards were issued
under the terms of existing stockholder-approved equity compensation
plans. The restricted stock units will convert into 10,000
shares of common stock at future dates selected by each
director. The amount included in the table represents the
amount recognized for financial statement reporting purposes for the
fiscal year ended December 31, 2008 in accordance with Statement of
Financial Accounting Standards No. 123R, Share Based Payment, or
SFAS No. 123R. At December 31, 2008, none of our then current
directors held restricted stock
units.
|
(3)
|
On
June 12, 2008, Messrs. LaMarche and Smith and Ms. Wyatt were each awarded
20,000 stock options, with a grant date fair value per share of $2.39,
upon their re-election as members of the Board by the stockholders at our
2008 Annual Meeting. On October 10, 2008, Dr. Radaelli and Mr.
Wilson were each awarded 25,000 stock options upon their appointment to
the Board, with a grant date fair value of $1.35 per share. In
general, the amount included in the table represents the amount recognized
for financial statement reporting purposes for the fiscal year ended
December 31, 2008 in accordance with SFAS No. 123R and thus includes
amounts from awards granted in and prior to 2008. Assumptions used
in the calculation of these amounts are set forth in the note to our
audited consolidated financial statements titled “Stock-Based
Compensation” included in our Annual Report on Form 10-K for the
respective fiscal years. These amounts reflect the Company’s
accounting expense and do not correspond to the actual value that may be
realized by the directors. As of December 31, 2008, each then
current director had the following aggregate number of stock options
outstanding: Dr. Lavidas – 45,000; Mr. LaMarche – 105,000; Dr. Radaelli –
25,000; and Mr. Wilson – 25,000.
|
On April
3, 2009, upon recommendation by the Compensation Committee, the Board of
Directors revised the compensation policy for non-management directors to (i)
issue shares of stock in addition to stock options upon initial election to the
Board, (ii) eliminate the grant of stock options upon re-election to the Board,
(iii) increase the annual award of restricted stock or restricted stock units
from 10,000 shares to 20,000 shares, and (iv) provide for an annual cash
retainer of $25,000. The revised compensation policy, as set forth
below, is effective for compensation earned on or after January 1, 2009 and
until further modified by the Board.
|
A
one-time stock option award to purchase 25,000 shares of common stock when
first elected to the Board. These options vest one-third on
each anniversary of the award date while the director remains in service
with us. The exercise price is the closing price of our common
stock as quoted on The NASDAQ Global Market on the date of
grant. This award has a term of ten years subject to earlier
termination.
|
|
A
one-time stock award of 20,000 shares of common stock when first elected
to the Board, pro-rated for the number of calendar quarters remaining in
the year. These shares are not subject to repurchase by the
Company.
|
|
An
annual award of 20,000 shares of restricted stock or 20,000 restricted
stock units, as elected by each director in his or her discretion, in
January of each year for service that year. Directors may
select future payment dates for the shares issued upon the settlement of
restricted stock units, subject to compliance with Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”). These
restricted-stock shares are not subject to the repurchase by the Company
and these restricted- stock units are fully vested on the date of grant,
and in each case are subject to the terms and conditions of the 2006
Plan.
|
|
An
annual cash retainer of $25,000, paid quarterly in arrears for ongoing
service to the Board and pro-rated for any partial year of
service.
|
|
A
stock option award to purchase 20,000 shares and 25,000 shares of common
stock upon reaching ten and fifteen years, respectively, of service to the
Company.
|
These
changes were made after evaluating compensation data from our compensation
consultant and are intended to make our director compensation structure more
consistent with current industry practice.
In
accordance with this revised director compensation policy, on April 3, 2009, for
annual service during 2009 each of Mr. LaMarche, Dr. Lavidas, Dr. Radaelli and
Mr. Wilson was awarded 20,000 shares of restricted stock that were fully vested
upon grant, and upon his initial election to the Board Dr. Smyth was awarded
15,000 shares of restricted stock that were fully vested upon grant and an
option to purchase 25,000 shares of common stock at an exercise price of $1.35
per share, vesting ratably over three years.
Stockholder
Communications with the Board of Directors
Generally,
stockholders who have questions or concerns should contact our Investor
Relations department at 617-494-0400, extension 2208. However, any
stockholders who wish to submit written communications to the Board of Directors
or any individual director should send their communications to our Secretary,
Attention: Corporate Governance, ARIAD Pharmaceuticals, Inc., 26 Landsdowne
Street, Cambridge, MA 02139-4234. Communications will be distributed
to the Board, or to any individual director or directors as appropriate,
depending on the facts and circumstances outlined in the
communications. Items that are unrelated to the duties and
responsibilities of the Board may be excluded, such as:
●•
|
junk
mail and mass mailings
|
●•
|
resumes
and other forms of job inquiries
|
●•
|
solicitations
or advertisements.
|
In
addition, any material that is unduly hostile, threatening, or illegal in nature
may be excluded, provided that any communication that is filtered out will be
made available to any outside director upon request.
Our
Policy With Respect to Director Attendance at Our Annual Meetings
We expect
all incumbent directors, as well as all nominees for election as director, to
attend our annual meetings of stockholders. All of our incumbent
directors who were directors as of our 2008 Annual Meeting of Stockholders
attended the meeting.
All
related-person transactions are reviewed and approved in advance by our Audit
Committee or other independent body of our Board of Directors. In
general, a related-person transaction is defined as any transaction (other than
setting compensation) in which we or any subsidiary or affiliate is a
participant and in which any of the following persons has or will have a direct
or indirect material interest: our executive officers, members of our Board of
Directors, beneficial holders of more than 5% of our securities, immediate
family members of any of the foregoing persons, and any other persons whom the
Board determines may be considered to be related persons as defined by the rules
and regulations of the SEC.
Our Audit
Committee or its chairperson or other independent body of our Board, as the case
may be, will approve only those related-person transactions that are determined
to be in, or not inconsistent with, the best interests of ARIAD and our
stockholders, taking into account all available facts and circumstances as it
determines in good faith to be necessary. These facts and
circumstances will typically include, but not be limited to, the benefits of the
transaction to us and our stockholders; the impact on a director’s independence
in the event the related person is a director, an immediate family member of a
director or an entity in which a director is a partner, shareholder or executive
officer; the availability of other sources for comparable products or services;
the terms of the transaction; and the terms of comparable transactions that
would be available to unrelated third parties or to employees
generally. No member of our Audit Committee or our Board of Directors
will participate in any review, consideration or approval of any related-person
transaction with respect to which the member or any of his or her immediate
family members or other business affiliates is the related person.
In
reviewing and approving such transactions, our Audit Committee or other
independent body of our Board will obtain, or will direct management to obtain
on its behalf, all information that it believes to be relevant and important to
its review of the transaction prior to approval. Following receipt
and review of the necessary information, a discussion will be held of the
relevant factors deemed to be necessary prior to approval. If a discussion is
not deemed to be necessary, approval may be given by unanimous written consent
of our Audit Committee or other independent body of our Board. This
approval authority may also be delegated to the chairperson of our Audit
Committee in some circumstances. No related-person transaction shall
be entered into prior to completing these procedures.
Our
policies as described above are included in the Audit Committee Charter as
approved by our Audit Committee and our Board of Directors. As
required under SEC rules, transactions that involve an amount in excess of
$120,000 in which ARIAD is a participant and a related person is determined to
have a direct or indirect material interest are disclosed in our proxy
statement.
In
September 2008, ARIAD entered into a merger agreement with its eighty-percent
owned subsidiary, AGTI. See “Board of Directors - Additional Information
Concerning Our Board of Directors and its Committees - Independent and
Disinterested Directors.” The merger was approved by the ARIAD Board
of Directors, with Dr. Berger and Mr. LaMarche abstaining from the vote due to
their financial interest in the transaction. In accordance with the
terms of the merger agreement, each outstanding share of AGTI common stock owned
by AGTI’s minority stockholders was converted into the right to receive two
shares of ARIAD common stock. As a result of this transaction, in
exchange for shares of AGTI common stock owned by them prior to the merger, Dr.
Berger received 357,142 shares of ARIAD common stock, Mr. LaMarche received
166,570 shares of ARIAD common stock, Mr. David L. Berstein, our Senior Vice
President and Chief Intellectual Property Officer, received 28,570 shares of
ARIAD common stock and Dr. John D. Iuliucci, our Senior Vice President,
Development received 71,428 shares of ARIAD common stock. These
shares of ARIAD common stock were valued at $2.56 per share on the date of the
merger.
In
addition, during 2008 we reimbursed $259,000 in expenses incurred by Dr. Berger
and Mr. LaMarche pursuant to an agreement we entered into with them in June 2007
in their individual capacities as stockholders of AGTI. The agreement
contained provisions regarding (i) confidentiality of material non-public
information provided to them and their advisors in the course of evaluation of
any potential transaction to acquire the twenty-percent interest in AGTI that
ARIAD did not then own, (ii) reimbursement by us of certain reasonable expenses
incurred by them to retain financial advisors and legal counsel to advise them
in connection with any potential transaction, (iii) indemnification of them by
us for claims arising out of or relating to any potential transaction and (iv)
the maintenance by us of liability insurance for their benefit.
The
following table sets forth, as of April 24, 2009, certain information with
respect to (i) each person (including
any “group” as defined in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), known to us to own beneficially more than
5% of our common stock, (ii) each of our directors and director nominees, (iii)
each executive officer named in the Summary Compensation Table under “Executive
Compensation” (referred to below as our named executive officers), and (iv) all
of our current directors and executive officers as a group. In
accordance with the rules promulgated by the SEC, such ownership includes shares
currently owned, as well as shares that the named person has the right to
acquire within 60 days of April 24, 2009, including, but not limited to, shares
that the named person has the right to acquire through the exercise of any
option. Except as otherwise indicated, the stockholders listed in the
table have sole voting and investment powers with respect to the common stock
shown as beneficially owned. Percentage ownership is based on
86,850,616 shares
of common stock outstanding as of April 24, 2009.
Name
and Address**
|
|
Number
and Nature of
Shares
Beneficially
Owned***
|
|
Percent
of Class
|
|
|
|
|
|
|
BVF
Partners, LP
900
North Michigan Avenue
Suite
1100
Chicago,
IL 60611
|
|
7,799,836
|
(1)
|
|
9.0%
|
|
|
|
|
|
|
Barclays
Global Investors NA
400 Howard Street
San Francisco, CA
94105
|
|
4,586,953
|
(2)
|
|
5.3%
|
|
|
|
|
|
|
Harvey
J. Berger, M.D.
|
|
2,340,059
|
(3)
|
|
2.7%
|
|
|
|
|
|
|
Timothy
P. Clackson, Ph.D.
|
|
453,042
|
(4)
|
|
*
|
|
|
|
|
|
|
Pierre
F. Dodion, M.D.
|
|
35,170
|
(5)
|
|
*
|
|
|
|
|
|
|
Edward
M. Fitzgerald
|
|
286,431
|
(6)
|
|
*
|
|
|
|
|
|
|
John
D. Iuliucci, Ph.D.
|
|
548,242
|
(7)
|
|
*
|
|
|
|
|
|
|
Jay
R. LaMarche
|
|
679,266
|
(8)
|
|
*
|
|
|
|
|
|
|
Athanase
Lavidas, Ph.D.
|
|
101,667
|
(9)
|
|
*
|
|
|
|
|
|
|
Massimo
Radaelli, Ph.D.
|
|
20,000
|
|
|
*
|
|
|
|
|
|
|
A.
Collier Smyth, M.D.
|
|
15,000
|
|
|
*
|
|
|
|
|
|
|
Wayne
Wilson
|
|
20,000
|
|
|
*
|
|
|
|
|
|
|
Laurie
A. Allen, Esq.
|
|
3,176
|
(10)
|
|
*
|
All
current directors and executive
officers
as a group (14 persons)
|
|
5,026,917
|
(11)
|
|
5.5%
|
*
|
Indicates
less than one percent of the outstanding shares of common
stock.
|
**
|
Addresses
are given for beneficial owners of more than 5% of the outstanding common
stock only.
|
***
|
Attached
to each share of common stock is a preferred share purchase right to
acquire a number of shares of common stock having a market value at that
time of twice the right’s exercise price, which rights are not presently
exercisable.
|
(1)
|
This
information is based solely on information contained in a Schedule 13G
that was filed with the SEC on January 27, 2009 by Biotechnology Value
Fund, L.P., Biotechnology Value Fund II, L.P., BVF Investments, L.L.C.,
Investment 10, L.L.C., BVF Partners, L.P. and BVF Inc. as to 6,734, 748
shares owned as of December 31, 2008, and on the purchase of our common
stock by BVF Partners, LP and affiliated entities on February 25, 2009
pursuant to a registered direct offering of our common
stock. According to the Schedule 13G, Biotechnology
Value Fund, L.P shares voting and dispositive power with
respect to 1,540,748 shares of common stock, Biotechnology Value Fund II,
L.P shares voting and dispositive power with respect to
1,059,000 shares, BVF Investments, L.L.C. shares voting and dispositive
power with respect to 3,676,000 shares, Investment 10, L.L.C. shares
voting and dispositive power with respect to 459,000 shares, BVF Partner
L.P. shares voting and dispositive power with respect to 6,734,748 shares
and BVF Inc. shares voting and dispositive power with respect to 6,734,748
shares.
|
(2)
|
This
information is based solely on information contained in a Schedule 13G
filed with the SEC on February 6, 2009 by Barclays Global Investors NA and
Barclays Global Fund Advisors, according to which Barclays Global
Investors NA has sole voting power with respect to 1,716,818 shares and
sole dispositive power with respect to 2,153,247 shares and Barclays
Global Fund Advisors has sole voting and dispositive power with respect to
2,433,706 shares.
|
(3)
|
Includes
503,028 shares issuable upon exercise of stock
options. Includes 90,015 shares of common stock held by the
2004 Edith Berger Revocable Trust, of which Harvey J. Berger, M.D. is
trustee and has the right to vote and dispose of the shares, and 18,816
shares owned by Dr. Berger’s spouse and daughters. Dr. Berger
disclaims beneficial ownership of the shares held by the 2004 Edith Berger
Revocable Trust.
|
(4)
|
Includes
368,625 shares issuable upon exercise of stock
options.
|
(5)
|
Includes
25,000 shares issuable upon exercise of stock
options.
|
(6)
|
Includes
278,000 shares issuable upon exercise of stock
options.
|
(7)
|
Includes
415,500 shares issuable upon exercise of stock
options.
|
(8)
|
Includes
91,667 shares issuable upon exercise of stock options and 6,696 shares
held by Mr. LaMarche’s spouse.
|
(9)
|
Includes
31,667 shares issuable upon exercise of stock
options.
|
(10)
|
This
amount is based solely on information we had regarding Ms. Allen’s
holdings as of October 15, 2008, the date of her departure from the
Company. Pursuant to the terms of our stock compensation plans,
stock options held by Ms. Allen on October 15, 2008 which were not
exercised by January 15, 2009 expired on that
date.
|
(11)
|
See
notes 2 through 9 above. Also includes 375,500 shares issuable
upon the exercise of stock options held by executive officers not listed
in the table above.
|
The
following table sets forth certain information regarding our executive
officers:
Name
|
Age
|
Position
|
Harvey
J. Berger,
M.D.
|
58
|
Chairman
of the Board of Directors, Chief Executive Officer and
President
|
David
L. Berstein,
Esq.
|
56
|
Senior
Vice President, Chief Intellectual Property Officer
|
Daniel
M. Bollag,
Ph.D.
|
48
|
Senior
Vice President, Regulatory Affairs and Quality
|
Timothy
P. Clackson,
Ph.D.
|
43
|
Senior
Vice President, Chief Scientific Officer
|
Pierre
F. Dodion,
M.D.
|
54
|
Senior
Vice President, Chief Medical Officer
|
Edward
M.
Fitzgerald
|
54
|
Senior
Vice President, Chief Financial Officer and Treasurer
|
Raymond
T. Keane,
Esq.
|
50
|
Senior
Vice President, General Counsel, Secretary, and Chief Compliance
Officer
|
John
D. Iuliucci,
Ph.D.
|
66
|
Senior
Vice President, Development
|
Matthew
E. Ros
|
42
|
Senior
Vice President, Commercial
Operations
|
For
biographical information on Dr. Berger, see “Board of Directors” above in this
proxy statement.
David L.
Berstein, Esq. has served as our Senior Vice President and Chief
Intellectual Property Officer since May 2008. Mr. Berstein also
served as our Senior Vice President and Chief Patent Counsel from June 2003
until June 2007 and our Vice President and Chief Patent Counsel from September
1993 to June 2000. From July 2007 until his return to ARIAD in May
2008, Mr. Berstein was Senior Vice President and Chief Patent Counsel for Tempo
Pharmaceuticals, Inc., a biotechnology company. During this time
period, he was a consultant to ARIAD on intellectual property
matters. From 1990 through 1993, Mr. Berstein was Patent Counsel at
BASF Bioresearch Corporation, a biotechnology company, where he was responsible
for intellectual property matters, including patents and
licensing. From 1985 to 1990, Mr. Berstein was a patent attorney at
Genetics Institute, Inc., a biotechnology company, where he was involved in
various aspects of the patent process from patent procurement through
litigation. Mr. Berstein joined Genetics Institute from the law firm
of Cooper & Dunham. Mr. Berstein received his B.S. degree from
the University of Michigan and his J.D. degree from Fordham University School of
Law.
Daniel M. Bollag,
Ph.D. has served as our Senior Vice President, Regulatory Affairs and
Quality since January 2009. He previously served as Vice President,
Regulatory Affairs, for Genzyme Corporation, a biotechnology company, from 2006
to 2008. From 2002 to 2006, Dr. Bollag held multiple positions at
Sanofi-Aventis Pharmaceuticals, including Associate Vice President, Global
Regulatory Domain Head, Associate Vice President, Global Regulatory Therapeutic
Area Head, and Director, U.S. Regulatory Liaison. Dr. Bollag also served
as Director, Project Planning and Management at the Bristol-Myers Squibb
Pharmaceutical Research Institute from 2000 to 2002. Earlier in his career,
from 1991-2000, he held positions at Merck Research Laboratories. Dr.
Bollag received his B.S. degree in Science and B.A. in French at
Pennsylvania State University and his Ph.D. degree in Biochemistry
from Cornell University. He also completed a post-doctoral
fellowship at Princeton University.
Timothy P.
Clackson, Ph.D. has served as our Senior Vice President and Chief
Scientific Officer since September 2003. Previously, he served as our
Senior Vice President, Science and Technology from June 2002 to September 2003,
as our Vice President, Gene Therapy and Genomics from June 2000 to June 2002, as
our Director, Gene Therapy from August 1999 to June 2000 and as our Department
Head, Gene Therapy Biology from March 1999 to August 1999. Prior to
joining us in December 1994, Dr. Clackson was a postdoctoral fellow at
Genentech, Inc., a biotechnology company from 1991 to 1994, where he studied the
molecular basis for human growth hormone function. Dr. Clackson
received his B.A. degree in Biochemistry from the University of
Oxford. Dr. Clackson received his Ph.D. degree in Biology from the
University of Cambridge, for research conducted at the MRC Laboratory of
Molecular Biology into antibody engineering and the development of phage display
technology.
Pierre F.
Dodion,
M.D. has served as our Senior Vice President, Chief Medical Officer
since April 2008. Previously, he served as our Senior Vice President,
Oncology since June 2007. From 2006 to 2007, Dr. Dodion served as
Executive Director, Oncology at Pfizer Inc. From 2002 to 2006, he
held senior positions at Novartis in the Oncology Business Unit, most recently
as Executive Director, Global Strategy and Global Marketing. From
1997 to 2002, Dr. Dodion served as Medical Director and later as Senior Medical
Director at Aventis. Prior to Aventis, he held medical and scientific
positions at UCB S.A. and Roche Pharmaceuticals. Previously he held
positions at Institut Jules Bordet at the Free University of Brussels and the
National Cancer Institute. Dr. Dodion received his M.D. from the Free University
of Brussels in Belgium and his M.B.A. degree from St Joseph University in
Philadelphia, Pennsylvania.
Edward M.
Fitzgerald has served as our Senior Vice President, Chief Financial
Officer and Treasurer since May 2002. From 1998 to April 2002, he
served as Senior Vice President, Chief Financial Officer and Secretary at
AltaRex Corp., a biotechnology company. From 1992 to 1997, Mr.
Fitzgerald held various management positions at BankBoston Corp., a financial
services and commercial banking company. From 1989 to 1992, he was a
partner at Arthur Andersen & Co. in the audit and business advisory
practice. Previously, from 1978 to 1988, he also was at Arthur
Andersen & Co. Mr. Fitzgerald received his B.S. degree in
accounting and M.B.A. degree in finance from Babson College.
John D. Iuliucci,
Ph.D. has served as our Senior Vice President and Chief Development
Officer since September 2003. Previously, he served as our Senior
Vice President, Drug Development from January 1999 to September 2003, as our
Vice President, Drug Development from October 1996 to December 1998 and as our
Vice President, Preclinical Development from June 1992 to September
1996. Prior to joining us, Dr. Iuliucci was Director of Preclinical
Pharmacology and Toxicology at Centocor, Inc., a biotechnology company, from
1984 to 1992. From 1975 to 1984, Dr. Iuliucci headed the Drug Safety
Evaluation Department at Adria Laboratories, a pharmaceutical
company. He was a Senior Toxicologist at the Warner-Lambert
Pharmaceutical Research Institute from 1972 to 1975. Dr. Iuliucci
received his B.S. degree in Pharmacy and M.S. and Ph.D. degrees in Pharmacology
from Temple University.
Raymond T. Keane,
Esq. has served as our Senior Vice President, General Counsel, Secretary
and Chief Compliance Officer since January 2009 and was previously our Vice
President, General Counsel and Chief Compliance Officer since May
2008. Prior to joining ARIAD, Mr. Keane spent 20 years with
Bristol-Myers Squibb Company (BMS), most recently as Senior Counsel, Worldwide
Medicines and previously as lead counsel to various therapeutic
divisions. While at BMS, he had primary legal responsibility for the
commercialization and launch of seven BMS products. Before joining
BMS in 1988, Mr. Keane was an associate with the law firms of Wilson, Elser,
Moskowitz, Edelman & Dicker from 1987 to 1988 and Martin, Clearwater and
Bell from 1984 to 1987. He received his J.D. degree from Fordham
University School of Law and his B.A. degree in Economics from Fordham
University.
Matthew E.
Ros has served as our Senior Vice President, Commercial Operations since
January 2009. He previously served as our Vice President, Commercial
Operations and Vice President, Oncology Marketing from November 2007 through
December 2008. From 1990 to 2007, Mr. Ros held a series of senior
sales, marketing and operations management positions at Bristol-Myers Squibb
Company (BMS), most recently Senior Director and U.S. Commercial Lead
responsible for the launch and commercialization of oncology
products. Mr. Ros’ previous positions at BMS included Director,
Oncology Franchise Planning and Development; Director, Oncology Global
Marketing; and Director, Sales Training and Promotion. Mr. Ros received his
B.Sc. from the State University of New York.
The
following Compensation Discussion and Analysis describes the material elements
of compensation for our executive officers, including the executive officers
identified in the Summary Compensation Table whom we refer to as our named
executive officers in this proxy statement.
The
primary objectives of our compensation and benefits programs for our executive
officers are:
|
To
enable us to attract, retain and motivate the best available talent to
lead ARIAD by providing competitive compensation
opportunities.
|
|
To
focus our executive officers on achieving key business objectives by
providing the opportunity to earn annual performance awards that place a
substantial portion of total annual compensation at risk depending upon
corporate and individual
performance.
|
|
To
align the interests of our executive officers with those of our
stockholders through the use of equity
compensation.
|
More
generally, we believe that our total compensation program should meet the
following additional key objectives:
|
To
maintain flexibility to respond to changes at ARIAD and in our industry
and related employment markets. We continually refine our
compensation objectives and practices as we evolve towards a commercially
focused biopharmaceutical organization. Since our founding, we
have strived to adjust compensation practices to reflect our stage of
development and evolving practices within our industry, and we will
continue to do so.
|
|
To
provide compensation opportunities across the Company that are
fundamentally fair and that recognize the contributions of all our
employees. We will maintain compensation programs that are
competitive at all levels and reward high performers for their achievement
of goals. This approach focuses the entire Company on advancing
our product candidates through development to the patients who need
them.
|
We provide
three basic forms of direct compensation to our executive officers: base salary,
annual performance awards and long-term incentive awards.
Base Salary
- Base
salary is intended to provide all ARIAD employees with a fair and competitive
base level of compensation that reflects their job function, organizational
level, experience and tenure, and sustained performance over
time. Executive officer base salary levels are set using these same
criteria.
Annual
Performance Awards -
Annual performance awards are intended to reward our executive officers
for achievement of corporate, departmental and team objectives, as well as their
individual contributions towards those goals. Performance awards to
our Chief Executive Officer have been made in the form of restricted stock as
the Compensation Committee believes this better aligns his interests with those
of our stockholders. Performance awards to our other executive
officers are deferred under our 2005 Executive Compensation
Plan. These awards vest in four equal installments beginning on the
first anniversary of the date of the award and are payable in equal installments
on the fourth and fifth anniversary of the grant date, subject to later payment
at the executive’s election. This plan design allows us to conserve
capital to fund our priority research and development programs and support the
retention of our executive officers. The value of amounts deferred
under this plan is increased or decreased over the vesting and payment periods
based upon the actual total return of specified mutual funds.
Long-Term
Incentive Awards – Long-term incentive awards are also intended to reward
our executive officers for achievement of corporate, departmental and team
objectives, as well as their individual contributions towards those
goals. In addition, such awards are intended to align the interests
of our executive officers with those of our stockholders, promote progress
toward achieving our long-term strategy and assist in their long-term
retention. As such, long-term incentive awards for our executive
officers are made in the form of stock options, restricted stock or restricted
stock units with vesting schedules over multiple years.
Benefits
and Perquisites
We provide
our executive officers with generally the same benefits as those provided to all
other salaried employees, such as health, dental and vision insurance, life
insurance, short- and long-term disability, 401(k) plan with company match, and
an employee stock purchase plan. In addition, we also provide
executive officers with supplemental long-term disability insurance and
long-term care insurance.
We offer
tax return preparation services to our executive officers to assist them in
complying with their tax reporting obligations. Our executive
officers also receive an auto allowance in accordance with their employment
agreements. These are the only perquisites we provide to our
executive officers. Perquisites represent less than 2% of each named
executive officer’s total compensation in the Summary Compensation Table located
elsewhere in this proxy statement.
Our
benefits and perquisites represent competitive market practices for executives
at companies within our peer group. They are offered as a means to
attract and retain our executive officers.
All of our
employees, including our executive officers, are eligible to participate in our
equity incentive programs, which provide for the award of stock options,
restricted stock, restricted stock units and similar rewards, and the purchase
of our common stock at a discount. Our equity incentive programs are
intended to:
|
Reward
our employees for performance based on achievement of
objectives;
|
|
Directly
align the long-term interests of our employees with those of our
stockholders by providing a meaningful ownership stake in
ARIAD;
|
|
Promote
progress toward achieving our long-term strategy and operating plan;
and
|
|
Assist
in the retention of employees by vesting awards over multiple
years.
|
For our
executive officers in particular, we believe our equity incentive programs are
important in building an alignment of interests with our stockholders and
promoting a long-term performance perspective. Significant value
accrues to equity-based awards only as the market value of our common stock
appreciates. In addition, such awards typically have vesting
schedules over time or other restrictions that require the executive officer to
remain employed by us in order to realize value from such awards. We
believe that awards under our equity incentive programs have a significant
relationship to the performance of our executive officers and the
Company.
Administration
of our Equity Incentive Programs
All equity
awards are made by our Compensation Committee under stockholder approved
plans. When granted, stock options have an exercise price equal to
the closing price of our common stock as quoted on The NASDAQ Global Market on
the date of grant. Our Compensation Committee also approves the other
terms of the grants, including the vesting period, restrictions and term of the
awards.
Grants of
stock options to new employees, including executive officers, are generally
approved and made at the first scheduled meeting of our Compensation Committee
after such employees begin employment. Annual grants are generally
approved and made in the first quarter of the fiscal year.
Our
employees can purchase shares of our common stock at a discount to market value
pursuant to our employee stock purchase plan, a stockholder approved
plan. Employees elect to make such purchases on a quarterly basis
through payroll deduction as provided for in the plan.
As
described under “The Compensation Committee” located elsewhere in this proxy
statement, the Compensation Committee is responsible for, among other duties,
establishing compensation levels for our Chief Executive Officer and reviewing
his performance, and reviewing and approving compensation levels recommended by
Dr. Berger for our other executive officers and reviewing their
performance. While our Compensation Committee has ultimate authority
and responsibility for approving all executive officer compensation, Dr. Berger
plays an important role in such decisions (except with respect to his own
compensation).
At the
beginning of each year, the executive leadership team establishes corporate
objectives, as well as individual and departmental objectives in support of such
corporate objectives, which are reviewed and discussed with the Compensation
Committee and the Board of Directors. Such objectives form the basis
for our annual operating plan which is approved by the Board of
Directors. The status of our corporate objectives, as well as our
performance relative to our operating plan, are reviewed and discussed with the
Board of Directors on a regular basis throughout the year.
At the end
of each year, each of the executive officers provides a self-assessment of his
or her performance relative to the established corporate, individual and
departmental objectives. The Chief Executive Officer reviews and
evaluates such assessments and completes an overall assessment of performance
for each officer relative to the these objectives for the year. These
assessments are reviewed and discussed by the Compensation
Committee. The Compensation Committee also uses this information as
part of its comprehensive review and assessment of the performance of the Chief
Executive Officer. This assessment forms the basis for the
Compensation Committee’s determination of the annual adjustment to the Chief
Executive Officer’s base salary, as well as the amount of his annual performance
award and long-term incentive award, if any. Such determinations are
made by the Compensation Committee and are subject to approval by the Board of
Directors.
Based on
the Compensation Committee’s assessment of overall corporate performance, the
Committee determines, with input from the Chief Executive Officer, the
components of total compensation available for the other executive officers
(other than the Chief Executive Officer) as follows:
|
the
average percent increase in base salary, if
any,
|
|
the
average annual performance awards as a percent of base salary,
and
|
|
the
overall pool available for equity-based long-term incentive
awards.
|
Once such
parameters are determined, the Chief Executive Officer then formulates
recommendations for adjustments to base salary, if any, and the amount of the
annual performance and long-term incentive awards for each executive officer
based on the Compensation Committee’s overall assessment of the Company’s
performance and the assessment of the performance of each
officer. The Chief Executive Officer reviews and discusses such
recommendations with the Compensation Committee. The Compensation
Committee may propose modifications to these recommendations. Once
agreement is reached, the Compensation Committee approves the annual base salary
and other awards for each executive officer.
In making
determinations and approving actions regarding the compensation of our executive
officers, the Compensation Committee considers the factors discussed below for
each executive officer. Such determinations and actions are based on
the Committee’s discretionary assessment of all factors, and no specific
weightings or formulas are used.
In making
decisions regarding the compensation of our executive officers, the Compensation
Committee considers the following:
Company Performance – As
noted above, our compensation program is designed to motivate our executive
officers to achieve our key corporate objectives. These objectives
include key research, clinical development, business development and financial
objectives. For 2008, these key corporate objectives
included:
|
Maximizing
the opportunity for the Company’s lead product candidate, deforolimus, by
executing all major initiatives in the deforolimus global development plan
on schedule and on budget;
|
|
Building
the commercial organization by executing the deforolimus manufacturing
development plan and by building a streamlined commercial infrastructure
to focus on the commercial launch of our product
candidates;
|
|
Expanding
the Company’s product pipeline through execution of the development plan
for our second product candidate, AP24534, and internal drug discovery
initiatives;
|
|
Preparing
the Company for commercialization by implementing agreed-upon corporate
and development information technology initiatives on schedule and on
budget and implementing critical business processes and programs to more
effectively manage our growth;
|
|
Strengthening
the balance sheet by managing the financial resources of the Company
consistent with achievement of operating plans and providing additional
funding through business development, capital or other
initiatives.
|
The
achievement of these objectives in 2008, as further discussed under
“Compensation Actions” below, formed the basis for recommendations and decisions
regarding the compensation of our executive officers.
Individual Performance – The
Compensation Committee also considers the following general criteria in
evaluating individual performance, not all of which are applicable to all
executive officers:
|
The
individual’s role in the research, development, acquisition and/or
licensing of product candidates and
technologies;
|
|
The
individual’s contribution to the achievement of key research,
development and business
milestones;
|
|
The
individual’s contribution to the management team and development and
application of leadership skills to drive the future performance of the
Company;
|
|
The
individual’s ability to attract, hire, manage, retain and motivate staff
in support of the achievement of our
objectives;
|
|
The
individual’s contribution to the achievement of key financial objectives
of the Company including the management of financial budgets and forecasts
and, as appropriate, involvement in investor relations and corporate
funding initiatives; and
|
|
The
individual’s management of regulatory compliance requirements related to
his or her responsibilities.
|
Market Analysis – We draw
upon a pool of talent that is highly sought after by large and established
pharmaceutical and biotechnology companies as well as by other development stage
life science companies, both within and outside our geographic
area. We believe that the compensation practices of our industry in
general and of our select peer group in particular provide useful information to
help us establish compensation practices that allow us to attract, retain and
motivate a talented executive team. We believe we must offer a
compensation package to our executive officers that is competitive with our peer
group and aligned with our current stage of development and our annual and
longer term performance. We believe that our total compensation
levels should normally fall within approximately the 50th to
75th
percentiles of our peer groups based on performance and contribution to our
strategic objectives over time.
Each year,
we review the levels of cash, equity and total compensation for all comparable
executive officers in our peer group relative to the elements of compensation
paid to our executive officers. In considering how these data relate
to our existing compensation structure, we take into account our Company’s size,
stage of development, performance and geographic location as compared to these
peer companies, as well as what we know about the comparable scope of
responsibilities of our executive officers versus those of comparable executives
at such peer group companies. With the assistance of our compensation
consultant, W.T. Haigh & Company, we used two primary market frames of
reference against which to compare our executive total compensation practices
and levels and inform our decisions regarding compensation of our executive
officers in 2008, as follows:
|
Select
Peer Group – 30 national biotechnology companies at a similar stage of
development as ARIAD with similar headcount, market capitalization and in
most cases, similar therapeutic targets,
and
|
|
Radford
Biotechnology Executive Compensation Report by Aon Consulting – A national
survey of executive compensation levels and practices that covers
approximately 60 positions in over 500
organizations.
|
We do not
apply a specific weighting to either data source when making compensation
comparisons. Instead, we work with our outside consultant to develop
competitive market guidelines using these data sources and in some cases,
additional local and/or national market frames of reference.
The select
peer group as of December 2007 analyzed by W.T. Haigh & Company and used to
inform our decisions impacting executive compensation in 2008, consisted of the
following companies:
Acorda
Therapeutics, Inc.
|
InterMune,
Inc.
|
Alexion
Pharmaceuticals, Inc.
|
Isis
Pharmaceuticals, Inc.
|
Arena
Pharmaceuticals, Inc.
|
Keryx
Biopharmaceuticals, Inc.
|
Arqule,
Inc.
|
Kosan
Biosciences Incorporated
|
Array
BioPharma Inc.
|
Maxygen,
Inc.
|
Cell
Genesys, Inc.
|
Neurogen
Corporation
|
CV
Therapeutics, Inc.
|
Progenics
Pharmaceuticals, Inc.
|
Cytokinetics,
Incorporated
|
Rigel
Pharmaceuticals, Inc.
|
Dendreon
Corporation
|
Sangamo
Biosciences, Inc.
|
Dyax
Corp.
|
Seattle
Genetics, Inc.
|
Exelixis,
Inc.
|
SuperGen,
Inc.
|
Geron
Corporation
|
Telik,
Inc.
|
ImmunoGen,
Inc.
|
Tercica,
Inc.
|
Incyte
Corporation
|
Vical
Incorporated
|
Indevus
Pharmaceuticals, Inc.
|
ZymoGenetics,
Inc.
|
This peer
group generally consisted of public companies in the biopharmaceutical industry
with product candidates in mid to late-stage development, annual revenues
generally less then $30 million, and market capitalization of at least $200
million and no higher than $1 billion. We believe that, as of
December 2007, this list was representative of the companies with whom we
compete for talent.
The
following sections discuss the actions taken by our Compensation Committee and
Board of Directors related to compensation for our executive officers for 2008,
as reflected in the Summary Compensation Table found elsewhere in this proxy
statement.
Base
Salary
On an
annual basis, our executives are eligible for a salary increase. The
amount of this increase, if any, is based primarily on market data, the
performance of the management team toward the achievement of key corporate
objectives and internal pay equity, as well as demonstrated levels of core job
competency and effectiveness in performing key job
requirements. Increases are considered within the context of our
overall budget parameters before more specific individual and market competitive
factors and overall economic factors are considered. We do not apply
specific formulas for individual actions.
Adjustments
to base salary levels typically become effective as of January 1 each
year. Effective January 1, 2008, the Compensation Committee approved
average base salary increases ranging from 4.0% to 5.8% for the named executive
officers in this proxy statement. These adjustments reflect
assessments of the factors outlined above. Specifically, we believe
the increases are consistent with increases in base salaries in the market in
which we operate. In addition, we believe the resulting base salary
for each officer reflects his or her responsibilities and performance and are
consistent with the range of base salaries for comparable positions in our peer
group. The base salary earned by each of our named executive officers
in the years ended December 31, 2006, 2007 and 2008 are shown in the Summary
Compensation Table found elsewhere in this proxy statement.
The
Compensation Committee has determined that base salaries for our executive
officers, including our Chief Executive Officer, in 2009 will remain the same as
in 2008. We believe this decision reflects the current economic
environment in which we and our peer group operate, including the substantial
lack of funding currently available in our industry sector, and our desire to
conserve cash and capital as we continue development of our product
candidates.
Annual Performance and Long-term
Incentive Awards
Annual
performance and long-term incentive awards for our executive officers are based
on achieving corporate, departmental and team objectives, as well as individual
performance goals. With respect to awards for
the year ended December 31, 2008, the Compensation Committee considered the
following key factors relative to our objectives for the year:
|
The
successful execution of all major initiatives in the deforolimus global
development plan, including the initiation of Phase 2 clinical trials in
three cancer indications – breast cancer, endometrial cancer and prostate
cancer – as well as the continued enrollment of patients in our Phase 3
clinical trial in patients with advanced
sarcomas;
|
|
The
establishment of the manufacturing development plan for deforolimus in
conjunction with Merck & Co., Inc. including the execution of a
long-term supply agreement between the parties providing for supply of
deforolimus active pharmaceutical ingredient and finished product for the
life of the deforolimus
collaboration;
|
|
The
initiation of a Phase 1 clinical trial for our second product candidate,
AP24534, in patients with hematologic
malignancies;
|
|
The
substantial completion of research necessary to designate our next product
candidate, an anaplastic lymphoma kinase, or ALK,
inhibitor;
|
|
The
implementation of key information technology initiatives and business
processes that are necessary to support development and commercialization
of our product candidates; and
|
|
The
strengthening of our balance sheet through our receipt of $10 million in
additional term- debt financing in the first quarter of 2008 and the
reduction in our expenses and our cash used in operations relative to
projections in the second half of 2008 to conserve cash and
capital.
|
The
Compensation Committee also took into account the leadership and contributions
of individual executive officers in achieving these objectives. No
specific weight was given to any of these factors in determining annual
performance or long-term incentive awards for any of our executive
officers.
The
amounts awarded also reflect our analysis of the compensation practices in our
industry as described under “Market Analysis” above. Consistent with
such analysis, we target average performance awards each year of 50% of annual
base salary for the Chief Executive Officer and 30% of annual base salary for
all other executive officers, as provided in their employment agreements,
depending on performance. We also target equity-based long-term
incentive awards based on the market analysis again taking into consideration
the performance of the Company and each executive officer relative to
objectives.
Performance
Awards
In
assessing the performance of Dr. Berger for 2008, the Compensation Committee
took into account the achievement of our key corporate objectives in 2008 as
detailed above and the impact of the leadership of Dr. Berger on our
performance. Based on its assessment of Dr. Berger’s performance for
2008, in March 2009, the Compensation Committee awarded 235,000 shares of
restricted stock to Dr. Berger, with a grant date fair market value of $305,500,
equal to approximately 50% of his base salary for 2008. This
restricted stock award was made, in lieu of deferred performance awards made to
our other executive officers or a cash bonus, to better align Dr. Berger’s
interests with those of our stockholders and to conserve cash in the
business. These shares of restricted stock are subject to a right of
repurchase by the Company until March 10, 2010.
In April
2008, the Compensation Committee awarded 82,500 shares of restricted stock to
Dr. Berger, with a grant date fair market value of $291,225, equal to
approximately 51% of his base salary in 2007. This award reflected
the Compensation Committee’s assessment of the achievement of key corporate
objectives during 2007. These shares of restricted stock were also
subject to a right of repurchase by the Company for one year, which lapsed on
April 11, 2009. This award is shown in the “Stock Award” column for
2008 in the Summary Compensation Table found elsewhere in this proxy
statement.
Based on
its assessment of 2008 performance as noted above, in March 2009, our
Compensation Committee granted performance awards to the other named
executive officers (other than Dr. Berger) totaling $425,000. These
awards were deferred under our 2005 Executive Compensation Plan and are shown in
the “Bonus” column for 2008 in the Summary Compensation Table located elsewhere
in this proxy statement. In determining the aggregate amount
available for performance awards for 2008, our Compensation Committee
established a pool equal to approximately 30% of annual base salary for our
executive officers (other than Dr. Berger). Individual allocations
from the pool for these officers were primarily based on an assessment of each
individual’s performance relative to the key corporate objectives as well as the
individual and department objectives established for each
officer. The awards for Dr. Clackson and Mr. Fitzgerald are greater
as a percentage of base salary than those for Dr. Dodion and Dr. Iuliucci
reflecting Dr. Clackson’s and Mr. Fitzgerald’s performance for the year,
particularly in light of their expanded responsibilities for management of key
functions in the Company in 2008.
Long-Term
Incentive Awards
Long-term
incentive awards to our executive officers may be provided in the form of stock
options or shares of restricted stock or restricted stock units. The
annual awards are based on the assessment of annual performance of the executive
officers as discussed above. These awards are shown in the Grants of
Plan-Based Awards table located elsewhere in this proxy statement.
Based on
its assessment of 2008 performance as noted above, in March 2009, the
Compensation Committee granted 160,000 restricted stock units to Dr. Berger,
with a grant date fair value of $208,000. A total of 267,000
restricted stock units were awarded to our other named executive officers (other
than Dr. Berger), with an aggregate grant date fair value of
$352,440. Each restricted stock unit entitles the holder to one share
of our common stock, subject to their continued employment, upon
vesting. All of these restricted stock units will vest 100% in March
2012.
Based on
its assessment of 2007 performance, in April 2008, the Compensation Committee
granted 104,000 restricted stock units to Dr. Berger, with a grant date fair
value of $367,120. A total of 161,000 restricted stock units were
awarded to our other named executive officers (other than Dr. Berger), with an
aggregate grant date fair value of $568,330. All of these restricted
stock units will vest 100% in April 2011.
Prior to
the grants made in 2008, all of our long-term incentive awards to our officers
were made in the form of stock options. The Compensation Committee
decided to use restricted stock units in lieu of stock options as the primary
form of equity compensation for long-term incentive awards beginning in 2008 in
order to:
|
Prudently
utilize our pool of shares available under shareholder-approved plans,
and
|
|
Increase
the retentive value of our long-term incentive awards in a volatile market
through the inherent embedded value associated with a restricted stock
unit.
|
Tax
Deductibility of Compensation
Section 162(m)
of the Internal Revenue Code limits the deduction a public company is permitted
for compensation paid to the chief executive officer and to the four most highly
compensated executive officers other than the chief executive
officer. Generally, amounts paid in excess of $1,000,000 to a covered
executive cannot be deducted, unless the compensation is paid pursuant to a plan
which is performance related, non-discretionary and has been approved by
shareholders. In its deliberations the Compensation Committee considers ways to
maximize deductibility of executive compensation, but nonetheless retains the
discretion to compensate executive officers at levels the Compensation Committee
considers commensurate with their responsibilities and
achievements. Our 2006 Long-Term Incentive Plan permits the issuance
of performance-based stock awards that would be compliant with Section 162(m),
but to date we have not issued any such awards and we have not adopted a policy
that all executive compensation be fully deductible.
Mix
of Direct Compensation Components
As our
executive officers have increasing responsibility for and impact on our results,
we place greater emphasis on variable, performance-based compensation and longer
term compensation vehicles in the form of equity awards and deferred performance
awards.
We do not
have specific policies nor do we use formulas to determine a mix of total
compensation. We intend for total compensation to vary based on our
progress towards achievement of corporate, departmental and team objectives, as
well as individual performance goals. For fiscal 2008, performance
awards and long-term incentive awards represent over 40% of the total direct
compensation (excluding benefits) on average for our named executive
officers.
Total
Direct Compensation Summary
We believe
the total direct compensation paid to our executive officers supports our
compensation philosophy and objectives, is positioned at appropriate levels
relative to our stage of development and our peer companies and provides our
named executive officers with a competitive total compensation
opportunity.
We have
entered into employment agreements with our named executive
officers. These employment agreements provide for base salary,
performance and long-term incentive awards, health, disability, life and other
insurance coverage, and other benefits over specified terms of
employment. Each of these agreements provides for certain payments
and other benefits if the executive’s employment terminates under certain
circumstances, including in connection with a “change in
control.” See “Executive Compensation - Narrative to Summary
Compensation Table” for a description of the agreement terms impacting current
compensation and “Executive Compensation - Potential Payments upon Termination
or Change in Control” for a description of applicable severance and change in
control benefits.
In October
2008, the Compensation Committee approved the extension of the terms of
employment of certain of the Company’s named executive officers as follows (term
ending on December 31 of each year):
|
From
|
|
To
|
Harvey
J. Berger, M.D.
|
2011
|
|
2013
|
Edward
M. Fitzgerald
|
2010
|
|
2012
|
Timothy
P. Clackson, Ph.D.
|
2010
|
|
2012
|
Pierre
F. Dodion, M.D.
|
2009
|
|
2011
|
Our
Compensation Committee believes that the extension of the terms of the
employment agreements for these officers reflects their high level of
performance over time in the achievement of our corporate objectives and helps
to secure their continued employment with the Company.
Our
Compensation Committee believes that change in control and severance
arrangements are an important part of the overall compensation program for our
named executive officers. Change in control provisions help to secure
the continued employment and dedication of our executive officers,
notwithstanding any concern that they might have regarding their own continued
employment prior to or following a change in control, and to promote a
continuity of management during a corporate transaction. Severance
arrangements are used primarily to attract, retain and motivate individuals with
the requisite experience and ability to drive our success. Severance
arrangements also serve, in part, as consideration to secure commitments from
our executive officers not to compete with us after termination of their
employment.
On October
15, 2008, Laurie A. Allen, Esq., our former Senior Vice President, Chief Legal
Officer and Secretary, departed her employment with the Company. In
accordance with the terms of her agreements with the Company, Ms. Allen is
receiving and will receive certain severance benefits, including continued
payment of her base salary through December 31, 2010, all as disclosed in
“Executive Compensation - Potential Payments
upon Termination or Change in Control” located elsewhere in this proxy
statement.
Our
Compensation Committee periodically reviews the principal terms of our
employment agreements with our named executive officers in light of our needs
and evolving market conditions. In December 2008, we amended the
employment agreements in order to comply with applicable tax requirements under
Section 409A of the Internal Revenue Code.
We, the
Compensation Committee of the Board of Directors of ARIAD
Pharmaceuticals, Inc. (the “Company”), have reviewed and discussed
the Compensation Discussion and Analysis set forth above with the management of
the Company, and, based on such review and discussion, have recommended to the
Board of Directors inclusion of the Compensation Discussion and Analysis in this
proxy statement and, through incorporation by reference from this proxy
statement, the Company’s Annual Report on Form 10-K for the year ended December
31, 2008.
|
Respectfully
submitted,
|
|
|
|
Massimo
Radaelli, Ph.D., Chairperson
|
|
Athanase
Lavidas, Ph.D.
|
EXECUTIVE
COMPENSATION
The
following table sets forth the compensation paid to or accrued on behalf of our
Chief Executive Officer, our Chief Financial Officer and our three other most
highly compensated executive officers and our former Chief Legal Officer, whom
we refer to collectively as our named executive officers, during the fiscal
years ended December 31, 2006, 2007 and 2008.
Name
and
Principal Position
|
Year
|
Salary
|
Bonus (1)
|
Stock Awards (2)
|
Option
Awards (2)
|
All
Other
Compensation
(3)
|
Total
|
|
|
|
|
|
|
|
|
Harvey
J. Berger, M.D.
Chairman,
Chief Executive Officer, and President
|
2008
2007
2006
|
$607,500
576,000
544,000
|
$ ---
---
---
|
$383,005
296,960
223,015
|
$407,385
552,427
366,223
|
$296,811
37,288
35,334
|
$1,694,701
1,462,674
1,168,572
|
Edward
M. Fitzgerald
Senior
Vice President, Chief Financial Officer
and
Treasurer
|
2008
2007
2006
|
348,000
329,000
309,000
|
131,000
115,000
176,000
|
45,890
---
---
|
147,992
173,056
153,647
|
64,091
24,463
21,502
|
736,973
641,519
660,149
|
Timothy
P. Clackson, Ph.D.
Senior
Vice President, Chief Scientific Officer
|
2008
2007
2006
|
350,000
333,000
309,000
|
158,000
117,000
185,000
|
45,890
---
---
|
151,351
200,867
180,938
|
35,161
25,200
22,337
|
740,402
676,067
697,275
|
Pierre
F. Dodion, M.D.
Senior
Vice President, Chief Medical Officer
|
2008
|
340,000
|
92,000
|
22,063
|
74,130
|
30,753
|
558,946
|
John
D. Iuliucci, Ph.D.
Senior
Vice President, Development
|
2008
2007
2006
|
342,000
329,000
309,000
|
62,000
82,000
167,000
|
28,240
---
---
|
156,970
272,381
168,642
|
203,447
30,657
28,582
|
792,657
714,038
673,224
|
Laurie
A. Allen, Esq.
Former
Senior Vice President,
Chief
Legal Officer and Secretary
|
2008
2007
2006
|
337,000
329,000
309,000
|
---
50,000
167,000
|
---
---
---
|
215,562
(4)
173,056
129,051
|
680,026
(5)
21,294
21,530
|
1,232,588
573,350
626,621
|
(1)
|
The
amounts included under “Bonus” reflect deferred performance awards under
our 2005 Executive Compensation Plan granted in March 2009 in respect of
performance for the year ended December 31, 2008, in April 2008 in respect
of performance for the year ended December 31, 2007 and in April 2007 in
respect of performance for the period from July 1, 2005 to December 31,
2006. These awards vest 25% on each anniversary of the award
date, subject to the executive remaining employed on such date, and will
be payable in equal installments on the fourth and fifth anniversary of
the grant date, subject to later payment at the executive’s
election. See “Non-qualified Deferred Compensation in 2008”
located elsewhere in this proxy statement for more
details.
|
(2)
|
The
amounts included under “Stock Awards” and “Option Awards” generally
reflect the dollar amount recognized as expense for financial statement
reporting purposes for the fiscal years ended December 31, 2008, 2007 and
2006, in accordance with SFAS No. 123R, for awards granted in and prior to
each respective year. These amounts reflect the Company’s
accounting expense and do not correspond to the actual value that may be
realized by the executives. Assumptions used in the calculation
of these amounts are set forth in the note to our audited consolidated
financial statements titled “Stock-Based Compensation” included in our
Annual Report on Form 10-K for the respective fiscal
year.
|
(3)
|
Amounts
included under “All Other Compensation” for 2008 consist
of: (i) the present value of lump sum payments upon
retirement from the Company related to amendment of our sabbatical policy
(described under “Non-qualified Deferred Compensation in 2008” located
elsewhere in this proxy statement) reflecting the dollar amount recognized
as expense for financial statement reporting purposes at December 31, 2008
($246,303 for Dr. Berger, $37,613 for Mr. Fitzgerald, $7,409 for Dr.
Clackson, and $171,000 for Dr. Iuliucci); (ii) matching contributions to
our 401(k) retirement savings plan ($6,900 for each of Dr. Berger, Dr.
Clackson, Dr. Dodion, Mr. Fitzgerald, Ms. Allen and Dr. Iuliucci); and
(iii) other compensation ($43,608 for Dr. Berger, $19,578 for Mr.
Fitzgerald, $14,083 for Ms. Allen, $20,852 for Dr. Clackson, $23,853 for
Dr. Dodion and $25,547 for Dr. Iuliucci) consisting of the cost of
supplemental long-term disability and long-term care insurances, an annual
auto allowance, and tax preparation services for Dr. Berger, Ms. Allen,
Dr. Clackson and Dr. Iuliucci. See note (5) regarding
additional amounts for Ms. Allen.
|
(4)
|
This
amount includes $67,569 of expense recognized for financial statement
reporting purposes related to accelerated vesting of stock options
pursuant to Ms. Allen’s employment agreement in accordance with SFAS No.
123R. See note (2) to this
table.
|
(5) |
This
amount includes $584,211, which is the present value of continued base
salary payments to be made through December 31, 2010, the term of her
employment, pursuant to Ms. Allen’s Employment Agreement dated March 4,
2002, as amended, which was recognized for financial statement reporting
purposes in 2008, $39,482 of expense related to a cash payment to her for
forfeited stock options pursuant to Ms. Allen’s Guarantee Agreement dated
September 11, 2008, and $35,350 in estimated health insurance premiums to
be paid by the Company for Ms. Allen through October 15, 2010 also
pursuant to Ms. Allen’s Guarantee
Agreement.
|
The
following table shows information regarding grants of non-equity incentive plan
awards and grants of equity awards that were made during the year ended December
31, 2008 to each of the named executive officers. All awards were
made under our 2006 Long-Term Incentive Plan.
Name
|
Grant
Date
|
|
All
Other Stock
Awards:
Number
of
Shares
of Stock
or Units (#)
|
|
All
Other Option
Awards:
Number
of
Securities
Underlying
Options (#)
|
|
|
Exercise
or Base
Price
of Option Awards ($/share)
|
|
|
Grant
Date Fair
Value
of Stock
and
Option
Awards
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Harvey
J. Berger, M.D.
|
04/11/08
04/11/08
|
|
|
82,500
104,000
|
(1)
(2)
|
|
|
---
|
|
|
|
---
|
|
|
$
$
|
291,225
367,120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward
M. Fitzgerald
|
04/11/08
|
|
|
52,000 |
(2) |
|
|
---
|
|
|
|
---
|
|
|
$ |
183,560
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy
P. Clackson, Ph.D.
|
04/11/08
|
|
|
52,000 |
(2) |
|
|
---
|
|
|
|
---
|
|
|
$ |
183,560 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pierre
F. Dodion, M.D.
|
04/11/08
|
|
|
25,000 |
(2) |
|
|
---
|
|
|
|
---
|
|
|
$ |
88,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
D. Iuliucci, Ph.D.
|
04/11/08
|
|
|
32,000 |
(2) |
|
|
---
|
|
|
|
---
|
|
|
$ |
112,960
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Laurie
A. Allen, Esq.
|
04/11/08
|
|
|
18,000 |
(2) |
|
|
---
|
|
|
|
---
|
|
|
$ |
63,540
|
|
______________________
(1)
|
This
award of restricted stock is subject to the Company’s right to repurchase
such shares at a cost of $0.001 per share until April 11,
2009. No consideration was paid by Dr. Berger for this
award.
|
(2)
|
These
awards are in the form of restricted stock units which vest as to 100% of
the awards on April 11, 2011 at which date the underlying shares of common
stock will be delivered to the recipient, so long as the recipient is
still an officer of the Company on that date. No consideration
was paid by the recipients for these
awards.
|
(3)
|
The
grant date fair values of awards have been determined in accordance with
SFAS No. 123R, using the assumptions set forth in Note 11 to our audited
financial statements for the year ended December 31, 2008 included in our
Annual Report on Form 10-K filed with the Securities and Exchange
Commission on March 16, 2009.
|
Narrative
to Summary Compensation Table and Grants of Plan-Based
Awards
|
Employment
agreements with our named executive officers provide for base salary, annual
bonus opportunities, participation in our benefit plans, the opportunity to
receive equity awards, and post-termination benefits and
obligations.
Dr.
Berger’s employment agreement has a term that expires on December 31, 2013,
subject thereafter to automatic renewal for successive three-year terms absent
notice to the contrary by either party. The employment agreements
with our other named executive officers provide for terms expiring on December
31, 2012 for Mr. Fitzgerald and Dr. Clackson, December 31, 2011 for Dr. Dodion
and December 31, 2010 for Dr. Iuliucci, subject thereafter to automatic renewal
for successive one-year terms absent notice to the contrary by either
party.
Each
employment agreement specifies a minimum level of base salary for the executive,
but gives our Compensation Committee authority to increase the executive’s base
salary from time to time. In the case of Dr. Berger, his employment
agreement provides for base salary to increase by ten percent annually during
the term, although he has waived this increase in 2006, 2007, 2008 and
2009.
Dr.
Berger’s employment agreement provides that we shall pay him a cash bonus of up
to fifty percent of his current salary, as determined by our Board of
Directors. For 2006, 2007 and 2008, the Board of Directors has
awarded restricted stock or restricted stock units to Dr. Berger instead of cash
bonuses or deferred compensation awards. The employment agreements
for the other named executive officers provide for discretionary bonuses of up
to thirty percent of their then current salary, payable in the form of stock
options, stock awards, deferred compensation or cash, as determined by our Board
of Directors. Payment of all bonuses awarded to such officers for
2006, 2007 and 2008 have been deferred under the terms of our 2005 Executive
Compensation Plan.
The
employment agreements also provide that each executive is entitled to, among
other things, participation in any incentive, stock award or bonus
plan, pension, group insurance and fringe benefits on the same basis
as executives at a comparable level; group health, disability and life
insurance; paid vacation; an auto allowance of $750 per month and standard tax
preparation and planning services; one three-month period of fully paid leave
after each six years of continuous employment, under our executive sabbatical
policy; reimbursement of business expenses; and indemnification and
directors’ and officers’ insurance coverage. In addition, Dr.
Berger’s employment agreement provides him with medical malpractice insurance
with coverage reasonably satisfactory to Dr. Berger and legal costs to enforce
the employment agreement on an as-incurred basis subject to repayment if we
prevail.
Our former
Senior Vice President, Chief Legal Officer and Secretary, Laurie A. Allen, Esq.,
was employed with us until October 15, 2008, pursuant to an employment agreement
dated March 4, 2002, as amended, which provided for a term of employment through
December 31, 2010. In September 2008, in connection with the merger
of AGTI into ARIAD, the Board of Directors authorized an amendment to Ms.
Allen’s employment agreement and entry into a guarantee agreement pursuant to
which the Company agreed, among other things, that following termination of her
employment, Ms. Allen would receive continued health and dental coverage for two
years, payment for her forfeited unvested stock options and reimbursement of
legal expenses, under certain circumstances, associated with litigation she
commences to enforce her rights under the agreements with the
Company. The Board of Directors also authorized the entry into a
consulting agreement with Ms. Allen, with a term of five years, which provides
for the payment of fees for consulting services she may provide if requested by
the Company. The Company has not requested, and does not intend to
request, any such services under this agreement.
The
employment agreements with our named executive officers also provide for
severance payments upon termination of employment by us without cause,
termination by the executive for material breach of the agreement by us,
non-renewal (for Dr. Berger only) or termination in connection with a change in
control. See “Executive Compensation – Potential Payments Upon
Termination or Change in Control” for a description of these provisions in the
employment agreements.
The
following table lists the outstanding equity awards at December 31, 2008 for
each of the named executive officers:
|
|
Option
Awards
|
|
Stock
Awards
|
|
Name
|
|
Number
of
Securities
Under-
lying
Unexercised
Options:
Exercisable (1)
|
|
|
Number
of
Securities
Under-
lying
Unexercised
Options: Un-Exercisable (1)
|
|
|
|
|
|
|
Number
of
Shares
or
Units
of Stock
That
Have
Not
Vested
|
|
|
Market
Value of
Shares
or Units of
Stock
That Have
Not
Vested (9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Harvey
J. Berger, M.D.
|
|
|
50,000 |
|
|
|
---
|
|
|
$ |
13.81
|
|
06/08/10
|
|
|
82,500 |
(7)
|
|
$ |
70,125 |
|
|
|
|
20,837 |
|
|
|
---
|
|
|
$ |
4.80
|
|
07/26/11
|
|
|
104,000 |
(8)
|
|
$ |
88,400 |
|
|
|
|
24,691 |
|
|
|
---
|
|
|
$ |
4.05
|
|
06/13/12
|
|
|
|
|
|
|
|
|
|
|
|
150,000 |
|
|
|
---
|
|
|
$ |
5.23
|
|
09/09/14
|
|
|
|
|
|
|
|
|
|
|
|
112,500 |
|
|
|
|
|
|
$ |
7.56
|
|
10/04/15
|
|
|
|
|
|
|
|
|
|
|
|
60,000 |
|
|
|
180,000
(3)
|
|
|
$ |
4.64
|
|
03/06/17
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
(6)
|
|
|
---
|
|
|
$ |
4.49
|
|
04/16/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward
M. Fitzgerald
|
|
|
100,000 |
|
|
|
---
|
|
|
$ |
4.63 |
|
05/06/12
|
|
|
52,000 |
(8)
|
|
$ |
44,200 |
|
|
|
|
33,000 |
|
|
|
---
|
|
|
$ |
3.90 |
|
08/15/13
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
|
|
---
|
|
|
$ |
5.23 |
|
09/09/14
|
|
|
|
|
|
|
|
|
|
|
|
45,000 |
|
|
|
15,000(2)
|
|
|
$ |
7.56 |
|
10/04/15
|
|
|
|
|
|
|
|
|
|
|
|
25,000 |
|
|
|
|
|
|
$ |
4.49 |
|
04/16/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy
P. Clackson, Ph.D.
|
|
|
25,000 |
|
|
|
---
|
|
|
$ |
13.81 |
|
06/08/10
|
|
|
52,000 |
(8)
|
|
$ |
44,200 |
|
|
|
|
60,000 |
|
|
|
---
|
|
|
$ |
5.65 |
|
06/07/11
|
|
|
|
|
|
|
|
|
|
|
|
25,000 |
|
|
|
---
|
|
|
$ |
4.05 |
|
06/13/12
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
|
|
---
|
|
|
$ |
4.19 |
|
06/18/12
|
|
|
|
|
|
|
|
|
|
|
|
33,000 |
|
|
|
---
|
|
|
$ |
3.90 |
|
08/15/13
|
|
|
|
|
|
|
|
|
|
|
|
7,500 |
|
|
|
---
|
|
|
$ |
6.39 |
|
09/23/13
|
|
|
|
|
|
|
|
|
|
|
|
20,000 |
|
|
|
---
|
|
|
$ |
7.44 |
|
06/23/14
|
|
|
|
|
|
|
|
|
|
|
|
55,000 |
|
|
|
---
|
|
|
$ |
5.23 |
|
09/09/14
|
|
|
|
|
|
|
|
|
|
|
|
43,125 |
|
|
|
14,375
(2)
|
|
|
$ |
7.56 |
|
10/04/15
|
|
|
|
|
|
|
|
|
|
|
|
25,000 |
|
|
|
75,000
(4)
|
|
|
$ |
4.49 |
|
04/16/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pierre
F. Dodion, M.D.
|
|
|
25,000 |
|
|
|
75,000
(5)
|
|
|
$ |
5.49 |
|
06/28/17
|
|
|
25,000 |
(8)
|
|
$ |
21,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
D. Iuliucci, Ph.D.
|
|
|
20,000 |
|
|
|
---
|
|
|
$ |
1.34 |
|
04/05/09
|
|
|
32,000 |
(8)
|
|
$ |
27,200 |
|
|
|
|
70,000 |
|
|
|
---
|
|
|
$ |
0.75 |
|
10/04/09
|
|
|
|
|
|
|
|
|
|
|
|
55,000 |
|
|
|
---
|
|
|
$ |
5.65 |
|
06/07/11
|
|
|
|
|
|
|
|
|
|
|
|
20,000 |
|
|
|
---
|
|
|
$ |
4.44 |
|
03/07/12
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
|
|
---
|
|
|
$ |
4.19 |
|
06/18/12
|
|
|
|
|
|
|
|
|
|
|
|
33,000 |
|
|
|
---
|
|
|
$ |
3.90 |
|
08/15/13
|
|
|
|
|
|
|
|
|
|
|
|
7,500 |
|
|
|
---
|
|
|
$ |
6.39 |
|
09/23/13
|
|
|
|
|
|
|
|
|
|
|
|
55,000 |
|
|
|
---
|
|
|
$ |
5.23 |
|
09/09/14
|
|
|
|
|
|
|
|
|
|
|
|
52,500 |
|
|
|
17,500
(2)
|
|
|
$ |
7.56 |
|
10/04/15
|
|
|
|
|
|
|
|
|
|
|
|
23,750 |
|
|
|
71,250
(4)
|
|
|
$ |
4.49 |
|
04/16/17
|
|
|
|
|
|
|
|
|
|
|
|
25,000 |
(6)
|
|
|
---
|
|
|
$ |
4.49 |
|
04/16/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Laurie
A. Allen, Esq.
(10)
|
|
|
16,550 |
|
|
|
---
|
|
|
$ |
1.34 |
|
01/15/09
|
|
|
|
|
|
|
|
|
|
|
|
29,020 |
|
|
|
---
|
|
|
$ |
0.75 |
|
01/15/09
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
|
---
|
|
|
$ |
4.44 |
|
01/15/09
|
|
|
|
|
|
|
|
|
|
|
|
33,000 |
|
|
|
---
|
|
|
$ |
3.90 |
|
01/15/09
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
|
|
---
|
|
|
$ |
5.23 |
|
01/15/09
|
|
|
|
|
|
|
|
|
|
|
|
60,000 |
|
|
|
---
|
|
|
$ |
7.56 |
|
01/15/09
|
|
|
|
|
|
|
|
|
|
|
|
75,000 |
|
|
|
---
|
|
|
$ |
4.49 |
|
01/15/09
|
|
|
|
|
|
|
|
|
____________________
(1)
|
Options
have terms of ten years. Options generally vest 25% per year
over the four year period following the date of
grant.
|
(2)
|
These
options will vest on October 4,
2009.
|
(3)
|
These
options will vest as to one-third of the balance on each of March 6, 2009,
2010 and 2011.
|
(4)
|
These
options will vest as to one-third of the balance on each of April 16,
2009, 2010 and 2011.
|
(5)
|
These
options will vest as to one-third of the balance on each of June 28, 2009,
2010 and 2011.
|
(6)
|
These
options were granted pursuant to our program to grant options to employees
and directors upon reaching ten or fifteen years of service with
ARIAD. These options are fully vested upon grant and have a
term of ten years.
|
(7)
|
These
restricted shares are subject to a right of the Company to repurchase such
shares at a cost of $0.001 per share until April 11,
2009.
|
(8)
|
These
restricted stock units vest as to 100% of the awards on April 11, 2011 at
which date the underlying shares of common stock will be delivered to the
recipient so long as the recipient is still an officer of the
Company.
|
(9)
|
The
market value of the stock awards is determined by multiplying the number
of shares by $0.85, the closing price of our common stock on The NASDAQ
Global Market on December 31, 2008, the last day of our fiscal
year.
|
(10)
|
In
accordance with the terms of Ms. Allen’s employment agreement, the vesting
of these stock options was accelerated upon her departure. In
accordance with the terms of our stock compensation plans, Ms. Allen had a
period of three months following her departure in which to exercise these
stock options before they expired.
|
There were
no stock options that were exercised or stock awards that vested during the year
ended December 31, 2008 for our named executive officers.
The
following table contains information about the participation of our named
executive officers in our 2005 Executive Compensation Plan (the “2005 Plan”) as
of and for the year ended December 31, 2008.
Name
|
Executive
Contributions
|
Registrant
Contributions (1)
|
Aggregate
Earnings
|
Aggregate
Withdrawals/
Distributions
|
Aggregate
Balance
at
Year
End
|
Harvey
J. Berger, M.D.
|
--
|
--
|
--
|
--
|
--
|
Edward
M. Fitzgerald
|
--
|
$
131,000
|
($
47,210)
|
($
54,647)
|
$
604,205
|
Timothy
P. Clackson, Ph.D.
|
--
|
$
158,000
|
($
47,045)
|
($
77,369)
|
$
631,210
|
Pierre
F. Dodion, M.D.
|
---
|
$ 92,000
|
($ 4,218)
|
---
|
$
139,782
|
John
D. Iuliucci, Ph.D.
|
---
|
$ 62,000
|
($
44,233)
|
($
79,119)
|
$
500,740
|
Laurie
A. Allen, Esq.
|
--
|
---
|
($
29,388)
|
($
54,647)
|
$
237,180
|
_________________
(1)
|
Represents
amounts awarded in March 2009 in respect of performance for the year ended
December 31, 2008. These amounts are reported in the Summary
Compensation Table, located elsewhere in this proxy
statement, above under the “Bonus” column and are required to
be deferred by their terms.
|
The 2005
Plan is an unfunded, non-qualified, deferred compensation plan and is intended
to comply with the requirements of Section 409A of the Code. The
Compensation Committee may from time to time in its sole discretion allow
participants to defer payment of part of their compensation under the 2005 Plan
on a pre-tax basis. In addition, the Compensation Committee may elect
to issue awards under the 2005 Plan to participants either as performance-based
awards (which it has historically done in lieu of cash bonus payments for each
of the officers of the Company other than the chief executive officer) or on an
ad hoc basis. Deferred amounts are subject to certain vesting
requirements (other than for salary deferrals) and payment provisions as
specified at the time of the deferral. The terms of awards, including
the acceleration or modification of vesting terms, are determined by our
Compensation Committee in its sole discretion. Amounts that are not
vested as of the time of a participant’s separation from service are
forfeited. Vesting of unvested amounts may be accelerated in
connection with a change of control at the Compensation Committee’s
discretion. The value of amounts deferred under the 2005 Plan is
increased or decreased over time based on the actual total return of specified
mutual funds. Participants may choose to receive payment of their
vested benefits in either a lump sum or annual installments (but not to exceed
twenty years) at either a specified date, upon the first anniversary of their
separation from service, or the earlier of these two dates. A
participant may subsequently change the form of payment or elect to defer the
timing of payment, within certain limits, provided the change is elected at
least twelve months before the previously scheduled date for commencement of
payment. Any changes to the timing of payment must be deferred for at
least five additional years.
From its
inception, the Company has maintained a sabbatical policy that provides three
months of paid sabbatical to corporate officers for every six years of
employment, with unused sabbaticals being eligible for a cash-out payment upon
retirement under certain circumstances. It was determined that this policy
would not comply with Section 409A of the Internal Revenue Code, and thus the
Company will no longer provide cash payments with respect to unused sabbatical
leave earned after December 31, 2008. In order to avoid a loss of rights
as part of this change, corporate officers who were employed on December 31,
2008 and who had fully earned a right to take one or more sabbaticals prior to
2009, will receive a lump-sum cash payment upon retirement from the Company, if
they retire in good standing after the age of 60, in an amount equal to three
months of pay for each sabbatical that was fully earned as of December 31,
2008. Pursuant to this arrangement, the following named executive
officers are eligible to receive the indicated lump sum payments upon
retirement in good standing from the Company after the age of 60: Dr. Berger -
$303,750; Mr. Fitzgerald - $87,000; Dr. Clackson - $85,500; and Dr. Iuliucci -
$171,000. The present values of these deferred payments, which
represent the amount of expense recognized during 2008 for financial statement
reporting purposes, are reported in the Summary Compensation Table under “All
Other Compensation.”
Chief
Executive Officer
The
following is a description of the potential payments due upon an employment
termination or a change in control solely with respect to Dr. Berger, our Chief
Executive Officer:
Employment
Termination without Cause
If we
terminate Dr. Berger’s employment without cause, we are obligated
to:
•
|
Make
a cash lump sum payment equal to the greater of (a) any remaining salary
payable during the term (including ten percent annual increases in salary)
plus the maximum possible bonus for each year remaining in the term, and
(b) an amount equal to two times the sum of the executive’s current base
salary and maximum bonus for the then-current year of employment;
and
|
•
|
Accelerate
the vesting of all stock options, stock grants and similar equity rights
and provide for continued exercisability of all awards through their
original terms with all rights.
|
In
addition to an uncured breach of the employment agreement and a material
reduction of duties, each of the following events is treated as a termination of
Dr. Berger’s employment without cause:
•
|
Dr.
Berger is no longer elected to our Board of Directors, named as Chairman
and designated as our chief executive
officer.
|
•
|
Dr.
Berger ceases to be our highest ranking executive with the power to
appoint and remove all other ARIAD
employees.
|
•
|
A
person other than Dr. Berger is elected ARIAD’s
president.
|
•
|
The
retention of any executive officer by ARIAD, or an offer to pay
compensation to any executive officer that in either case is unacceptable
to Dr. Berger, in his reasonable
judgment.
|
•
|
We
file for bankruptcy or otherwise become
insolvent.
|
“Cause”
for purposes of Dr. Berger’s employment agreement consists
of:
|
•
|
willful
neglect of duties following written notice and a 30 day opportunity to
correct;
|
•
|
conviction
of a felony involving moral turpitude;
or
|
•
|
any
act of fraud or embezzlement involving us or any of our
affiliates.
|
Any
determination of cause requires at least a two-thirds vote of the entire Board
of Directors.
Non-Renewal
If we do
not renew Dr. Berger’s employment agreement at the end of its term, we are
obligated to make a lump sum cash payment equal to two times his annual salary
for the final year of the term.
All
Employment Terminations Except Cause and Death
Dr.
Berger’s employment agreement requires us to continue providing medical coverage
in all group health plans for the maximum COBRA continuation period at our
expense following any termination of employment other than for cause and
death.
Change
in Control
Dr.
Berger’s employment agreement provides that in the event of a “Change in
Control” (as defined below), all stock, stock option, stock award and similar
equity rights granted to him shall immediately vest and remain fully exercisable
through their original term with all rights.
In
addition, Dr. Berger has the right to terminate his employment agreement within
90 days after a Change in Control, in which case we will pay Dr. Berger the same
benefits as if we had terminated his employment without
cause. Alternatively, if Dr. Berger elects to continue his employment
agreement, then he will be paid a single lump sum cash payment equal to the sum
of his then-current salary plus the bonus for the most recently completed full
year of employment.
A tax
gross-up will be paid on Dr. Berger’s behalf if any amounts payable by us (or
our successor) become subject to excise taxes under Sections 280G and 4999 of
the Code.
Generally,
pursuant to the Dr. Berger’s employment agreement, a Change in Control occurs
if:
|
Any
person makes a tender or exchange offer for our common stock pursuant to
which such person acquires 25% or more of our issued and outstanding
common stock;
|
|
Our
stockholders approve a definitive agreement to merge or consolidate ARIAD
with or into another corporation, or to sell or otherwise dispose of all
or substantially all of our assets;
or
|
|
Any
person acquires more than 25% of our issued and outstanding voting
securities.
|
Other
Named Executive Officers
The
following is a description of the potential payments upon termination or change
in control with respect to the named executive officers other than Dr.
Berger:
Employment
Termination without Cause
If we
terminate the employment of a named executive officer other than Dr. Berger
without cause, we are obligated to continue payment of the executive’s then
current salary for the remainder of the applicable employment agreement term;
accelerate vesting of all stock, stock options, stock awards, and
similar equity awards granted to the executive that would have otherwise vested
during the term, subject to the normal post termination exercise period; and
continue payment of all benefits covered under COBRA for up to one
year.
"Cause"
for purposes of the other executive officer’s employment agreement consists
of:
|
the
officer’s failure to perform any of his material
duties;
|
|
the
conviction of any felony involving moral
turpitude;
|
|
any
acts of fraud or embezzlement involving us or any of our
affiliates;
|
|
violation
of any law or regulation related to our
business;
|
|
conduct
that could result in unfavorable publicity for us in a material
way;
|
|
failure
to comply with our written policies;
or
|
|
breach
of the terms of the employment
agreement.
|
The
executive officer has a right to cure any conduct that constitutes cause, if
curable, within 30 days after receiving written notice.
For
purposes of determining payments upon termination, a termination of the
employment agreement by the named executive officer due to an uncured breach by
us of the employment agreement is treated as a termination of the executive’s
employment without cause.
If we do
not renew the employment agreement of a named executive officer other than Dr.
Berger, no severance benefit is payable.
Change
in Control
In the
event that a named executive officer, other than Dr. Berger, terminates his
employment agreement within 90 days after a ”Change in Control” (as defined
below), we are obligated to accelerate the vesting of all stock options, stock
grants and similar equity rights and provide for continued exercisability of all
awards through their original terms with all rights. We are also
obligated to continue to pay the named executive officer the then current salary
for the shorter of six months or the remaining period of the applicable
term.
The Change
in Control definition with respect to the employment agreements for the other
named executive officers is the same as the employment agreement for Dr. Berger
except that the threshold for a tender offer or an acquisition of third party
stock is fifty percent, not twenty-five percent as in Dr. Berger’s
agreement.
Assumptions
Regarding Post Termination Payment
Tables
|
The tables
presented on the following pages were prepared as though each named executive
officer’s employment was terminated on December 31, 2008 using the closing price
of our common stock as of that day ($0.85). The amounts under the
column labeled “Termination within 90 Days after a Change in Control,” and
“Continuous Employment within 90 Days after a Change in Control” assume that a
change in control occurred on December 31, 2008. We are required by
the SEC to use these assumptions. With those assumptions taken as a
given, we believe that the remaining assumptions listed below, which are
necessary to produce these estimates and reflect solely the Company’s
interpretation of its contractual obligations, are reasonable in the
aggregate. However, the executives’ employment was not terminated on
December 31, 2008, and a Change in Control did not occur on that
date. There can be no assurance that a termination of employment, a
Change in Control or both would produce the same or similar results as those
described if either or both of them occur on any other date or at any other
price of our common stock, or if any assumption is not correct in
fact.
The
following assumptions were used for these
tables.
|
|
Base
amount calculations for Section 280G tax gross-up are based on Dr.
Berger’s taxable wages (Form W-2, Box 1) for the years 2003 through
2007.
|
|
Dr.
Berger was assumed to be subject to the maximum federal and Massachusetts
income and other payroll taxes, aggregating to a net combined effective
tax rate of 39.6% when calculating the excise tax
gross-up.
|
|
In
determining Dr. Berger’s estimated severance benefits, the salary for his
year of employment termination equals his then current salary, and his
salary for any additional years remaining in the term equals his salary
increased by ten percent per year as required under his employment
agreement.
|
|
Stock
options and stock appreciation rights vested on December 31, 2008 with
respect to a change in control for Dr. Berger or a termination of
employment without cause by us, death or
disability.
|
|
Restricted
stock, restricted stock units and stock options that become vested due to
a change in control or termination of employment are valued in the table
below based on their intrinsic value on December 31, 2008 (i.e., the
difference between the stock’s fair market value and the exercise or
purchase price, if any).
|
Chief Executive
Officer
The
following table sets out the estimated potential payments upon termination or
change in control for Dr. Berger, based on the assumptions discussed
above.
Dr.
Berger
Payments
and Benefits
|
|
Voluntary
termination
or
termination
by
the
Company
for
Cause
|
|
|
Non-
Renewal
|
|
|
Termination
by
the
Company
Without
Cause
|
|
|
Termination
within
90 days
after
a Change
in
Control
|
|
|
Continuation
of
Employment
within
90 days
after
a Change
in
Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
benefits:
Lump sum payment
|
|
$ |
--- |
|
|
$ |
1,956,770 |
|
|
$ |
6,119,600 |
|
|
$ |
6,119,600 |
|
|
$ |
607,500 |
|
Healthcare
benefits
|
|
|
26,512 |
|
|
|
26,512 |
|
|
|
26,512 |
|
|
|
26,512 |
|
|
|
--- |
|
Acceleration
of stock awards:
Market value of
stock
vesting
on termination (2)
|
|
|
--- |
|
|
|
--- |
|
|
|
158,525 |
|
|
|
158,525 |
|
|
|
158,525 |
|
280G
Tax Gross-Up
|
|
|
n/a |
|
|
|
n/a |
|
|
|
n/a |
|
|
|
2,686,054 |
(1) |
|
|
n/a |
|
Total
Payment
|
|
$ |
26,512 |
|
|
$ |
1,983,282 |
|
|
$ |
6,304,637 |
|
|
$ |
8,990,691 |
|
|
$ |
766,025 |
|
(1)
|
Based
on the assumptions set forth above, Dr. Berger’s payments will result in a
tax gross-up payment to him.
|
(2)
|
Does
not include the value associated with vested options. There
were no unvested options held by Dr. Berger that were in the money on
December 31, 2008. Information about stock options that are
vested as of December 31, 2008 is included in the “Outstanding Equity
Awards at December 31, 2008” table.
|
The
amounts in the table above do not include the value of non-qualified deferred
compensation benefits, the value of which as of December 31, 2008 is set forth
in “Non-qualified Deferred Compensation in 2008” located elsewhere in this proxy
statement.
All Other Named Executive
Officers
The
following tables set out the estimated potential payments upon termination or
change in control for Mr. Fitzgerald, Dr. Clackson, Dr. Dodion and Dr. Iuliucci,
based on the assumptions discussed above. The total of continued
payments in the case of termination by the Company without cause in the tables
below reflect the remaining terms of the employment agreements with each of
these executives. The footnotes to all of the tables follow the last
table.
Mr.
Fitzgerald
Payments
and benefits
|
|
Voluntary
Termination
(1)
|
|
|
Termination
for
Cause (1)
|
|
|
Termination
by the Company Without Cause
|
|
|
Termination
within 90 days after a Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
benefits:
Total of continued
payments
|
|
$ |
--- |
|
|
$ |
--- |
|
|
$ |
1,392,000 |
|
|
$ |
174,000 |
|
Healthcare
benefits
|
|
|
--- |
|
|
|
--- |
|
|
|
17,675 |
|
|
|
--- |
|
Non-qualified benefits (3)
|
|
|
--- |
|
|
|
--- |
|
|
|
--- |
|
|
|
258,657 |
|
Acceleration
of stock awards:
Market value of
stock
vesting on termination (2)
|
|
|
--- |
|
|
|
--- |
|
|
|
44,200 |
|
|
|
44,200 |
|
Total
Payment
|
|
$ |
--- |
|
|
$ |
--- |
|
|
$ |
1,453,875 |
|
|
$ |
476,857 |
|
Dr.
Clackson
Payments
and benefits
|
|
Voluntary
Termination (1)
|
|
|
Termination
for
Cause (1)
|
|
|
Termination
by the Company Without Cause
|
|
|
Termination
within 90 days after a Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
benefits:
Total of continued
payments
|
|
$ |
--- |
|
|
$ |
--- |
|
|
$ |
1,400,000 |
|
|
$ |
175,000 |
|
Healthcare
benefits
|
|
|
--- |
|
|
|
--- |
|
|
|
17,675 |
|
|
|
--- |
|
Non-qualified benefits (3)
|
|
|
--- |
|
|
|
--- |
|
|
|
--- |
|
|
|
264,284 |
|
Acceleration
of stock awards:
Market value of
stock
vesting on termination (2)
|
|
|
--- |
|
|
|
--- |
|
|
|
44,200 |
|
|
|
44,200 |
|
Total
Payment
|
|
$ |
--- |
|
|
$ |
--- |
|
|
$ |
1,461,875 |
|
|
$ |
483,434 |
|
Dr.
Dodion
Payments
and benefits
|
|
Voluntary
Termination (1)
|
|
|
Termination
for
Cause (1)
|
|
|
Termination
by the Company Without Cause
|
|
|
Termination
within 90 days after a Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
benefits:
Total of continued
payments
|
|
$ |
--- |
|
|
$ |
--- |
|
|
$ |
1,020,000 |
|
|
$ |
170,000 |
|
Healthcare
benefits
|
|
|
--- |
|
|
|
--- |
|
|
|
17,675 |
|
|
|
--- |
|
Non-qualified benefits (3)
|
|
|
--- |
|
|
|
--- |
|
|
|
--- |
|
|
|
47,782 |
|
Acceleration
of stock awards:
Market value of
stock
vesting on termination (2)
|
|
|
--- |
|
|
|
--- |
|
|
|
18,700 |
|
|
|
18,700 |
|
Total
Payment
|
|
$ |
--- |
|
|
$ |
--- |
|
|
$ |
1,056,375 |
|
|
$ |
236,482 |
|
Dr.
Iuliucci
Payments
and benefits
|
|
Voluntary
Termination (1)
|
|
|
Termination
for
Cause (1)
|
|
|
Termination
by the Company Without Cause
|
|
|
Termination
within 90 days after a Change in Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
benefits:
Total of continued
payments
|
|
$ |
--- |
|
|
$ |
--- |
|
|
$ |
684,000 |
|
|
$ |
171,000 |
|
Healthcare
benefits
|
|
|
--- |
|
|
|
--- |
|
|
|
17,675 |
|
|
|
--- |
|
Non-qualified benefits (3)
|
|
|
--- |
|
|
|
--- |
|
|
|
--- |
|
|
|
223,254 |
|
Acceleration
of stock awards:
Market value of
stock
vesting on termination (2)
|
|
|
--- |
|
|
|
--- |
|
|
|
27,200 |
|
|
|
27,200 |
|
Total
Payment
|
|
$ |
--- |
|
|
$ |
--- |
|
|
$ |
728,875 |
|
|
$ |
421,454 |
|
(1)
|
Does
not include the value of non-qualified deferred compensation benefits
under our deferred compensation plans. The value of these
benefits as of December 31, 2008 is set forth in the section above
entitled “Non-qualified Deferred Compensation in
2008.”
|
(2)
|
Reflects
the market value of unvested restricted stock units as of December 31,
2008. Does not include the value associated with vested
options. There were no unvested options held by the executive that were in
the money on December 31, 2008. Information about stock
options and unvested restricted stock units as of December 31, 2008 is
included in the “Outstanding Equity Awards at December 31, 2008”
table.
|
(3)
|
This
amount represents the estimated value of unvested deferred compensation
under our 2005 Executive Compensation Plan and assumes the Compensation
Committee elects to accelerate the
vesting.
|
Our former
Senior Vice President, Chief Legal Officer and Secretary, Laurie A. Allen, Esq.,
was employed with us until October 15, 2008. In accordance with her
employment and related agreements, which provided for a term of employment
through December 31, 2010, upon separation of employment Ms. Allen’s outstanding
stock options that would have vested over the remainder of her term were
immediately vested and she has received or will receive the following
payments: continuation of base salary at an annual rate of $337,000
through the term; continuation of health and dental benefits for two years,
totaling approximately $31,700; payment of her vested balances under our
non-qualified deferred compensation plan, totaling approximately $237,180;
payment of two times the Black-Scholes value of her forfeited stock options upon
her departure, totaling $39,482; and reimbursement of legal expenses, under
certain circumstances, associated with litigation she commences to enforce her
rights under the agreements with the Company. Certain amounts due to
Ms. Allen under her employment and related agreements are being disputed by Ms.
Allen.
The
following table provides certain aggregate information with respect to all of
our equity compensation plans in effect as of December 31,
2008:
Plan
Category
|
|
Number
of Securities to be Issued Upon Exercise of Outstanding
Options
|
|
|
Weighted
Average Exercise Price of Outstanding Options
|
|
|
Number
of Securities Remaining Available for Future Issuance Under Equity
Compensation Plans (excluding securities reflected in first
column)
|
|
Equity
Compensation Plans Approved by Securityholders
|
|
|
7,424,428 |
(1) |
|
$ |
4.98 |
|
|
|
2,452,673 |
(2) |
Equity
Compensation Plans not Approved by Securityholders
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
Total
|
|
|
7,424,428 |
(1) |
|
$ |
4.98 |
|
|
|
2,452,673 |
(2) |
_______________
(1)
|
Consists
of options to
purchase 769,500 shares of common stock granted under our 1991 Stock
Option Plans for Employees, Consultants, and Directors, options to
purchase 25,000 shares of common stock granted under our 1994 Stock Option
Plan for Non-Employee Directors, options to purchase 3,539,497 shares of
common stock granted under our 2001 Stock Plan, and options to purchase
3,090,431 shares of common stock under our 2006 Long Term Incentive
Plan.
|
(2)
|
Consists
of 1,953,556 shares available for issuance under our 2006 Long Term
Incentive Plan and 499,117 shares available for issuance under our 1997
Employee Stock Purchase Plan. This amount does not include
7,000,000 shares proposed to be added to our 2006 Long-Term Incentive Plan
as described in Proposal 2 in this proxy statement and 750,000 shares
proposed to be added to our Amended and Restated 1997 Employee Stock
Purchase Plan as described in Proposal 3 in this proxy
statement.
|
Management
of the Company is responsible for our financial statements, financial reporting
process and internal accounting, financial reporting and disclosure
controls. Our independent registered public accounting firm is
responsible for (1) performing an audit of our annual consolidated financial
statements and expressing an opinion as to the fair presentation of such
financial statements in conformity with generally accepted accounting
principles, (2) performing an audit of our system of internal control over
financial reporting and expressing an opinion on the effectiveness thereof based
on its audit, (3) reviewing our quarterly consolidated financial statements, and
(4) other procedures as approved by the Audit Committee. The Audit
Committee is responsible for overseeing and reviewing these
processes.
In
connection with fulfilling its responsibilities with respect to our consolidated
financial statements for the year ended December 31, 2008, the Audit Committee
reviewed and discussed the audited financial statements and related footnotes
and other disclosures with management and the independent registered public
accounting firm, Deloitte & Touche LLP. The Audit Committee also
reviewed with management our financial reporting processes and internal
accounting, financial reporting and disclosure controls, including those related
to compliance with legal and regulatory requirements that impact its financial
reporting and disclosure obligations. This review included discussion
with Deloitte & Touche LLP regarding the results of its audit of our
consolidated financial statements and our system of internal control over
financial reporting, as well as the matters required to be discussed by
Statement on Auditing Standards No. 61 Communication with Audit
Committees. The Audit Committee has also reviewed the written
disclosures and letter required by Public Company Accounting Oversight Board
(PCAOB) Ethics and Independence Rule 3526, Communications with Audit Committees
Concerning Independence and has discussed with Deloitte & Touche LLP
its independence from the Company. The Audit Committee has considered
whether the provision of non-audit services by Deloitte & Touche LLP to us
is compatible with maintaining Deloitte & Touche LLP’s
independence. The Audit Committee has concluded that Deloitte &
Touche LLP is independent from ARIAD and its management. Based on
these reviews and discussions, the Audit Committee recommended to the Board of
Directors that the audited financial statements referred to above be included in
our Annual Report on Form 10-K for the year ended December 31, 2008 for filing
with the SEC.
Throughout
2008, the Audit Committee met on a regular basis with management and Deloitte
& Touche LLP. In such meetings, in addition to the review of the
quarterly consolidated financial statements to be included in Forms 10-Q, the
Audit Committee reviewed and discussed the critical accounting policies and
significant judgments made by management in the preparation of our financial
statements, the ongoing review, testing and assessment of the adequacy of
internal controls, proposed changes to auditing and accounting principles and
practices, and the effect of regulatory and accounting initiatives that may
impact us. The Audit Committee also reviewed and approved all audit
and non-audit services and the fees related thereto, and addressed other matters
as outlined in its charter. In addition, the Audit Committee reviewed
and reassessed the adequacy of its charter.
The Audit
Committee has reviewed and evaluated the qualifications and performance of
Deloitte & Touche LLP as the Company’s independent registered public
accounting firm. Based on this review and evaluation, the Audit
Committee has selected Deloitte & Touche LLP to serve as our independent
registered public accounting firm through the audit of our consolidated
financial statements for 2009 and system of internal control over financial
reporting as of December 31, 2009.
Respectfully
submitted,
Wayne
Wilson, Chairperson
Jay R.
LaMarche
Massimo
Radaelli, Ph.D.
Section
16(a) of the Securities Exchange Act of 1934 requires our directors and
officers, and persons who own more than 10% of our common stock, to file with
the Securities and Exchange Commission (the “SEC”) initial reports of beneficial
ownership and reports of changes in beneficial ownership of the common stock and
our other equity securities. Officers, directors and greater than 10%
beneficial owners are required by SEC regulation to furnish us with copies of
all Section 16(a) forms they file.
To our
knowledge, based solely on review of the copies of such reports furnished to us
and written representations that no other reports were required, during the
fiscal year ended December 31, 2008, all Section 16(a) filing requirements
applicable to our officers, directors and greater than 10% beneficial owners
were complied with on a timely basis except that Statements of Beneficial
Ownership on Form 4 for Dr. Berger, Mr. LaMarche, Mr. Berstein and Dr. Iuliucci
related to the exchange of AGTI shares for ARIAD shares in connection with the
merger of AGTI with and into ARIAD, which were required to be filed on October
17, 2008, were filed on November 21, 2008.
We have
adopted a Corporate Code of Conduct and Ethics that applies to our directors,
officers and employees, including our chief executive officer and chief
financial and accounting officers. A copy of the Corporate Code of
Conduct and Ethics is publicly available on the investor relations section of
our website at www.ariad.com under the heading “Corporate
Governance.” Disclosure regarding any amendments to, or waivers from,
provisions of our Corporate Code of Conduct and Ethics will be included in a
Current Report on Form 8-K within four business days following the date of the
amendment or waiver, unless website posting of such amendments or waivers is
permitted by the rules of NASDAQ.
Our Annual
Report on Form 10-K for the year ended December 31, 2008, as filed with the SEC,
is available on the investor relations section of our website at www.ariad.com under
the heading “SEC Filings.” In addition, we will provide, without
charge, a copy of this report (other than exhibits) to any record holder or
beneficial owner of common stock entitled to vote at the Annual Meeting upon
written request to Investor Relations, ARIAD Pharmaceuticals, Inc., 26
Landsdowne Street, Cambridge, Massachusetts 02139-4234; telephone: (617)
494-0400; extension 2208; facsimile: (617) 225-2860; e-mail:
investor@ariad.com.
To
the extent this proxy statement has been or will be specifically incorporated by
reference into any filing by ARIAD under the Securities Act of 1933 or the
Securities Exchange Act of 1934, the sections of this proxy statement entitled
“Compensation Committee Report” and “Report of the Audit Committee” shall not be
deemed to be so incorporated unless specifically otherwise provided in any such
filing.
Election
of Two Class 3 Directors to Hold Office until the 2012 Annual
Meeting
Our
certificate of incorporation, as amended, provides that the number of directors
shall be fixed by our Board of Directors, which has fixed the number at
six. At a meeting held on April 3, 2009, our Board of Directors
nominated Harvey J. Berger, M.D. and Wayne Wilson to stand for election at this
year’s Annual Meeting, based upon the recommendation of our Nominating and
Corporate Governance Committee. Both nominees are currently
directors.
Our
certificate of incorporation provides that our Board of Directors shall be
divided into three classes, as nearly equal in number as possible, with the
directors in each class serving a term of three years and until their successors
are duly elected and qualified. As the term of one class expires, a
successor class is elected at the Annual Meeting for that year. At
this year’s Annual Meeting, two Class 3 directors are to
be elected to serve until the 2012 Annual Meeting and until their successors are
duly elected and qualified.
It is
intended that, if no contrary specification is made, the persons named as
proxies shall vote for the nominees named below. Our Board of
Directors believes that both of the nominees will be available and able to serve
as directors, but if for any reason any of the nominees named below should not
be available to stand for election or be able to serve, the proxies may exercise
discretionary authority to vote for a substitute or substitutes recommended by
our Board of Directors.
A
plurality of the votes cast at the Annual Meeting will be required to elect the
two nominees as Class 3 directors.
The
Board of Directors recommends that you vote “FOR” the election of Harvey J.
Berger, M.D. and Wayne Wilson as Class 3 directors, and proxies solicited by the
Board of Directors will be voted in favor thereof, unless a stockholder has
indicated otherwise on the proxy.
Approval
of an Amendment to and Restatement of the 2006 Long-Term Incentive Plan to
Increase the Number of Shares of Common Stock Available for Issuance under the
Plan and to Remove the Limitation on the Number of Full-Value Awards Issuable
under the Plan
The ARIAD
Pharmaceuticals, Inc. 2006 Long-Term Incentive Plan (the “2006 Plan”), approved
by our stockholders at our 2006 Annual Meeting, allows us, under the direction
of the Compensation Committee, to make grants of stock options, restricted
stock, restricted stock units, performance-based stock awards and stock
appreciation rights to employees, directors and consultants. The
purpose of awards under the 2006 Plan is to attract and retain key individuals,
align employee and stockholder interests and closely link compensation with
Company performance. Our Board of Directors has determined that, in
order to continue its policies and practices regarding our equity incentive
programs, the number of shares available for awards under the 2006 Plan should
be increased and the 2006 Plan terms should allow greater flexibility to grant
full-value awards (such as restricted stock, restricted stock units and
unrestricted grants of shares or other awards). Therefore, on April
3, 2009, the Compensation Committee recommended and our Board of Directors
approved amending and restating the 2006 Plan to reserve an additional 7,000,000
shares of our common stock for awards under the 2006 Plan and remove the limit
on the number of full-value awards that can be issued under the 2006 Plan,
subject to and effective upon approval of our stockholders at the Annual
Meeting.
An
increase in the number of shares reserved for issuance under the 2006 Plan is
being requested at this time because only 541,060 shares remain available for
future grants under the 2006 Plan as of April 24, 2009. The 2006 Plan
currently provides that, of the total shares authorized under the 2006 Plan, no
more than 1.8 million shares may be issued in the form of full-value awards,
which are awards whose intrinsic value is not solely dependent on appreciation
in the price of the underlying shares following the date of
grant. The Board proposes to remove this limit to allow greater
flexibility in the types of grants that may be made in the future consistent
with our director compensation policy, our practice of granting full-value
awards to our officers, and our overall compensation objectives and
philosophy. No other changes to the 2006 Plan are being
proposed. The 2006 Plan, as amended and restated subject to
stockholder approval, is attached to this proxy statement as Appendix
A.
The
following table summarizes the award activity under the 2006 Plan since its
inception in 2006 and the status of awards under the 2006 Plan as of April 24,
2009, prior to the impact of the proposed increase:
|
|
|
|
Shares
reserved
|
|
|
4,500,000 |
|
Shares
transferred from 2001 Stock Plan
|
|
|
1,714,627 |
|
Stock
options awarded
|
|
|
(4,723,725
|
) |
Stock
grants awarded
|
|
|
(1,819,500
|
) |
Shares
forfeited
|
|
|
869,658 |
|
|
|
|
|
|
Shares
available for future grant
|
|
|
541,060 |
|
Stock
options exercised
|
|
|
27,750 |
|
Stock
options outstanding
|
|
|
3,905,317 |
|
Upon
approval of the 2006 Plan by the stockholders in 2006, the 2001 Stock Plan was
terminated so that no additional awards could then be made under the 2001 Stock
Plan. Stock options outstanding under that plan at the time of its
termination remained valid and outstanding stock options according to the terms
of such awards. Any of such outstanding stock options that were or
will be subsequently forfeited by the optionees are transferred to the 2006 Plan
and become available for future awards. A total of 3,064,107 options
currently remain outstanding under the 2001 Stock Plan as of April 24,
2009.
The 2006
Plan contains a number of provisions that we believe are consistent with the
interests of shareholders, sound corporate governance practices and our equity
compensation philosophy:
|
Continued broad-based
eligibility for equity awards with reasonable annual
dilution. Our gross annual burn rate, defined as the
number of stock option or stock awards granted divided by total common
shares outstanding, for 2008, 2007 and 2006 was 3.03%, 3.74% and
1.12%. On average, our three-year average burn rate was
2.63%. This is significantly below the average burn rate of
3.70% for Russell 3000 companies in our Global Industry Classification
Standard Group, which covers companies in the pharmaceuticals and
biotechnology industry. We intend to maintain responsible
annual dilution levels related to our equity incentive plans, not
including extraordinary events such as
acquisitions.
|
|
No annual “Evergreen”
provision. The 2006 Plan authorizes a fixed number of
shares, thereby requiring stockholder approval of any additional
authorization of shares.
|
|
No discount stock options or
stock appreciation rights. All stock options and stock
appreciation rights must have an exercise price equal to or greater than
the fair market value of our common stock on the date the stock option or
stock appreciation right is
granted.
|
|
No stock option or stock
appreciation right repricings. The 2006 Plan prohibits
the repricing of stock options and stock appreciation rights without the
approval of stockholders.
|
|
No reload
rights. Stock options granted under the 2006 Plan do not
contain provisions entitling participants to automatic grant of additional
stock options in connection with the exercise of the original
option.
|
•
|
Reasonable share counting
provisions. In general, shares of common stock reserved
for awards granted under the 2006 Plan that lapse or are canceled are
added back to the share reserve available for future
awards. However, shares of common stock tendered in payment of
a stock option or shares of common stock withheld for taxes are not
available again for grant.
|
•
|
Independent
committee. As it relates to our employees, the 2006 Plan
is governed by the Compensation Committee, which consists of “outside
directors” within the meaning of Section 162(m) of the Internal Revenue
Code and which meets the directors’ independence criteria of the National
Association of Securities Dealers Automated Quotations
(NASDAQ).
|
The
following is a brief summary of the 2006 Plan. This summary is
qualified in its entirety by reference to the text of the 2006 Plan, as proposed
to be amended, a copy of which is attached as Appendix A to this Proxy
Statement.
Purpose
of the 2006 Plan
The 2006
Plan allows us, under the direction of the Compensation Committee, to make
grants of stock options, restricted stock, restricted stock units,
performance-based stock awards, and stock appreciation rights (any of which may
or may not require the satisfaction of performance objectives) to key employees,
consultants and directors who, in the opinion of the Compensation Committee, are
in a position to make a significant contribution to our long-term
success. The purpose of these awards is to attract and retain key
individuals, further align employee and stockholder interests, and to closely
link compensation with Company performance. The 2006 Plan provides an
essential component of the total compensation package, reflecting the importance
that we place on aligning the interests of key individuals with those of our
stockholders. The 2006 Plan terminates on April 28,
2016.
Types
of Awards
The 2006
Plan allows any of the following types of awards, to be granted alone or in
tandem with other awards:
Stock
Options. Stock options
granted under the 2006 Plan may be either incentive stock options, which are
intended to satisfy the requirements of Section 422 of the Internal Revenue Code
of 1986, as amended, which is referred to as the Code, or non-qualified stock
options, which are not intended to meet those requirements.
The
exercise price of a stock option may not be less than 100% of the fair market
value of our common stock on the date of grant and the term may not be longer
than 10 years. If an incentive stock option is granted to an
individual who owns more than 10% of the combined voting power of all classes of
our capital stock, the exercise price may not be less than 110% of the fair
market value of common stock on the date of grant and the term may not be longer
than five years.
Award
agreements for stock options may include rules for exercise of the stock options
after termination of service. Options may not be exercised unless
they are vested, and no option may be exercised after the end of the term set
forth in the award agreement. If an award agreement does not have
rules for exercise after termination of service, the stock options will be
exercisable for three months after termination of service for any reason other
than death or total and permanent disability, and for 12 months after
termination of service on account of death or total and permanent
disability. Options, however, will not be exercisable if the
termination of service was due to cause.
Stock
Appreciation Rights. A stock
appreciation right entitles the grantee to receive, with respect to a specified
number of shares of common stock, any increase in the value of the shares from
the date the award is granted to the date the right is
exercised. Under the 2006 Plan, all stock appreciation rights must be
settled in common stock, except as otherwise determined by the Compensation
Committee.
Award
agreements for stock appreciation rights may include rules for exercise of the
stock appreciation rights after termination of service. If an award
agreement does not have rules for exercise after termination of service, the
stock appreciation rights will be exercisable for three months after termination
of service for any reason other than death or total and permanent disability,
and for 12 months after termination of service on account of death or total and
permanent disability. Stock appreciation rights, however, will not be
exercisable if the termination of service was due to cause.
Restricted
Stock. Restricted stock is common stock that is subject to
restrictions, including a prohibition against transfer and a substantial risk of
forfeiture, until the end of a “restricted period” during which the grantee must
satisfy certain vesting conditions. If the grantee does not satisfy
the vesting conditions by the end of the restricted period, the restricted stock
is forfeited.
During the
restricted period, the holder of restricted stock has the rights and privileges
of a regular stockholder, except that the restrictions set forth in the
applicable award agreement apply. For example, the holder of
restricted stock may vote and receive dividends on the restricted shares; but he
or she may not sell the shares until the restrictions are lifted.
Restricted Stock
Units. A restricted
stock unit entitles the grantee to receive common stock, or cash (or other
property) based on the value of common stock, after a “restricted period” during
which the grantee must satisfy certain vesting conditions. If the
grantee does not satisfy the vesting conditions by the end of the restricted
period, the restricted stock unit is forfeited. The Compensation
Committee is authorized (but not required) to grant holders of restricted stock
units the right to receive dividends on the underlying common
stock.
Other
Equity-Based Awards. The 2006 Plan
also authorizes the Compensation Committee to grant other types of equity-based
compensation. For example, the Compensation Committee may grant
deferred stock units or shares of common stock upon the achievement of
performance objectives.
Conditions
on Awards
The 2006
Plan allows for the following conditions and restrictions on
awards:
Vesting and
Performance Objectives. Awards under the 2006
Plan are forfeitable until they become vested. An award will become
vested only if the vesting conditions set forth in the award agreement (as
determined by the Compensation Committee) are satisfied. The vesting
conditions may include performance of services for a specified period,
achievement of “performance objectives” (as enumerated in the 2006 Plan), or a
combination of both. The Compensation Committee also has authority to
provide for accelerated vesting, including upon the occurrence of an event such
as a change of control.
Transferability. In general, awards
under the 2006 Plan may not be assigned or transferred except by will or the
laws of descent and distribution. However, the Compensation Committee
may allow the transfer of non-qualified stock options to members of a
participant’s immediate family or to a trust, partnership, or corporation in
which the parties in interest are limited to the participant and members of the
participant’s immediate family.
Federal
Income Tax Consequences
The
material federal income tax consequences of the issuance and exercise of stock
options and other awards under the 2006 Plan, based on the current provisions of
the Code and regulations, are as follows. Changes to these laws could
alter the tax consequences described below. This summary assumes that
all awards granted under the 2006 Plan are exempt from or comply with, the rules
under Section 409A of the Code related to nonqualified deferred
compensation.
Stock
Options. The grant of a stock option will have no tax
consequences to the recipient or to ARIAD or its affiliates. In
general, upon the exercise of an incentive stock option, the employee will not
recognize income and the employer will not be entitled to a tax
deduction. However, the excess of the acquired shares’ fair market
value on the exercise date over the exercise price is included in the employee’s
income for purposes of the alternative minimum tax.
Upon the
exercise of a non-qualified stock option, the employee (or consultant or
director, as applicable) will generally recognize ordinary income equal to the
excess of the acquired shares’ fair market value on the exercise date over the
exercise price, and ARIAD (or the affiliate that granted the option) will
generally be entitled to a tax deduction in the same amount. If the
acquired shares are restricted stock (i.e., they are not
transferable and are subject to a substantial risk of forfeiture), the tax
consequences for restricted stock (described below) will apply.
If an
employee (or consultant or director) transfers non-qualified stock options to
members of his or her immediate family or to a trust, partnership, or
corporation (as described above), the transfer will not be a taxable
event. Upon the exercise of the non-qualified stock options (by the
family member, trust, partnership, or corporation), the employee (or consultant
or director) will recognize ordinary income.
Stock
Appreciation Rights. The grant of a stock appreciation right
will have no tax consequences to the recipient or to ARIAD or its
affiliates. Upon the exercise of a stock appreciation right, the
employee (or consultant or director, as applicable) will recognize ordinary
income equal to the received shares’ fair market value on the exercise date, and
ARIAD (or the affiliate that granted the option) will generally be entitled to a
tax deduction in the same amount.
Restricted Stock,
Restricted Stock Units, and Other Equity Awards. In general, the
grant of restricted stock, a restricted stock unit, or other equity awards will
have no tax consequences to the recipient or to ARIAD or its
affiliates. When the award is settled (or, in the case of restricted
stock, when the restrictions are lifted), the employee (or consultant or
director, as applicable) will recognize ordinary income equal to the excess of
(1) the applicable shares’ fair market value on the date the restrictions are
lifted over (2) the amount, if any, paid for the shares by the employee (or
consultant or director); ARIAD (or the affiliate that granted the award) will
generally be entitled to a tax deduction in the same amount. If the
award is settled in cash or other property, the employee (or consultant or
director) will recognize ordinary income equal to the net amount received, and
ARIAD (or the affiliate that granted the award) will generally be entitled to a
tax deduction in the same amount) subject to deduction limitations under Section
162(m) of the Code. The grantee of a restricted stock award may elect
to be taxed on the date of grant by filing a “Section 83(b) election” rather
than on the date when the restrictions are lifted.
Sale of
Shares. When an employee (or director or consultant) sells
shares received under any award other than an incentive stock option, the
employee (or director or consultant) will recognize capital gain or loss equal
to the difference between the sale proceeds and the employee’s (or director’s or
consultant’s) basis in the shares. In general, the basis in the
shares is the amount of ordinary income recognized upon receipt of the shares
(or upon the lifting of restrictions, in the case of restricted stock) plus any
amount paid for the shares.
When an
employee disposes of incentive stock option shares, the difference between the
amount realized by the employee and the exercise price will generally constitute
a capital gain or loss, as the case may be. However, if the employee
does not hold the incentive stock option shares for more than one year after
exercising the incentive stock option and for more than two years after the
grant of the incentive stock option, then: (1) the excess of the incentive stock
option shares’ fair market value on the exercise date over the exercise price
will generally be treated as ordinary income for the employee; (2) the
difference between the sale proceeds and the incentive stock option shares’ fair
market value on the exercise date will be treated as a capital gain or loss for
the employee; and (3) the employer will generally be entitled to a tax deduction
equal to the amount of ordinary income recognized by the employee.
Deduction
Limits. In general, under Section 162(m) of the Code, a
corporation is denied a tax deduction for any compensation paid to its chief
executive officer or to any of its four most highly compensated officers (other
than the chief executive officer) to the extent that the compensation paid to
the officer exceeds $1,000,000 in any year. “Performance-based
compensation” is not subject to this deduction limit. The 2006 Plan
permits the grant of awards that qualify as performance-based compensation—such
as restricted stock and restricted stock units that are conditioned on
achievement of one or more performance objectives, and stock options and stock
appreciation rights—and of awards that do not so qualify—such as restricted
stock and restricted stock units that are not conditioned on achievement of
performance objectives.
The
possible performance objectives and other terms of awards of performance-based
restricted stock or restricted stock units are subject to re-approval by our
stockholders at a future stockholder meeting at or prior to the annual
stockholder meeting in 2011 in order for future grants of such awards to qualify
as “performance-based compensation.” If the performance objectives
and other terms are not re-approved at or prior to such time, any restricted
stock or restricted stock units intended to be considered “performance-based
compensation” after that meeting will not be qualified under Section 162(m) of
the Code, unless the vesting of such awards is based upon stockholder approval
of the performance objectives and the other material terms of the
awards.
Awards Not
Nonqualified Deferred Compensation. Awards under the 2006 Plan
are not intended to be nonqualified deferred compensation. The
Compensation Committee is required to administer, interpret,
and
construe the 2006 Plan in a manner that is intended to not give rise to tax
liability under Section 409A of the Code.
Plan
Benefits
All awards
to employees, directors and consultants under the 2006 Plan are made at the
discretion of the Compensation Committee or its designee. Therefore,
except as set forth in the table below for grants already made under the 2006
Plan, the future benefits and amounts that will be received or allocated under
the 2006 Plan are not determinable at this time. The following table sets forth
the number of shares of common stock underlying outstanding stock options and
restricted stock units under the 2006 Plan for each person or group named in the
table as of April 24, 2009:
Name and
Position
|
Number
of Shares
of
Common Stock
Underlying
Outstanding
Awards
|
|
|
|
Harvey
J. Berger, M.D., Chairman and Chief Executive
Officer and
nominee for Class 3 director
|
529,000
|
|
Timothy
P. Clackson, Ph.D., Senior Vice President, Chief
Scientific Officer
|
243,000
|
|
Pierre
F. Dodion, M.D., Senior
Vice President, Chief Medical Officer
|
184,000
|
|
Edward
M. Fitzgerald, Senior
Vice President, Chief Financial Officer and
Treasurer
|
230,000
|
|
John
D. Iuliucci, Ph.D., Senior Vice President,
Development
|
191,000
|
|
Laurie
A. Allen, Esq., Former
Senior Vice President, Chief Legal Officer and
Secretary
|
---
|
|
Wayne
Wilson, nominee
for Class 3
Director
|
25,000
|
|
All
current executive officers as a group
|
1,882,000
|
|
All
current directors who are not executive officers as a group
|
140,000
|
|
All
employees as a group (including officers who are not executive officers)
|
3,007,317
|
|
On April
24, 2009, the closing market price per share of our common stock was $1.52 as
reported by NASDAQ.
The
Board of Directors recommends that you vote “FOR” the approval of the amendment
to the ARIAD Pharmaceuticals, Inc. 2006 Long-Term Incentive Plan, and proxies
solicited by the Board of Directors will be voted in favor thereof, unless a
stockholder has indicated otherwise on the proxy.
Approval
of an Amendment to the Amended and Restated ARIAD Pharmaceuticals, Inc. 1997
Employee Stock Purchase Plan to Increase the Number of Shares of Common Stock
Available for Issuance under the Plan
The
Amended and Restated ARIAD Pharmaceuticals, Inc. 1997 Employee Stock Purchase
Plan (the “ESPP”) provides our eligible employees and those of our participating
subsidiaries with the opportunity to purchase shares of our common stock through
payroll deductions. Our Board of Directors has determined that in
order to continue to allow participation in the ESPP as a means to attract
and retain talented employees, the number of shares available for issuance
under the ESPP should be increased. Therefore, on April 24, 2009, the
Compensation Committee recommended and our Board of Directors approved amending
the ESPP to reserve an additional 750,000 shares of common stock for issuance
under the ESPP, effective on July 1, 2009, subject to approval of our
stockholders at the Annual Meeting.
The ESPP
was established in 1997 and initially had 500,000 shares authorized for
issuance. At the 2008 Annual Meeting, the stockholders of the Company
authorized an additional 500,000 shares for issuance under the
ESPP. As of April 24, 2009, we had issued and employees had purchased
730,890 shares of the total of 1,000,000 shares authorized under the
ESPP, of which 286,050 were issued in the period from the 2008 Annual
Meeting to the current date, and 269,110 shares remain available for future
issuance. Due to an increase in the number of employees participating
in the ESPP and a decrease in the market price of our common stock over the past
year, we have issued shares of our common stock under the ESPP at a faster rate
than we have historically and than we expected at this time last year, since, as
described below, participants in the ESPP elect to purchase shares valued at a
set percentage of their salary rather than a set number of
shares. Accordingly, without this amendment, there will be
insufficient authorized shares for future issuances. Assuming
approval of the proposed amendment to the ESPP by the stockholders, the
number of shares authorized for issuance under the ESPP will increase by 750,000
shares to a total of 1,750,000 shares and the number of shares available for
future issuance under the plan will increase from 269,110 to
1,019,110.
Description
of the ESPP
The
following is a summary of the material features of the ESPP. The
following summary does not purport to be complete and is qualified in its
entirety by reference to the terms of the ESPP, which is attached to this proxy
statement as Appendix B.
Purpose. The purpose of the ESPP
is to provide our eligible employees with the opportunity to purchase shares of
our common stock through payroll deductions.
Eligibility to
Participate. Employees of ARIAD who
have been employed for three months are eligible to elect to participate in the
ESPP. Employees who would own stock and/or hold outstanding options
to purchase stock representing five percent or more of our voting stock or the
voting stock of any of our subsidiaries and employees whose customary employment
is for not more than five months in any calendar year and for at least twenty
hours a week are not eligible to participate in the ESPP. As of April
24, 2009, approximately 150 employees were eligible to participate and
approximately 50 employees were participating in the ESPP.
Shares Subject to the
ESPP. Currently, the maximum number of shares of common stock
that are available for issuance under the ESPP is 1,000,000 shares, of which
730,890 shares have already been issued. Shares sold under the ESPP
may be authorized but unissued shares or treasury shares or may come from any
other proper source. In the event of any stock split or other change in our
capital structure, appropriate adjustments will be made in the number, kind and
purchase price of the shares available for purchase under the
ESPP. If shareholders approve the proposed amendment to the ESPP, an
additional 750,000
shares of
common stock will be available for issuance under the ESPP. The
aggregate total number of shares available for issuance under the ESPP as of
July 1, 2009 will be these 750,000 shares plus any shares remaining available
for grant as of that date from the 1,000,000 shares authorized to date under the
ESPP, subject to adjustment. As of April 24, 2009, the closing
price of our common stock as reported on NASDAQ was $1.52.
Administration, Amendment and
Termination: Plan Term. Subject to the terms of
the ESPP, our Board of Directors supervises and administers the ESPP and has the
power to interpret and determine questions arising in connection with the
ESPP. Our Board of Directors, in its sole discretion, may amend or
terminate the ESPP at any time and for any reason, except that no amendment may
adversely affect the rights of any participant with respect to any then
outstanding option to purchase shares under the ESPP. Unless sooner
terminated, the ESPP will terminate on March 10, 2017.
Enrollment and
Contributions. Eligible employees voluntarily elect whether or
not to enroll in the ESPP and may cancel participation at any time (subject to
ESPP rules). Each purchase period under the ESPP lasts for three
months. Employees contribute to the ESPP through payroll
deductions. Participating employees generally may contribute up to
10% of their eligible compensation through after-tax payroll
deductions. After the purchase period begins, employees are only
allowed to decrease their current contribution percentage on one occasion,
subject to ESPP rules.
Purchase of
Shares. On the last business day of each three-month purchase
period, each participating employee’s payroll deductions are used to purchase
shares of common stock for the employee. The price of the shares
purchased will be the lesser of 85% of the closing price, or the closing bid if
no sales were reported, of a share of common stock as reported in the Wall
Street Journal (or, if not reported there, in such other source that the Board
of Directors deems reliable (i) on the first business day of the applicable
purchase period or (ii) on the last day of the applicable purchase
period. During any single year, no employee may purchase under the
ESPP shares of common stock having a fair market value of more than
$25,000.
Termination of
Participation. Participation in the ESPP terminates when a
participating employee’s employment with ARIAD ceases for any reason, the
employee withdraws from the ESPP, or the ESPP is terminated or amended such that
the employee no longer is eligible to participate.
Federal
Income Tax Consequences
The ESPP
is intended to qualify as an employee stock purchase plan under Section 423 of
the Internal Revenue Code of 1986, as amended. As a result, the
material U.S. federal income tax consequences of the purchase of shares of
common stock under the ESPP are as follows:
|
An
employee will have no taxable income when the shares of common stock are
purchased for him or her under the ESPP. The employee generally
will be taxed when he or she sells or otherwise disposes of the
stock. The employee’s income tax treatment depends on whether
shares are sold within 24 months after the first day of the three-month
purchase period in which the shares were purchased (the “24-month holding
period”).
|
|
If
an employee sells or otherwise disposes of the shares within the 24-month
holding period, the employee will recognize ordinary income at the time of
disposition in an amount equal to the excess of the fair market value of
the shares on the date of purchase over the purchase price and ARIAD will
be entitled to a tax deduction for the same
amount.
|
|
If
an employee sells or otherwise disposes of the shares after holding the
shares for the 24-month holding period, the employee will recognize
ordinary income at the time in an amount equal to the lesser of (i) the
excess of the fair market value of the shares on the first day of the
purchase period over the purchase price, or (ii) the excess of the fair
market value of the shares at the time of disposition over the purchase
price. ARIAD will not be entitled to any tax deduction with
respect to shares purchased under the ESPP if the shares are held for the
24-month holding period.
|
|
The
employee may also recognize capital gain or loss at the time of
disposition of the shares, either short-term or long-term, depending on
the holding period for the shares.
|
New
Plan Benefits
Because
benefits under the ESPP will depend on employees’ elections to participate and
to purchase shares under the ESPP at various future dates, it is not possible to
determine the benefits that will be received by executive officers and other
employees. Non-employee directors are not eligible to participate in
the ESPP. The maximum value of shares that may be purchased in any
calendar year by any participant in the ESPP is $25,000.
The
Board of Directors recommends that the stockholders vote “FOR” the proposal to
amend the ESPP to increase the number of shares of common stock available for
issuance under the ESPP, and proxies solicited by the Board of Directors will be
voted in favor thereof, unless a stockholder has indicated otherwise on the
proxy.
Ratification
of Selection of Independent Registered Public Accounting Firm
The Audit
Committee of our Board of Directors has selected Deloitte & Touche LLP to be
our independent registered public accounting firm for the year ending December
31, 2009. Our Board of Directors has ratified this
selection. Deloitte & Touche LLP has served as our independent
registered public accounting firm since 1991. Deloitte & Touche
LLP has advised us that it does not have any direct or indirect financial
interest in ARIAD. Representatives of Deloitte & Touche LLP are
expected to attend the Annual Meeting and will be given the opportunity to make
a statement if they so choose. They will also be available to respond
to appropriate questions raised by those in attendance at the Annual
Meeting.
Before it
selected Deloitte & Touche LLP as our independent registered public
accounting firm, our Audit Committee carefully considered the qualifications of
Deloitte & Touche LLP, including the firm’s performance in prior years, the
competence of personnel assigned to our engagement and its reputation for
integrity, quality, and competence in the fields of accounting and
auditing. Our Audit Committee also considered whether Deloitte &
Touche LLP’s provision of non-audit services to ARIAD is compatible with that
firm’s independence.
Stockholders
will be asked at the Annual Meeting to ratify the selection of Deloitte &
Touche LLP. If the stockholders ratify the selection of Deloitte
& Touche LLP, our Audit Committee may still, in its discretion, decide to
appoint a different independent registered public accounting firm at any time
during the year 2009, if it concludes that such a change would be in the best
interests of ARIAD and our stockholders. If the stockholders fail to
ratify the selection, our Audit Committee will reconsider, but not necessarily
rescind the retention of Deloitte & Touche LLP.
Audit
and Non-Audit Fees
For the
fiscal years ending December 31, 2008 and 2007, we paid Deloitte & Touche
LLP the following fees:
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
Audit
Fees
|
|
$ |
338,550 |
|
|
$ |
259,878 |
|
Audit-Related
Fees
|
|
|
24,000 |
|
|
|
23,000 |
|
Tax
Fees
|
|
|
390,829 |
|
|
|
45,760 |
|
All
Other Fees
|
|
|
56,755 |
|
|
|
7,202 |
|
Total
|
|
$ |
810,134 |
|
|
$ |
335,840 |
|
Audit Fees
include fees for audit of our annual financial statements, the review of our
quarterly financial statements included in reports on Form 10-Q, the review of
SEC filings, including Deloitte & Touche’s consents, and the audit of our
system of internal control over financial reporting as well as the audit of
management’s assessment of the effectiveness thereof. Audit-Related
Fees include fees for the audits of employee benefit plan financial
statements. Tax Fees include fees for preparation of tax returns as
well as tax planning and advice. All Other Fees include fees for
consultation regarding accounting and financial reporting matters during the
year. All of the services set forth above were approved by our Audit
Committee.
Policy
on Audit Committee Pre-Approval of Audit and Permissible Non-audit Services of
Independent Auditors
Consistent
with SEC policies regarding auditor independence, our Audit Committee has
responsibility for appointing, setting compensation and overseeing the work of
the independent registered public accounting firm. In recognition of
this responsibility, our Audit Committee has established a policy to pre-approve
all audit and permissible non-audit services provided by the independent
registered public accounting firm.
On a
quarterly basis, management submits a report to our Audit Committee for their
approval, outlining the services planned or anticipated to be rendered by the
independent registered public accounting firm, and the estimated fees for such
services, within the following two calendar quarters. The services
are outlined according to the four categories of services defined above, (i.e. Audit, Audit-Related,
Tax and All Other). Actual fees incurred relative to estimated fees
are reported to our Audit Committee each quarter.
To ensure
prompt consideration of unexpected services, our Audit Committee has delegated
authority to the Chair of our Audit Committee to pre-approve services to be
rendered. Any such actions taken by the Chair must be reported to our
Audit Committee at its next scheduled meeting.
A majority
of the votes cast at the Annual Meeting will be required to ratify the selection
of Deloitte & Touche LLP as our independent registered public accounting
firm for 2009.
The
Board of Directors recommends that the stockholders vote “FOR” ratification of
the selection of Deloitte & Touche LLP as our independent registered public
accounting firm, and proxies solicited by the Board of Directors will be voted
in favor thereof, unless a stockholder has indicated otherwise on the
proxy.
FOR
DIRECTOR FOR 2010 ANNUAL MEETING
In order
to be considered for inclusion in proxy materials for the Annual Meeting to be
held in 2010, stockholder proposals must be received by us on or before January
8, 2010. For stockholder proposals which are not to be included in
proxy materials for the Annual Meeting to be held in 2010, in order for a
stockholder to nominate a person or persons for election to the Board of
Directors or to properly bring other business before the 2010 Annual Meeting,
notice of such nomination or business proposal must be received not earlier than
February 19, 2010 and not later than March 21,
2010. Stockholder proposals must be received marked for the attention
of: Raymond T. Keane, Esq., Secretary, ARIAD Pharmaceuticals, Inc.,
26 Landsdowne Street, Cambridge, Massachusetts 02139-4234.
This proxy
statement and the 2008 Annual Report are available at www.proxyvote.com. We
also offer our stockholders the opportunity to receive stockholder
communications electronically. By signing up for electronic delivery
of documents such as the annual report and the proxy statement, you can receive
stockholder communications as soon as they are available without waiting for
them to arrive in the mail, and submit your stockholder votes on
line. You can also reduce the number of bulky documents in your
personal files, eliminate duplicate mailings and help reduce our printing and
mailing costs. If you have any questions about electronic delivery,
please call our investor relations office at 617-494-0400, extension
2208.
In
December 2000, the Securities and Exchange Commission adopted a rule concerning
the delivery of annual disclosure documents. The rule allows us or
your broker to send a single set of our annual report and proxy statement to any
household at which two or more of our stockholders reside, if we or your broker
believe that the stockholders are members of the same family. This
practice, referred to as “householding,” benefits both you and
ARIAD. It reduces the volume of duplicate information received at
your household and helps to reduce our expenses. The rule applies to
our annual reports, proxy statements and information statements. Once
you receive notice from your broker or from us that communications to your
address will be “householded,” the practice will continue until you are
otherwise notified or until you revoke your consent to the
practice. Each shareholder will continue to receive a separate proxy
card or voting instruction card.
If your
household received a single set of disclosure documents this year, but you would
prefer to receive your own copy, please contact our transfer agent,
Computershare Trust Company, N.A., by calling its toll free number, (877)
282-1168.
If you do
not wish to participate in “householding” and would like to receive your own set
of our annual disclosure documents in future years, follow the instructions
described below. Conversely, if you share an address with another
ARIAD shareholder and together both of you would like to receive only a single
set of our annual disclosure statements, follow these instructions:
|
If
your ARIAD shares are registered in your own name, please contact our
transfer agent, Computershare Trust Company, N.A. and inform them of your
request by calling them at (877) 282-1168 or writing them at P.O. Box
43078, Providence,
RI 02940-3078.
|
|
If a
broker or other nominee holds your ARIAD shares, please contact the broker
or other nominee directly and inform them of your request. Be
sure to include your name, the name of your brokerage firm and your
account number.
|
The Board
of Directors, at the time of the preparation of this proxy statement, knows of
no business to come before the Annual Meeting other than that referred to
herein. If any other business should come before the Annual Meeting,
the persons named in the enclosed proxy will have discretionary authority to
vote all proxies received and not thereafter revoked in accordance with their
best judgment.
By Order of the Board of
Directors,
Raymond T. Keane, Esq.
Secretary
April 29,
2009
ARIAD
Pharmaceuticals, Inc.
2006
Long-Term Incentive Plan
(as
amended on April 3, 2009)
Article
1
Background
and Purpose
1.1.
|
Background.
This 2006 Long-Term Incentive Plan (the “Plan”) permits the grant of
Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation
Rights, Restricted Stock, Restricted Stock Units, and other equity-based
awards.
|
1.2.
|
Purpose. The
purposes of the Plan are (a) to attract, reward and retain highly
competent persons as Employees, Directors, and Consultants of the Company;
(b) to provide additional incentives to such Employees, Directors, and
Consultants by aligning their interests with those of the Company’s
shareholders; and (c) to promote the success of the business of the
Company.
|
1.3
|
Eligibility.
Service Providers who are Employees, Consultants determined by the
Committee to be significantly responsible for the success and future
growth and profitability of the Company, or Directors are eligible to be
granted Awards under the Plan. However, Incentive Stock Options may be
granted only to Employees.
|
1.4.
|
Definitions.
Capitalized terms used in the Plan and not otherwise defined herein shall
have the meanings assigned to such terms in the attached
Appendix.
|
2.1.
|
Shares Subject to the
Plan.
|
|
(a)
|
Share Reserve. Subject
to adjustment under Section 2.3 of the Plan, Awards may be made under the
Plan for up to 11,500,000 Shares plus the
number of Shares previously authorized for issuance under the Company’s
2001 Stock Plan (i) that are not subject to outstanding awards on the date
of the 2006 annual meeting of Company’ stockholders; or (ii) that become
available for future award grants as a result of the subsequent
forfeiture, lapse or expiration of awards granted pursuant to the 2001
Plan that were outstanding as of the date of the 2006 annual meeting of
the Company’s stockholders. All of the available Shares may,
but need not, be issued pursuant to the exercise of Incentive Stock
Options. At all times the Company will reserve and keep available a
sufficient number of Shares to satisfy the requirements of all outstanding
Awards made under the Plan and all other outstanding but unvested Awards
made under the Plan that are to be settled in
Shares.
|
|
(b)
|
Shares Counted Against
Limitation. If an Award is exercised, in whole or in part, by
tender or attestation of Shares under Section 5.4(b), or if the Company’s
tax withholding obligation is satisfied by withholding Shares under
Section 10.7(b), the number of Shares deemed to have been issued under the
Plan (for purposes of the limitation set forth in this Section 2.1) shall
be the number of Shares that were subject to the Award or portion thereof
so exercised, and not the net number of Shares actually issued upon such
exercise.
|
|
(c)
|
Lapsed Awards. If an Award:
(i) expires; (ii) is terminated, surrendered, or canceled without having
been exercised in full; or (iii) is otherwise forfeited in whole or in
part (including as a result of Shares constituting or subject to an Award
being repurchased by the
Company
|
|
|
pursuant
to a contractual repurchase right), then the unissued Shares that were
subject to such Award and/or such surrendered, canceled, or forfeited
Shares (as the case may be) shall become available for future grant or
sale under the Plan (unless the Plan has terminated), subject however, in
the case of Incentive Stock Options, to any limitations under the
Code.
|
|
(d)
|
Substitute Awards. The
Committee may grant Awards under the Plan in substitution for stock and
stock based awards held by employees, directors, consultants or advisors
of another company (an “Acquired
Company”) in connection with a merger, consolidation or similar
transaction involving such Acquired Company with the Company or an
Affiliate or the acquisition by the Company or an Affiliate of property or
stock of the Acquired Company. The Committee may direct that the
substitute Awards be granted on such terms and conditions as the Committee
considers appropriate in the circumstances. Any substitute Awards granted
under the Plan shall not count against the share limitations set forth in
Section 2.1(a) and 2.2.
|
2.2.
|
Individual Share
Limit. In any Tax Year, no Service Provider shall be granted Awards
with respect to more than 500,000 Shares. The limit described in this
Section 2.2 shall be construed and applied consistently with Section
162(m) of the Code, except that this limit shall apply to all Service
Providers.
|
|
(a)
|
Awards not Settled in
Shares. If an Award is to be settled in cash or any medium other
than Shares, the number of Shares on which the Award is based shall count
toward the individual share limit set forth in this Section
2.2.
|
|
(b)
|
Canceled Awards. Any
Awards granted to a Participant that are canceled shall continue to count
toward the individual share limit applicable to that Participant set forth
in this Section 2.2.
|
2.3.
|
Adjustments.
The following provisions will apply if any extraordinary dividend or other
extraordinary distribution occurs in respect of the Shares (whether in the
form of cash, Shares, other securities, or other property), or any
reclassification, recapitalization, stock split (including a stock split
in the form of a stock dividend), reverse stock split, reorganization,
merger, combination, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Shares or other securities of the Company or
any similar, unusual or extraordinary corporate transaction (or event in
respect of the Shares) or a sale of all or substantially all the assets of
the Company occurs. The Committee will, in such manner and to such extent
(if any) as it deems appropriate and
equitable:
|
|
(a)
|
proportionately
adjust any or all of (i) the number and type of Shares (or other
securities) that thereafter may be made the subject of Awards (including
the specific maximums and numbers of shares set forth elsewhere in the
Plan), (ii) the number, amount and type of Shares (or other securities or
property) subject to any or all outstanding Awards, (iii) the grant,
purchase, or exercise price of any or all outstanding Awards, (iv) the
securities, cash or other property deliverable upon exercise of any
outstanding Awards or (v) the performance standards appropriate to any
outstanding Awards (subject to the limitations for performance based
compensation under Section 162(m) of the Code),
or
|
|
(b)
|
in
the case of an extraordinary dividend or other distribution,
recapitalization, reclassification, merger, reorganization, consolidation,
combination, sale of assets, split up, exchange, or spin off, make
provision for (i) a cash payment, (ii) the substitution or exchange of any
or all outstanding Awards, (iii) the cash, securities or property
deliverable
|
|
|
to
the holder of any or all outstanding Awards based upon the distribution or
consideration payable with respect to Shares upon or in respect of such
event, (iv) all vested Options and Stock Appreciation Rights to be
exercised by a date certain in connection with such event at which time
these stock rights (whether or not then vested) shall terminate, provided
Participants are provided advance written notice or (v) a combination of
the foregoing, which may vary among Participants.
The
Committee shall value Awards as it deems reasonable in the event of a cash
settlement and, in the case of Options, Stock Appreciation Rights or
similar stock rights, may base such settlement solely upon the excess if
any of the per Share amount payable upon or in respect of such event over
the exercise price of the Award. The Committee’s determination with
respect to any adjustments under this Section 2.3 shall be final and
conclusive. The Committee may act under this Section 2.3 at any time to
the extent that the Committee deems such action necessary to permit a
Participant to realize the benefits intended to be conveyed with respect
to the underlying Shares in the same manner as is or will be available to
stockholders generally. In the case of any stock split or reverse stock
split, if no action is taken by the Committee, the proportionate
adjustments contemplated by Section 2.3(a) above shall nevertheless be
made.
|
3.1.
|
Administrator.
The Plan shall be administered by the
Committee.
|
3.2.
|
Powers of the
Committee. Subject to the provisions of the Plan, Applicable Law,
and the specific duties delegated by the Board to the Committee, the
Committee shall have the authority in its discretion: (a) to determine the
Fair Market Value; (b) to select the Service Providers to whom Awards may
be granted hereunder and the types of Awards to be granted to each; (c) to
determine the number of Shares to be covered by each Award granted
hereunder; (d)to determine whether, to what extent, and under what
circumstances an Award may be settled in cash, Shares, other securities,
other Awards, or other property; (e) to approve forms of Award Agreements;
(f) to determine, in a manner consistent with the terms of the Plan, the
terms and conditions of any Award granted hereunder, based on such factors
as the Committee, in its sole discretion, shall determine; (g) to construe
and interpret the terms of the Plan and Award Agreements; (h) to correct
any defect, supply any omission, or reconcile any inconsistency in the
Plan or any Award Agreement in the manner and to the extent it shall deem
desirable to carry out the purposes of the Plan; (i) to prescribe, amend,
and rescind rules and regulations relating to the Plan, including rules
and regulations relating to sub-plans established pursuant to Section 12.1
of the Plan; (j) to authorize withholding arrangements pursuant to Section
10.7(b) of the Plan; (k) to authorize any person to execute on behalf of
the Company any instrument required to effect the grant of an Award
previously granted by the Committee; (l) to accelerate the vesting of an
Award; and (m) to make all other determinations and take all other action
described in the Plan or as the Committee otherwise deems necessary or
advisable for administering the Plan and effectuating its
purposes.
|
3.3.
|
Compliance with
Applicable Law. The Committee shall administer, construe,
interpret, and exercise discretion under the Plan and each Award Agreement
in a manner that is consistent and in compliance with a reasonable, good
faith interpretation of all Applicable Laws, and that avoids (to the
extent practicable) the classification of any Award as “deferred
compensation” for purposes of Section 409A of the Code, as determined by
the Committee. Notwithstanding the foregoing, the failure to satisfy the
requirements of Section 409A or Section 162(m) with respect to the grant
of an Award under the Plan shall not affect the validity of the action of
the Committee otherwise duly authorized and acting in the
matter.
|
3.4.
|
Effect of Committee’s
Decision and Committee’s Liability. The Committee’s decisions, determinations and
interpretations shall be final and binding on all Participants and any
other holders of Awards. Neither the Committee nor any of its members
shall be liable for any act, omission, interpretation, construction, or
determination made in good faith in connection with the Plan or any Award
Agreement.
|
3.5.
|
Delegation to Chief
Executive Officer. To the extent permitted by Applicable Law, the
Committee may delegate to the Chief Executive Officer the powers: (a) to
designate Service Providers who are not Executive Officers as eligible to
participate in the Plan; and (b) to determine the amount and type of
Awards that may be granted to Service Providers who are not Executive
Officers.
|
3.6.
|
Awards may be Granted
Separately or Together. In the Committee’s discretion, Awards may
be granted alone, in addition to, or in tandem with any other Award or any
award granted under another plan of the Company or an Affiliate. Awards
granted in addition to or in tandem with other awards may be granted
either at the same time or at different
times.
|
|
Vesting
and Performance Objectives
|
4.1.
|
General. The
vesting schedule or Period of Restriction for any Award shall be specified
in the Award Agreement. The criteria for vesting and for removing
restrictions on any Award may include (i) performance of substantial
services for the Company for a specified period; (ii) achievement of one
or more Performance Objectives; or (iii) a combination of (i) and (ii), as
determined by the Committee.
|
4.2.
|
Period of Absence from
Providing Substantial Services. Except as provided under Section
4.5 below with respect to Disability, to the extent that vesting or
removal of restrictions is contingent on performance of substantial
services for a specified period, a leave of absence (whether paid or
unpaid) shall not count toward the required period of service unless the
Award Agreement specifically provides
otherwise.
|
4.3.
|
Performance
Objectives.
|
|
(a)
|
Possible Performance
Objectives. Any Performance Objective shall relate to the Service
Provider’s performance for the Company (or an Affiliate) or the Company’s
(or Affiliate’s) business activities or organizational goals, and shall be
sufficiently specific that a third party having knowledge of the relevant
facts could determine whether the Performance Objective is achieved. The
Performance Objectives with respect to any Award may be one or more of the
following General Financial and/or Operational Objectives, as established
by the Committee in its sole
discretion:
|
(i)
|
General Financial
Objectives:
|
·
|
Increasing
the Company’s net sales
|
·
|
Achieving
a target level of earnings (including gross earnings; earnings before
certain deductions, such as interest, taxes, depreciation, or
amortization; or earnings per Share)
|
·
|
Achieving
a target level of income (including net income or income before
consideration of certain factors, such as overhead) or a target level of
gross profits for the Company, an Affiliate, or a business
unit
|
·
|
Achieving
a target return on the Company’s (or an Affiliate’s) capital, assets, or
stockholders’ equity
|
·
|
Maintaining
or achieving a target level of appreciation in the price of the
Shares
|
·
|
Increasing
the Company’s (or an Affiliate’s) market share to a specified target
level
|
·
|
Achieving
or maintaining a Share price that meets or exceeds the performance of
specified stock market indices or other benchmarks over a specified
period
|
·
|
Achieving
a level of Share price, earnings, or income performance that meets or
exceeds performance in comparable areas of peer companies over a specified
period
|
·
|
Achieving
specified reductions in costs
|
·
|
Achieving
specified improvements in collection of outstanding accounts or specified
reductions in non-performing debts
|
·
|
Expanding
one or more products into one or more new markets
|
·
|
Acquiring
a prescribed number of new customers in a line of
business
|
·
|
Achieving
a prescribed level of productivity within a business
unit
|
·
|
Completing
specified projects within or below the applicable
budget
|
·
|
Completing
acquisitions of other businesses
|
·
|
Expanding
into other markets
|
·
|
Achieving
progress in research and development programs
|
·
|
Achieving
regulatory milestones related to development and approval of
products
|
|
(b)
|
Stockholder Approval of
Performance Objectives. The list of possible Performance Objectives
set forth in Section 4.3(a), above, and the other material terms of Awards
of Restricted Stock or Restricted Stock Units that are intended to qualify
as “performance-based compensation” under Section 162(m) of the Code,
shall be subject to reapproval by the Company’s stockholders at the first
stockholder meeting that occurs in 2011. No Award of Restricted Stock or
Restricted Stock Units that is intended to qualify as “performance-based
compensation” under Section 162(m) of the Code shall be made after that
meeting unless stockholders have reapproved the list of Performance
Objectives, or unless the vesting of the Award is made contingent on
stockholder approval of the Performance Objectives and other material
terms of such Awards.
|
|
(c)
|
Documentation of Performance
Objectives. With respect to any Award, the Performance Objectives
shall be set forth in writing no later than 90 days after commencement of
the period to which the Performance Objective(s) relate(s) (or, if sooner,
before 25% of such period has elapsed) and at a time when achievement of
the Performance Objectives is substantially uncertain. Such writing shall
also include the period for measuring achievement of the Performance
Objectives, which shall be no greater than five consecutive years, as
established by the Committee. Once established by the Committee, the
Performance Objective(s) may not be changed to accelerate the settlement
of an Award or to accelerate the lapse or removal of restrictions on
Restricted Stock that otherwise would be due upon the attainment of the
Performance Objective(s).
|
|
(d)
|
Committee Certification. Prior to settlement of any Award that is
contingent on achievement of one or more Performance Objectives, the
Committee shall certify in writing that the applicable Performance
Objective(s) and any other material terms of the Award were in
fact
|
|
|
satisfied.
For purposes of this Section 4.3(d), approved minutes of the Committee
shall be adequate written
certification.
|
|
(e)
|
Negative Discretion.
The Committee may reduce, but may not increase, the number of Shares
deliverable or the amount payable under any Award after the applicable
Performance Objectives are
satisfied.
|
4.5.
|
Effect of Termination
of Service for Death or Disability on Vesting. Except as provided
to the contrary in an Award Agreement, in the event that the Participant’s
Termination of Service is the result of death or Disability, a pro-rata
portion of the Award that would have vested had the Participant not died
or become Disabled, as applicable, as of the next following vesting date
shall vest, with such pro-rata number to be calculated using a fraction,
the numerator of which is the number of days the Participant remained a
Service Provider since the immediately preceding vesting date, and the
denominator of which is the total number of days between the immediately
preceding vesting date and the next following vesting
date.
|
5.1.
|
Terms of
Option. Subject to the provisions of the Plan, the type of Option,
term, exercise price, vesting schedule, and other conditions and
limitations applicable to each Option shall be as determined by the
Committee and shall be stated in the Award
Agreement.
|
|
(a)
|
Each
Option shall be designated in the Award Agreement as either an Incentive
Stock Option or a Non-Qualified
Option.
|
|
(b)
|
Neither
the Company nor the Committee shall have liability to a Participant or any
other party if an Option (or any part thereof) which is intended to be an
Incentive Stock Option does not qualify as an Incentive Stock Option. In
addition, the Committee may make an adjustment or substitution described
in Section 2.3 of the Plan that causes the Option to cease to qualify as
an Incentive Stock Option without the consent of the affected Participant
or any other party.
|
|
(a)
|
Maximum Term. No Option
shall have a term in excess of 10 years measured from the date the Option
is granted. In the case of any Incentive Stock Option granted to a 10%
Stockholder (as defined in Section 5.3(e), below), the term of such
Incentive Stock Option shall not exceed five years measured from the date
the Option is granted.
|
|
(b)
|
Minimum Exercise Price.
Subject to Section 2.3(b) of the Plan, the exercise price per share of an
Option shall not be less than 100% of the Fair Market Value per Share on
the date the Option is granted. In the case of any Incentive Stock Option
granted to a 10% Stockholder (as defined in Section 5.3(e), below),
subject to Section 2.3(b) of the Plan, the exercise price per share of
such Incentive Stock Option shall not be less than 110% of the Fair Market
Value per Share on the date the Option is
granted.
|
|
(c)
|
$100,000 Limit for Incentive
Stock Options. Notwithstanding an
Option’s designation, to the extent that Incentive Stock Options are
exercisable for the first time by the Participant during any calendar year
with respect to Shares whose aggregate Fair Market Value
exceeds
|
|
|
$100,000
(regardless of whether such Incentive Stock Options were granted under the
Plan, the 2001 Plan, or any other plan of the Company or any Affiliate),
such Options shall be treated as Non-Qualified Options. For purposes of
this Section 5.3(d), Fair Market Value shall be measured as of the date
the Option was granted and Incentive Stock Options shall be taken into
account in the order in which they were granted consistent with Applicable
Law.
|
|
(d)
|
10% Stockholder. For
purposes of this Section 5.3, a “10% Stockholder” is an individual who,
immediately before the date an Award is granted, owns (or is treated as
owning) stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company (or an Affiliate), determined under
Section 424(d) of the
Code.
|
5.4.
|
Form of
Consideration. The Committee shall determine the acceptable form of
consideration for exercising an Option, including the method of payment.
In the case of an Incentive Stock Option, the Committee shall determine
the acceptable form of consideration at the time of grant. To
the extent approved by the Committee, the consideration for exercise of an
Option may be paid in any one, or any combination, of the forms of
consideration set forth in subsections (a), (b), (c), and (d)
below.
|
|
(a)
|
Cash Equivalent.
Consideration may be paid by cash, check, or other cash equivalent
approved by the Committee.
|
|
(b)
|
Tender or Attestation of
Shares. Consideration may be paid by the tendering of other Shares
to the Company or the attestation to the ownership of the Shares that
otherwise would be tendered to the Company in exchange for the Company’s
reducing the number of Shares issuable upon the exercise of the Option.
Shares tendered or attested to in exchange for Shares issued under the
Plan must be held by the Service Provider for at least six months prior to
their tender or their attestation to the Company and may not be Shares of
Restricted Stock at the time they are tendered or attested to. The
Committee shall determine acceptable methods for tendering or attesting to
Shares to exercise an Option under the Plan and may impose such
limitations and prohibitions on the use of Shares to exercise Options as
it deems appropriate. For purposes of determining the amount of the Option
price satisfied by tendering or attesting to Shares, such Shares shall be
valued at their Fair Market Value on the date of tender or attestation, as
applicable.
|
|
(c)
|
Broker-Assisted Cashless
Exercise. Subject to the Committee’s approval, consideration may be
paid by the Participant’s (i) irrevocable instructions to the Company to
deliver the Shares issuable upon exercise of the Option promptly to a
broker (acceptable to the Company) for the Participant’s account, and (ii)
irrevocable instructions to the broker to sell Shares sufficient to pay
the exercise price and upon such sale to deliver the exercise price to the
Company. A Participant may use this form of exercise only if the exercise
would not subject the Participant to liability under Section 16(b) of the
Exchange Act or would be exempt pursuant to Rule 16b-3 promulgated under
the Exchange Act or any other exemption from such liability. The Company
shall deliver an acknowledgement to the broker upon receipt of
instructions to deliver the Shares, and the Company shall deliver the
Shares to such broker upon the settlement date. Upon receipt of the Shares
from the Company, the broker shall deliver to the Company cash sale
proceeds sufficient to cover the exercise price and any applicable
withholding taxes due. Shares acquired by a cashless exercise shall be
deemed to have a Fair Market Value on the Option exercise date equal to
the gross sales price at which the broker sold the Shares to pay the
exercise price.
|
|
(d)
|
Other Methods. Consideration
may be paid using such other methods of payment as the Committee, at its
discretion, deems appropriate from time to
time.
|
|
(a)
|
Procedure for Exercise.
Any Option granted hereunder shall be exercisable according to the terms
of the Plan and at such times and under such conditions as set forth in
the Award Agreement. An Option shall be deemed exercised when the
Committee receives: (i) written or electronic notice of exercise from the
person entitled to exercise the Option and (ii) full payment for the
Shares (in a form permitted under Section 5.4 of the Plan) with respect to
which the Option is
exercised.
|
|
(b)
|
Termination of Relationship as
a Service Provider. Except as otherwise provided in the Award
Agreement, in the event of Termination of Service before exercise of an
Option, the following rules shall
apply:
|
|
(i)
|
If
the Participant’s Termination of Service is for Cause, no portion of the
Option may be exercised, and the Option will immediately expire upon the
Termination of Service;
|
|
(ii)
|
An
Option may be exercised after the Participant’s Termination of Service
only to the extent that the Option was vested as of the Termination of
Service;
|
|
(iii)
|
An
Option may not be exercised after the expiration of the term of such
Option as set forth in the Award
Agreement;
|
|
(iv)
|
Unless
a Participant’s Termination of Service is the result of the Participant’s
death or Disability, the Participant may not exercise the vested portion
of an Option more than three months after such Termination of
Service;
|
|
(v)
|
If a
Participant’s Termination of Service is the result of the Participant’s
death or Disability, the Participant may exercise the vested portion of an
Option up to 12 months after Termination of Service;
and
|
|
(vi)
|
After
the Participant’s death, his Beneficiary may exercise an Option only to
the extent that the deceased Participant was entitled to exercise such
Incentive Stock Option as of the date of his
death.
|
|
|
If
the Committee determines, subsequent to a Participant’s Termination of
Service but before exercise of an Option, that either before or after the
Participant’s Termination of Service the Participant engaged in conduct
that constitutes “Cause,” then the Participant’s right to exercise any
Option is forfeited
immediately.
|
|
(c)
|
Rights as a Stockholder. Shares subject to an Option shall be deemed
issued, and the Participant shall be deemed the record holder of such
Shares, on the Option exercise date. Until such Option exercise date, no
right to vote or receive dividends or any other rights as a stockholder
shall exist with respect to the Shares subject to the Option. In the event
that the Company effects a split of the Shares by means of a stock
dividend and the exercise price of, and number of Shares subject to, an
Option are adjusted as of the date of distribution of the dividend (rather
than as of the record date for such dividend), then a Participant who
exercises such Option between the record date and the distribution date
for such stock dividend shall be entitled to receive, on the distribution
date, the stock dividend
with
|
|
|
respect
to the Shares subject to the Option. No other adjustment shall be made for
a dividend or other right for which the record date is prior to the date
the Shares are issued.
|
|
|
Notice of Disqualifying
Disposition. If an Option is
designated as an Incentive Stock Option, the Participant must give prompt
notice to the Company of any disposition or other transfer of any Shares
acquired under the Award Agreement if such disposition or transfer is made
(a) within two years from the date of grant with respect to such Shares or
(b) within one year after the transfer of such Shares to the Participant.
The notice must specify the date of disposition or other transfer and the
amount realized, in cash, other property, assumption of indebtedness or
other consideration, by the Participant in such disposition or other
transfer.
|
5.6.
|
Repurchase
Rights. The Committee shall have the discretion to grant Options
which are exercisable for unvested Shares. If the Participant ceases to be
a Service Provider while holding such unvested Shares, the Company shall
have the right to repurchase any or all of those unvested Shares at a
price per share equal to the lower of (i) the exercise price paid per
Share, or (ii) the Fair Market Value per Share at the time of repurchase.
The terms upon which such repurchase right shall be exercisable by the
Committee (including the period and procedure for exercise and the
appropriate vesting schedule for the purchased Shares) shall be
established by the Committee and set forth in the document evidencing such
repurchase
right.
|
|
Stock
Appreciation Rights
|
6.1.
|
Terms of Stock
Appreciation Right. The term, base amount, vesting schedule, and
other conditions and limitations applicable to each Stock Appreciation
Right shall be as determined by the Committee and shall be stated in the
Award Agreement. Except as
otherwise provided by the Committee, all Awards of Stock Appreciation
Rights shall be settled in Shares issuable upon the exercise of the Stock
Appreciation Right.
|
6.2.
|
Exercise of Stock
Appreciation Right.
|
|
(a)
|
Procedure for Exercise.
Any Stock Appreciation Right granted hereunder shall be exercisable
according to the terms of the Plan and at such times and under such
conditions as set forth in the Award Agreement. A Stock Appreciation Right
shall be deemed exercised when the Committee receives written or
electronic notice of exercise (in accordance with the Award Agreement)
from the person entitled to exercise the Stock Appreciation
Right.
|
|
(b)
|
Termination of Relationship as
a Service Provider. Following a Participant’s Termination of
Service, the Participant (or the Participant’s Beneficiary, in the case of
Termination of Service due to death) may exercise his or her Stock
Appreciation Right within such period of time as is specified in the Award
Agreement to the extent that the Stock Appreciation Right is vested as of
the Termination of Service. In the absence of a specified time in the
Award Agreement, the Stock Appreciation Right shall remain exercisable for
three months following the Participant’s Termination of Service for any
reason other than Disability or death, and for 12 months after the
Participant’s Termination of Service on account of Disability or death.
However, if the Participant’s Termination of Service is for Cause, no
portion of the Stock Appreciation Right may be exercised, and the Stock
Appreciation Right will immediately expire upon the Termination of
Service. If the Committee determines, subsequent to a Participant’s
Termination of Service but before exercise of a Stock Appreciation Right,
that either before or after the Participant’s Termination of Service that
the Participant engaged in conduct that constitutes “Cause,” then the
Participant’s right to exercise any Stock Appreciation Right is forfeited
immediately.
|
|
(c)
|
Rights as a
Stockholder. Shares subject to a Stock Appreciation Right shall be
deemed issued, and the Participant shall be deemed the record holder of
such Shares, on the date the Stock Appreciation Right is exercised. Until
such date, no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the Shares subject to the Stock
Appreciation Right. If the Company effects a split of the Shares by means
of a stock dividend and the exercise price of, and number of Shares
subject to, a Stock Appreciation Right are adjusted as of the date of
distribution of the dividend (rather than as of the record date for such
dividend), then a Participant who exercises such Stock Appreciation Right
between the record date and the distribution date for such stock dividend
shall be entitled to receive, on the distribution date, the stock dividend
with respect to the Shares subject to the Stock Appreciation Right. No
other adjustment shall be made for a dividend or other right for which the
record date is prior to the date the Shares are
issued.
|
7.1.
|
Terms of Restricted
Stock. Subject to the provisions of the Plan, the Period of
Restriction, the number of Shares granted, and other conditions and
limitations applicable to each Award of Restricted Stock shall be as
determined by the Committee and shall be stated in the Award Agreement.
Unless the Committee determines otherwise, Shares of Restricted Stock
shall be held by the Company as escrow agent until the restrictions on
such Shares have lapsed.
|
7.2.
|
Transferability.
Except as provided in this Article 7, Shares of Restricted Stock may not
be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated until the end of the applicable Period of
Restriction.
|
7.3.
|
Other
Restrictions. The Committee, in its sole discretion, may impose
such other restrictions on Shares of Restricted Stock as it may deem
advisable or appropriate.
|
7.4.
|
Removal of
Restrictions. Except as otherwise provided in this Article 7, and
subject to Section 10.5 of the Plan, Shares of Restricted Stock covered by
an Award of Restricted Stock made under the Plan shall be released from
escrow, and shall become fully transferable, as soon as practicable after
the Period of Restriction ends, and in any event no later than 2½ months
after the end of the Tax Year in which the Period of Restriction
ends.
|
7.5.
|
Voting Rights.
During the Period of Restriction, Service Providers holding Shares of
Restricted Stock granted hereunder may exercise full voting rights with
respect to those Shares, unless otherwise provided in the Award
Agreement.
|
7.6.
|
Dividends and Other
Distributions. During the Period of Restriction, Service Providers
holding Shares of Restricted Stock shall be entitled to receive all
dividends and other distributions paid with respect to such Shares unless
otherwise provided in the Award
Agreement.
|
|
(a)
|
If
any such dividends or distributions are paid in Shares, the Shares shall
be subject to the same restrictions (and shall therefore be forfeitable to
the same extent) as the Shares of Restricted Stock with respect to which
they were paid.
|
|
(b)
|
If
any such dividends or distributions are paid in cash, the Award Agreement
may specify that the cash payments shall be subject to the same
restrictions as the related Restricted Stock, in which case they shall be
accumulated during the Period of Restriction and paid or forfeited when
the related Shares of Restricted Stock vest or are forfeited.
Alternatively, the Award Agreement may specify that the dividend
equivalents or other payments shall be unrestricted, in which case they
shall be paid as soon as practicable after the dividend or distribution
date. In no event shall any cash dividend or distribution be paid later
than 2½ months after the Tax Year in which the dividend or distribution
becomes non-forfeitable.
|
7.7.
|
Right of Repurchase of
Restricted Stock. If, with respect to any Award of Restricted
Stock, (a) a Participant’s Termination of Service occurs before the end of
the Period of Restriction, (b) any Performance Objectives are not achieved
by the end of the period for measuring such Performance Objectives or (c)
the Participant has engaged in conduct either before or after Termination
of Service that constitutes Cause, then the Company shall have the right
to repurchase forfeitable Shares of Restricted Stock from the Participant
at their original issuance price (or to require forfeiture of such Shares
if issued at no cost).
|
8.1.
|
Terms of Restricted
Stock Units. Subject to the provisions of the Plan, the Period of
Restriction, number of underlying Shares, and other conditions and
limitations applicable to each Award of Restricted Stock Units shall be as
determined by the Committee and shall be stated in the Award
Agreement.
|
8.2.
|
Settlement of
Restricted Stock Units. Subject to Section 10.5 of the Plan, the
number of Shares specified in the Award Agreement, or cash equal to the
Fair Market Value of the underlying Shares specified in the Award
Agreement, shall be delivered to the Participant as soon as practicable
after the end of the applicable Period of Restriction, and in any event no
later than 2½ months after the end of the Tax Year in which the Period of
Restriction ends.
|
8.3.
|
Dividend and Other
Distribution Equivalents. The Committee is authorized to grant to
holders of Restricted Stock Units the right to receive payments equivalent
to dividends or other distributions with respect to Shares underlying
Awards of Restricted Stock Units. The Award Agreement may specify that the
dividend equivalents or other distributions shall be subject to the same
restrictions as the related Restricted Stock Units, in which case they
shall be accumulated during the Period of Restriction and paid or
forfeited when the related Restricted Stock Units are paid or forfeited.
Alternatively, the Award Agreement may specify that the dividend
equivalents or other distributions shall be unrestricted, in which case
they shall be paid on the dividend or distribution payment date for the
underlying Shares, or as soon as practicable thereafter. In no event shall
any unrestricted dividend equivalent or other distribution be paid later
than 2½ months after the Tax Year in which the record date for the
dividend or distribution occurs.
|
|
Deferral
Election.
Notwithstanding anything to the contrary in Sections 8.2 or
8.3, a Participant may elect in accordance with the terms of the Award
Agreement and Section 409A of the Code to defer receipt of all or any
portion of the Shares or other property otherwise issuable to the
Participant pursuant to a Restricted Stock Unit Award to the extent
permitted by the
Committee. |
8.5.
|
Forfeiture. If,
with respect to any Award, (a) a Participant’s Termination of Service
occurs before the end of the Period of Restriction, (b) any Performance
Objectives are not achieved by the end of the period for measuring such
Performance Objectives or (c) the Participant has engaged in conduct
either before or after Termination of Service that constitutes Cause, then
the Restricted Stock Units granted pursuant to such Award shall be
forfeited and the Company (and any Affiliate) shall have no further
obligation.
|
|
Other
Equity Based Awards
|
9.1.
|
Other Equity-Based
Awards. The Committee shall have the right to grant other Awards
based upon or payable in Shares having such terms and conditions as the
Committee may determine, including deferred stock units, the grant of
Shares upon the achievement of a Performance Objective and the grant of
securities convertible into Shares.
|
|
Additional
Terms of Awards
|
10.1.
|
No Rights to
Awards. No Service Provider shall have any claim to be granted any
Award under the Plan, and the Company is not obligated to extend uniform
treatment to Participants or Beneficiaries under the Plan. The terms and
conditions of Awards need not be the same with respect to each
Participant.
|
10.2.
|
No Effect on
Employment or Service. Neither the Plan nor any Award shall confer
upon a Participant any right with respect to continuing the Participant’s
relationship as a Service Provider with the Company; nor shall they
interfere in any way with the Participant’s right or the Company’s right
to terminate such relationship at any time, with or without Cause, to the
extent permitted by Applicable Laws and any enforceable agreement between
the Service Provider and the
Company.
|
10.3.
|
No Fractional
Shares. No fractional Shares shall be issued or delivered pursuant
to the Plan or any Award, and the Committee shall determine whether cash,
other securities, or other property shall be paid or transferred in lieu
of any fractional Shares, or whether such fractional Shares or any rights
thereto shall be canceled, terminated, or otherwise
eliminated.
|
10.4.
|
Transferability of
Awards. Unless otherwise determined by the Committee, an Award may
not be sold, pledged, assigned, hypothecated, transferred, or disposed of
in any manner other than by will or by the laws of descent or distribution
and may be exercised, during the lifetime of the Participant, only by the
Participant. Subject to the approval of the Committee in its sole
discretion, Non-Qualified Options may be transferable to members of the
immediate family of the Participant and to one or more trusts for the
benefit of such family members, partnerships in which such family members
are the only partners, or corporations in which such family members are
the only stockholders. “Members of the immediate family” means the
Participant’s spouse, children, stepchildren, grandchildren, parents,
grandparents, siblings (including half brothers and sisters), and
individuals who are family members by adoption. To the extent that any
Award is transferable, such Award shall contain such additional terms and
conditions as the Committee deems
appropriate.
|
10.5.
|
Conditions On Delivery
of Shares and Lapsing of Restrictions. The Company shall not be
obligated to deliver any Shares pursuant to the Plan or to remove
restrictions from Shares previously delivered under the Plan until (a) all
conditions of the Award have been met or removed to the satisfaction of
the Committee, (b)subject to approval of the Company’s counsel, all other
legal matters (including any Applicable Laws) in connection with the
issuance and delivery of such Shares have been satisfied, and (c) the
Participant has executed and delivered to the Company such representations
or agreements as the Committee may consider appropriate to satisfy the
requirements of Applicable Laws.
|
10.6.
|
Inability to Obtain
Authority. The inability of the Company to obtain authority from
any regulatory body having jurisdiction, which authority is deemed by the
Company’s counsel to be necessary to the lawful issuance or sale of any
Shares hereunder, shall relieve the Company of any liability in respect of
the failure to issue or sell such Shares as to which such requisite
authority shall not have been
obtained.
|
|
(a)
|
Withholding
Requirements. Prior to the delivery of any Shares or cash pursuant
to the grant, exercise, vesting, or settlement of an Award, the Company
shall have the power and the right to deduct or withhold, or to require a
Participant or Beneficiary to remit to the Company, an amount sufficient
to satisfy any federal, state, and local taxes (including the
Participant’s FICA obligation) that the Company determines is required to
be withheld to comply with Applicable Laws. The Participant or Beneficiary
shall remain responsible at all times for paying any federal, state, and
local income or employment tax due with respect to any Award, and the
Company shall not be liable for any interest or penalty that a Participant
or Beneficiary incurs by failing to make timely payments of
tax.
|
|
(b)
|
Withholding
Arrangements. The Committee, in its sole discretion and pursuant to
such procedures as it may specify from time to time, may permit a
Participant or Beneficiary to satisfy such tax withholding obligation, in
whole or in part, by (i) electing to have the Company withhold otherwise
deliverable Shares, or (ii) delivering to the Company already-owned Shares
having a Fair Market Value equal to the amount required by Applicable Law
to be withheld. The Fair Market Value of the Shares to be withheld or
delivered, or with respect to which restrictions are removed, shall be
determined as of the date that the taxes are required to be
withheld.
|
10.8.
|
Other Provisions in
Award Agreements. In addition to the provisions described in the
Plan, any Award Agreement may include such other provisions (whether or
not applicable to the Award of any other Participant) as the Committee
determines appropriate, including restrictions on resale or other
disposition, provisions for the acceleration of vesting and/or
exercisability of Awards upon a Change of Control of the Company and
provisions to comply with Applicable Laws. Without limiting any other
express authority of the Committee under (but subject to) the express
limits of the Plan, the Committee may waive conditions of or limitations
on Awards to Participants that the Committee in the prior exercise of its
discretion had imposed, without the Participant’s consent, and may make
other changes to the terms and conditions of Awards. Notwithstanding the
foregoing, the Committee shall not adjust or change previously imposed
terms and conditions for an Option or a Stock Appreciation Right in such a
manner as would constitute a repricing of the exercise price or base
amount of any Option or Stock Appreciation Right without stockholder
approval except as contemplated in Section 2.3 (with respect to a stock
split, merger, acquisition, spin-off or any other similar, unusual or
extraordinary corporate transaction or event in respect of the shares as
described therein).
|
10.9.
|
Section 16 of the
Exchange Act. It is the intent of the Company that Awards and
transactions permitted by Awards be interpreted in a manner that, in the
case of Participants who are or may be subject to Section 16 of the
Exchange Act, qualify, to the maximum extent compatible with the express
terms of the Awards, for exemption from matching liability under Rule
16b-3 promulgated under the Exchange Act. The Company shall have no
liability to any Participant or other person for Section 16 consequences
of Awards or events in connection with Awards if an Award or related event
does not so qualify.
|
10.10.
|
Not Benefit Plan
Compensation. Payments and other benefits received by a Participant
under an Award made pursuant to the Plan shall not be deemed a part of a
Participant’s compensation for purposes of determining the Participant’s
benefits under any other employee benefit plans or arrangements provided
by the Company or an Affiliate, except where the Committee expressly
provides otherwise in writing.
|
Term,
Amendment, and Termination of Plan
11.1.
|
Term of Plan.
The Plan shall become effective on the Effective
Date.
|
11.2.
|
Termination.
The Plan shall terminate upon the earliest to occur of (i) April 28, 2016;
(ii) the date on which all Shares available for issuance under the Plan
have been issued as fully vested Shares; or (iii) the date determined by
the Board pursuant to its authority under Section 11.3 of the
Plan.
|
11.3.
|
Amendment. The
Board or the Committee may at any time amend, alter, suspend, or terminate
the Plan, without the consent of the Participants or Beneficiaries. The
Company shall obtain stockholder approval of any Plan amendment to the
extent necessary to comply with Applicable
Laws.
|
11.4.
|
Effect of Amendment or
Termination. Except as provided in Section 11.5 of the Plan, no
amendment, alteration, suspension, or termination of the Plan shall impair
the rights of any Participant or Beneficiary under an outstanding Award,
unless required to comply with an Applicable Law or mutually agreed
otherwise between the Participant and the Committee; any such agreement
must be in writing and signed by the Participant and the Company.
Termination of the Plan shall not affect the Committee’s ability to
exercise the powers granted to it hereunder with respect to Awards granted
under the Plan prior to the date of such
termination.
|
11.5.
|
Adjustments of Awards
Upon the Occurrence of Unusual or Nonrecurring Events. The
Committee may, in its sole discretion (but subject to the limitations and
conditions expressly stated in the Plan, such as the limitations on
adjustment of Performance Objectives), adjust the terms and conditions of
Awards during the pendency or in recognition of (a) unusual or
nonrecurring events affecting the Company or an Affiliate (such as a
capital adjustment, reorganization, or merger) or the financial statements
of the Company or an Affiliate, or (b) any changes in Applicable Laws or
accounting principles. By way of example, the power to adjust Awards shall
include the power to suspend the exercise of any Option or Stock
Appreciation Right.
|
12.1.
|
Authorization of
Sub-Plans. The Committee may from time to time establish one or
more sub-plans under the Plan for purposes of satisfying applicable blue
sky, securities, and/or tax laws of various jurisdictions. The Committee
shall establish such sub-plans by adopting supplements to the Plan
containing (i) such limitations as the Committee deems necessary or
desirable, and (ii) such additional terms and conditions not otherwise
inconsistent with the Plan as the Committee shall deem necessary or
desirable.
|
All
sub-plans adopted by the Committee shall be deemed to be part of the Plan, but
each sub-plan shall apply only to Participants within the affected jurisdiction
and the Company shall not be required to provide copies of any sub-plans to
Participants in any jurisdiction which is not the subject of such
sub-plan.
12.2.
|
Governing Law.
The provisions of the Plan and all Awards made hereunder shall be governed
by and interpreted in accordance with the laws of the State of Delaware,
regardless of the laws that might otherwise govern under any state’s
applicable principles of conflicts of
laws.
|
12.3.
|
Committee
Manner of
Action. Unless
otherwise provided in the bylaws of the Company or the charter of the
Committee: (a) a majority of the members of a Committee shall constitute a
quorum, and (b)the
vote of a majority of the members present who are qualified to act on a
question assuming the presence of a quorum or the unanimous written
consent of the members of the Committee shall constitute action by the
Committee. The Committee may delegate the performance of ministerial
functions in connection with the Plan to such person or persons as the
Committee may select. Governing
Law.
|
12.4.
|
Expenses. The
costs of administering the Plan shall be paid by the
Company.
|
12.5.
|
Severability.
If any provision of the Plan or any Award Agreement is determined by a
court of competent jurisdiction to be invalid, illegal, or unenforceable
in any jurisdiction, or as to any person or Award, such provision shall be
construed or deemed to be amended to resolve the applicable infirmity,
unless the Committee determines that it cannot be so construed or deemed
amended without materially altering the Plan or the Award, in which case
such provision shall be stricken as to such jurisdiction, person, or
Award, and the remainder of the Plan and any such Award shall remain in
full force and effect.
|
12.6.
|
Construction.
Unless the contrary is clearly indicated by the context, (a) the
use of the masculine gender shall also include within its meaning the
feminine and vice versa; (b) the
use of the singular shall also include within its meaning the plural and
vice versa; and (c)the word “include” shall mean to include, but not to be
limited to.
|
|
|
12.7.
|
No Trust or Fund
Created. Neither the Plan nor any Award Agreement shall create or
be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company (or an Affiliate) and a Participant or
any other person. To the extent that any person acquires a right to
receive payments from the Company (or an Affiliate) pursuant to an Award,
such right shall be no more secure than the right of any unsecured general
creditor of the Company (or the Affiliate, as
applicable).
|
12.8.
|
Headings.
Headings are given to the sections and subsections of the Plan solely as a
convenience to facilitate reference. Such headings shall not be deemed in
any way material or relevant to the construction or interpretation of the
Plan or any provision thereof.
|
12.9.
|
Complete Statement of
Plan. This document is a complete statement of the
Plan.
|
|
As
used in the Plan, the following terms shall have the following
meanings:
|
•
|
2001 Plan” means the
ARIAD Pharmaceuticals, Inc. 2001 Stock Plan, as Amended and Restated
(Effective September 27, 2005).
|
•
|
“Affiliate” means an
entity in which the Company has a direct or indirect equity interest,
whether now or hereafter existing; provided however, that with respect to
an Incentive Stock Option, an Affiliate means a “parent corporation” (as
defined in Section 424(e) of the Code) or a “subsidiary corporation” (as
defined in Section 424(f) of the Code) with respect to the Company,
whether now or hereafter existing.
|
•
|
“Applicable Laws” means
the requirements relating to, connected with, or otherwise implicated by
the administration of long-term incentive plans under applicable state
corporation laws, United States federal and state securities laws, the
Code, any stock exchange or quotation system on which the Shares are
listed or quoted, and the applicable laws of any foreign country or
jurisdiction where Awards are, or will be, granted under the
Plan.
|
•
|
“Award” means,
individually or collectively, a grant under the Plan of Options, Stock
Appreciation Rights, Restricted Stock, Restricted Stock Units, or other
equity-based awards.
|
•
|
“Award Agreement” means
a written agreement setting forth the terms and provisions applicable to
an Award granted under the Plan. Each Award Agreement shall be subject to
the terms and conditions of the
Plan.
|
•
|
Beneficiary” means the
personal representative of the Participant’s estate or the person(s) to
whom an Award is transferred pursuant to the Participant’s will or in
accordance with the laws of descent or
distribution.
|
•
|
Board” means the board
of directors of the Company.
|
•
|
Cause”, as used in
connection with the termination of a Participant’s services, means (1)
with respect to any Participant employed under a written employment
agreement with the Company which agreement includes a definition of
“cause,” “cause” as defined in that agreement or, if that agreement
contains no such definition, a material breach by the Participant of that
agreement, or (2) with respect to any other Participant, any of the
following:
|
(a)
|
the
failure of the Participant to perform any of his or her material duties to
the Company, including, without limitation, breach of the Company’s code
of ethics, conflict of interest or employment
policies;
|
(b)
|
the
Participant’s conviction (including any pleas of guilty or nolo contendre) of any
felony or other crime that the Committee reasonably determines adversely
impacts the Participant’s ability to continue performing services with the
Company;
|
|
any
act or omission to act by the Participant (other than the Participant’s
resignation or retirement) which would reasonably be likely to have the
effect of injuring the reputation, business or business relationships of
the Company or impairing the Participant’s ability to perform services for
the Company;
|
(d)
|
acts
of theft, embezzlement, fraud, dishonesty, misrepresentation or
falsification of documents or records involving the
Company;
|
(e)
|
violation
of any law or administrative regulation related to the Company’s business
and use of the Company’s facilities or premises to conduct unlawful or
unauthorized activities or transactions
and
|
|
conduct
that could result in publicity reflecting unfavorably on the Company in a
material way;
|
(g)
|
the
Participant’s improper use of the Company’s confidential or proprietary
information; or
|
(h)
|
a
breach of the terms of any employment agreement, confidentiality
agreement, non-competition agreement and non-solicitation agreement or any
other agreement between the Participant and the Company , after giving
effect to the notification provisions, if any, and the mechanisms to
remedy or cure a breach, if appropriate, as described in any such
agreement.
|
The
Committee shall determine whether conduct constituting “Cause” has occurred for
purposes of the Plan. For purposes of this definition, the term “Company”
includes any Affiliate of the Company and “Cause” is not limited to events that
have occurred before a Participant’s Termination of Service, nor is it necessary
that the Committee’s finding of “Cause” occur prior to Termination of
Service.
•
|
Change of Control”
means the occurrence of any of the following
events:
|
(a)
|
Any
corporation, person or other entity makes a tender or exchange offer for
Shares pursuant to which such corporation, person or other entity acquires
more than 50% of the issued and outstanding
Shares;
|
(b)
|
The
stockholders of the Company approve a definitive agreement to merge or
consolidate the Company with or into another corporation or to sell or
otherwise dispose of all or substantially all of the Company’s assets;
or
|
|
(c)
|
Any
person within the meaning of Section 3(a)(9) or Section 13(d) of the
Exchange Act acquires more than 50% of the combined voting power of
Company’s issued and outstanding voting securities entitled to vote in the
election of the Board.
|
•
|
Code” means the
Internal Revenue Code of 1986, as amended. Any reference to a section of
the Code herein shall be a reference to any regulations or other guidance
of general applicability promulgated under such section, and shall further
be a reference to any successor or amended section of such section of the
Code that is so referred to and any regulations
thereunder.
|
•
|
Committee” means the
Compensation Committee of the
Board.
|
•
|
Company” means ARIAD
Pharmaceuticals, Inc., a Delaware corporation, or any successor
thereto.
|
•
|
Consultant” means any
natural person, including an advisor, engaged by the Company or an
Affiliate to render services (other than in connection with the offer or
sale of securities in a capital raising transaction or to promote or
maintain a market for securities) to such
entity.
|
•
|
Director” means a
member of the Board.
|
•
|
Disability” means total
and permanent disability as defined in Section 22(e)(3) of the Code. The
Committee shall determine both whether Disability has occurred and the
date of its occurrence. If requested, a Participant shall be examined by a
physician selected or approved by the
Committee.
|
•
|
Effective Date” means
April 28, 2006; provided that the Plan and any Awards granted hereunder
shall be null and void if the Plan is not approved by the Company’s
stockholders before any compensation under the Plan is
paid.
|
•
|
Employee” means any
person who is an employee, as defined in Section 3401(c) of the Code, of
the Company or any Affiliate or any other entity the employees of which
are permitted to receive Incentive Stock Options under the Code. Neither
service as a Director nor payment of a director’s fee by the Company shall
be sufficient to constitute “employment” by the
Company.
|
•
|
Exchange Act” means the
Securities Exchange Act of 1934, as
amended.
|
•
|
Executive Officer”
means an individual who is an “executive officer” of the Company (as
defined by Rule 3b-7 under the Exchange Act) or a “covered employee” under
Section 162(m) of the Code.
|
•
|
Fair Market Value”
means, with respect to Shares as of any date (except in the case of a
cashless exercise pursuant to Section 5.4(c)) the closing sale price per
share of such Shares (or the closing bid, if no sales were reported) as
reported in The Wall Street Journal or, if not reported therein, such
other source as the Committee deems
reliable.
|
•
|
Incentive Stock Option”
means an Option intended to qualify as an incentive stock option within
the meaning of Section 422 of the
Code.
|
•
|
Non-Qualified Option”
means an Option not intended to qualify as an Incentive Stock
Option.
|
•
|
Option” means an option
to purchase Shares that is granted pursuant to Article 5 of the Plan. An
Option may be an Incentive Stock Option or a Non-Qualified
Option.
|
•
|
Participant” means the
holder of an outstanding Award granted under the
Plan.
|
•
|
Performance Objective”
means a performance objective or goal that must be achieved before an
Award, or a feature of an Award, becomes non-forfeitable, as described in
Section 4.3 of the Plan.
|
•
|
Period of Restriction”
means the period during which Restricted Stock, the remuneration
underlying Restricted Stock Units, or any other feature of an Award is
subject to a substantial risk of forfeiture. A Period of Restriction shall
be deemed to end when the applicable Award ceases to be subject to a
substantial risk of forfeiture.
|
•
|
Plan” means this 2006
Long-Term Incentive Plan.
|
•
|
Repricing” means (a)
reducing the exercise price or base amount of an Option or Stock
Appreciation Right after it is granted, (b) taking any action that is
treated as a “repricing” under generally accepted accounting principles,
(c) canceling an Option or a Stock Appreciation Right at a time when its
exercise price or base amount exceeds the Fair Market Value of a Share
(each, an “Underwater Award”), in exchange for another Option, Stock
Appreciation Right, Restricted Stock or other Award, or (d) repurchasing
an Option or Stock Appreciation Right that is an Underwater
Award.
|
•
|
Restricted Stock” means
Shares that, during a Period of Restriction, are subject to restrictions
as described in Article 7 of the
Plan.
|
•
|
Restricted Stock Unit”
means an Award that entitles the recipient to receive Shares or cash after
a Period of Restriction, as described in Article 8 of the
Plan.
|
•
|
Service Provider” means
an Employee, Director, or
Consultant.
|
•
|
Share” means a share of
the Company’s common stock, $.001 par value per
share.
|
•
|
Stock Appreciation
Right” means an Award that entitles the recipient to receive, upon
exercise, the excess of (i) the Fair Market Value of a Share on the date
the Award is exercised, over (ii) a base amount specified by the Committee
which shall not be less than the Fair Market Value of a Share on the date
the Award is granted, as described in Article 6 of the
Plan.
|
•
|
Tax Year” means the
Company’s taxable year. If an Award is granted by an Affiliate, such
Affiliate’s taxable year shall apply instead of the Company’s taxable
year.
|
•
|
Termination of Service”
means the date an individual ceases to be a Service Provider in any
capacity. Awards under the Plan shall not be affected by the change of a
Participant’s status with in or among the Company and any Affiliates, so
long as the Participant remains a Service Provider. Unless the Committee
or a Company policy provides otherwise, a leave of absence authorized by
the Company or the Committee (including sick leave or military leave) from
which return to service is not guaranteed by statute or contract shall be
characterized as a Termination of Service if the individual does not
return to service within three months; such Termination of Service shall
be effective as of the first day that is more than three months after the
beginning of the period of leave. If the ability to return to service upon
the expiration of such leave is guaranteed by statute or contract, but the
individual does not return, the leave shall be characterized as a
Termination of Service as of a date established by the Committee or
Company policy. For purposes of the Plan and any Award hereunder, if an
entity ceases to be an Affiliate, Termination of Service shall be deemed
to have occurred with respect to each Participant in respect of such
Affiliate who does not continue as a Service Provider in respect of the
Company or another Affiliate after such giving effect to such Affiliate’s
change in status.
|
Amended
and Restated
ARIAD
Pharmaceuticals, Inc.
1997
Employee Stock Purchase Plan
(as
amended on April 24, 2009)
WHEREAS, ARIAD
Pharmaceuticals, Inc. (the “Company”) established the ARIAD Pharmaceuticals,
Inc. 1997 Employee Stock Purchase Plan effective January 1, 1997 with 500,000
shares of Common Stock (as defined below) available for sale under such
plan;
WHEREAS, the stockholders of
the Company approved an increase in the number of shares of Common Stock
available for issuance under the ARIAD Pharmaceuticals, Inc. 1997 Employee Stock
Purchase Plan of 500,000 shares at the annual meeting of stockholders of the
Company held on June 12, 2008 (the “Amended and Restated ARIAD Pharmaceuticals,
Inc. 1997 Employee Stock Purchase Plan”);
WHEREAS, only 269,110 shares
of Common Stock remained available for sale under the Amended and Restated ARIAD
Pharmaceuticals, Inc. 1997 Employee Stock Purchase Plan as of April 24,
2009;
WHEREAS, the Internal Revenue
Service has issued final regulations interpreting Section 423 of the Code (as
defined below);
WHEREAS, the Company proposes
to increase the number of shares of Common Stock available for sale by and
additional 750,000 shares and to amend and restate this plan as the Amended and
Restated ARIAD Pharmaceuticals, Inc. 1997 Employee Stock Purchase Plan (as so
amended and restated, the “Plan”), subject to stockholder approval;
NOW THEREFORE, the Plan is
amended effective as of July 1, 2009, subject to stockholder approval, as
follows.
1.
|
Purpose. The
purpose of the Plan is to provide Employees of the Company and its
Designated Subsidiaries with an opportunity to purchase Common Stock of
the Company. It is the intention of the Company to have the
Plan qualify as an “Employee Stock Purchase Plan” under Section 423 of the
Code. The provisions of the Plan shall, accordingly, be construed so as to
extend and limit participation in a manner consistent with the
requirements of that section of the
Code.
|
|
a)
|
“Board” shall
mean the Board of Directors of the Company, or a committee of the Board of
Directors named by the Board to administer the
Plan.
|
|
b)
|
“Code” shall
mean the Internal Revenue Code of 1986, as
amended.
|
|
c)
|
“Common Stock”
shall mean the common stock, $0.001 par value, of the
Company.
|
|
d)
|
“Company” shall
mean ARIAD Pharmaceuticals, Inc., a Delaware
corporation.
|
|
e)
|
“Compensation”
shall mean all taxable compensation that is paid on an hourly, daily,
weekly or monthly basis in cash (including overtime) and cash
bonuses.
|
|
f)
|
“Continuous Status as
an Employee” shall mean the absence of any interruption or
termination of service as an Employee. Continuous Status as an Employee
shall not be considered interrupted in the case of a leave of absence
agreed to in writing by the Company, provided that such leave is for a
period of not more than 90 days or reemployment upon the expiration of
such leave is guaranteed by contract or
statute.
|
|
g)
|
“Contributions”
shall mean all amounts credited to the account of a participant pursuant
to the Plan.
|
|
h)
|
“Designated
Subsidiaries” shall mean the Subsidiaries which have been
designated by the Board from time to time in its sole discretion as
eligible to participate in the Plan. As of July 1, 2009, there
are no Designated Subsidiaries.
|
|
i)
|
“Employee” shall
mean any person, including an officer, who is customarily employed for at
least 20 hours per week and more than five months in a calendar year by
the Company or one of its Designated
Subsidiaries.
|
|
j)
|
“Exercise Date”
shall mean the last day of each Offering Period of the
Plan.
|
|
k)
|
“Offering Date”
shall mean the first business day of each Offering Period of the Plan,
except that in the case of an individual who becomes an eligible Employee
after the first business day of an Offering Period but on or prior to the
first business day of the last calendar quarter of such Offering Period,
the term “Offering Date” shall mean the first business day of the calendar
quarter coinciding with or next succeeding the day on which that
individual becomes an eligible
Employee.
|
|
l)
|
“Offering
Period” shall mean a period of three
months.
|
|
m)
|
“Plan” shall
mean this Amended and Restated ARIAD Pharmaceuticals, Inc. 1997 Employee
Stock Purchase Plan effective as of July 1, 2009. Matters with
respect to periods prior to July 1, 2009 shall be as determined under the
Amended and Restated ARIAD Pharmaceuticals, Inc. 1997 Employee Stock
Purchase Plan as in effect prior to such
date.
|
|
n)
|
“Subsidiary”
shall mean a corporation, domestic or foreign, of which not less than 50%
of the voting shares are held by the Company or a Subsidiary, whether or
not such corporation now exists or is hereafter organized or acquired by
the Company or a Subsidiary.
|
|
a)
|
Any
person who has been continuously employed as an Employee for three (3)
months as of the Offering Date of a given Offering Period shall be
eligible to participate in such Offering Period under the Plan, provided
that such person was not eligible to participate in such Offering Period
as of any prior Offering Date, and further, subject to the requirements of
paragraph 5(a) and the limitations imposed by Section 423(b) of the
Code. No non-employee director or independent contractor may
participate in the Plan.
|
|
b)
|
Any
provisions of the Plan to the contrary notwithstanding, no Employee shall
be granted an option under the Plan (i) if, immediately after the grant,
such Employee (or any other person whose stock would be attributed to such
Employee pursuant to Section 424(d) of the Code) would own stock and/or
hold outstanding options to purchase stock possessing five percent (5%) or
more of the total combined voting power or value of all classes of stock
of the Company or of any parent or subsidiary corporation (as determined
under Section 424(e) and (f) of the Code), or (ii) which permits his or
her rights to purchase stock under all employee stock purchase plans
(described in Section 423 of the Code) of the Company and any parent or
subsidiary corporation (as determined under Section 424(e) and (f) of the
Code) to accrue at a rate which exceeds $25,000 of fair market value of
such stock (determined at the time such option is granted) for each
calendar year in which such option is outstanding at any
time. Any option granted under the Plan shall be deemed to be
modified to the extent necessary to satisfy this paragraph (b) and Treas.
Reg. § 1.423-2(d).
|
4.
|
Offering
Periods. The Plan shall be implemented by a series of
Offering Periods, with a new Offering Period commencing on July 1, October
1, January 1 and April 1 of each year (or at such other time or times as
may be determined by the Board). The Plan shall continue until
terminated in accordance with paragraph 19 hereof. The Board shall have
the power to change the duration and/or the frequency of Offering Periods
with respect to future offerings without stockholder
approval. In addition, Employees shall not be entitled to
enroll in the Plan or exercise any options granted under the Plan during
any period in which the Company has restricted the purchase or sale of its
securities by its Employees.
|
|
a)
|
An
eligible Employee may become a participant in the Plan by completing an
enrollment form provided by the Company and filing it with the Company in
such form as approved by the Board prior to the applicable Offering Date,
unless a later time for filing the enrollment form is set by the Board for
all eligible Employees with respect to a given Offering
Period. The enrollment form shall set forth the percentage of
the participant’s Compensation (which shall be not less than 1% and not
more than 10%) to be paid as Contributions pursuant to the
Plan.
|
|
b)
|
Payroll
deductions shall commence on the first payroll that ends after the
Offering Date and shall end on the last payroll paid on or prior to the
Exercise Date of the Offering Period(s) to which the enrollment form is
applicable, unless sooner terminated by the participant as provided in
paragraph 10.
|
6.
|
Method of Payment of
Contributions.
|
|
a)
|
The
participant shall elect to have payroll deductions made on each payday
during the Offering Period in an amount not less than 1% and not more than
10% of such participant’s Compensation on each such payday; provided that
the aggregate of such payroll deductions during the Offering Period shall
not exceed 10% of the participant’s aggregate Compensation during said
Offering Period. All payroll deductions made by a participant
shall be credited to his or her account under the Plan. A
participant may not make any additional payments into such
account.
|
|
b)
|
A
participant may discontinue his or her participation in the Plan as
provided in paragraph 10, or on one occasion only during an Offering
Period, may decrease, but may not increase, the rate of his or her
Contributions during the Offering Period by completing and filing with the
Company a new enrollment form within the ten day period immediately
preceding the end of the then Offering Period. The change in
rate shall be effective as of the beginning of the calendar quarter
following the date of the filing of the new enrollment
form.
|
|
c)
|
Notwithstanding
the foregoing, to the extent necessary to comply with Section 423(b)(8) of
the Code and paragraph 3(b) herein, a participant’s payroll deductions may
be decreased to 0% at such time during any Offering Period which is
scheduled to end during the current calendar year so that the aggregate
amount of all payroll deductions accumulated with respect to such Offering
Period and any other Offering Period ending within the same calendar year
equals $21,250. Payroll deductions shall recommence at the rate
provided in such participant’s enrollment form at the beginning of the
first Offering Period which is scheduled to end in the following calendar
year, unless terminated by the participant as provided in paragraph
10.
|
|
a)
|
On
the Offering Date of each Offering Period, each eligible Employee
participating in such Offering Period shall be granted an option to
purchase on the Exercise Date of such Offering Period a number of shares
of the Common Stock determined by dividing such Employee’s Contributions
accumulated prior to such Exercise Date and retained in the participant’s
account as of the Exercise Date by the lower of (i) 85% of the fair market
value of a share of Common Stock on the Offering Date, or (ii) 85% or the
fair market value of a share of the Common Stock on the Exercise Date;
provided however, that such purchase shall be subject to the limitations
set forth in paragraphs 3(b) and 12 hereof. The fair market
value of a share of the Common Stock shall be determined as provided in
paragraph 7(b) herein.
|
|
b)
|
The
option price per share of the shares offered in a given Offering Period
shall be the lower of (i) 85% of the fair market value of a share of the
Common Stock on the Offering Date, or (ii) 85% of the fair market value of
a share of the Common Stock on the Exercise Date. The fair
market value of the Common Stock on a given date shall be the closing sale
price per share of a share of the Common Stock on such date (or, the
closing bid, if no sales were reported) as reported in The Wall Street
Journal or, if not reported therein, such other source as the Board deems
reliable.
|
8.
|
Exercise of
Option. Unless a participant withdraws from the Plan as provided in
paragraph 10, his or her option for the purchase of shares will be
exercised automatically on the Exercise Date of the Offering Period, and
the maximum number of full shares subject to option will be purchased for
him or her at the applicable option price under paragraph 7(b) with the
accumulated Contributions in his or her account. If a
fractional number of shares results, then such number shall be rounded
down to the next whole number and any unapplied cash shall be carried
forward to the next Exercise Date, unless the participant requests a cash
payment. The shares purchased upon exercise of an option
hereunder shall be deemed to be transferred to the participant on the
Exercise Date. During a participant’s lifetime, a participant’s option to
purchase shares hereunder is exercisable only by him or
her.
|
9.
|
Delivery. Upon
the written request of a participant, certificates representing the shares
purchased upon exercise of an option will be issued as promptly as
practicable after the Exercise Date of each Offering Period to
participants who wish to hold their shares in certificate
form. Any cash remaining to the credit of a participant’s
account under the Plan after a purchase by him or her of shares at the
termination of each Offering Period shall be carried forward to the next
Exercise Date unless the participant requests a cash
payment.
|
10.
|
Withdrawal;
Termination of Employment.
|
|
a)
|
A
participant may withdraw all but not less than all the Contributions
credited to his or her account under the Plan at any time prior to the
Exercise Date of an Offering Period by giving written notice to the
Company. All of the participant’s Contributions credited to his
or her account will be paid to him or her promptly after receipt of his or
her notice of withdrawal and his or her option for the current period will
be automatically terminated, and no further Contributions for the purchase
of shares will be made during the Offering
Period.
|
|
b)
|
Upon
termination of the participant’s Continuous Status as an Employee prior to
the Exercise Date of the Offering Period for any reason, including
retirement or death, the Contributions credited to his or her account will
be returned to him or her or, in the case of his or her death, to the
person or persons entitled thereto under paragraph 14, and his or her
option will be automatically
terminated.
|
|
c)
|
In
the event an Employee fails to remain in Continuous Status as an Employee
of the Company for at least 20 hours per week during the Offering Period
in which the Employee is a participant, he or she will be deemed to have
elected to withdraw from the Plan and the Contributions credited to his or
her account will be returned to him or her and his or her option
terminated.
|
|
d)
|
A
participant’s withdrawal from an Offering Period will not have any effect
upon his or her eligibility to participate in a succeeding offering or in
any similar plan which may hereafter be adopted by the
Company.
|
11.
|
Interest. No
interest shall accrue on the Contributions of a participant in the
Plan.
|
|
a)
|
As
of July 1, 2009 the maximum number of shares of Common Stock available for
sale under the Plan shall be 750,000 shares plus any share reserve under
the Plan immediately after completion of the Offering Period ending June
30, 2009, subject to adjustment upon changes in capitalization of the
Company as provided in paragraph 18. If the total number of
shares which would otherwise be subject to options granted pursuant to
paragraph 7(a) hereof on the Offering Date of an Offering Period exceeds
the number of shares then available under the Plan (after deduction of all
shares for which options have been exercised or are then outstanding), the
Company shall make a pro rata allocation of the shares remaining available
for option grant in as uniform a manner as shall be practicable and as it
shall determine to be equitable. Any amounts remaining in an
Employee’s account not applied to the purchase of stock pursuant to this
paragraph 12 shall be refunded on or promptly after the Exercise
Date. In such event, the Company shall give written notice of
such reduction of the number of shares subject to the option to each
Employee affected thereby and shall similarly reduce the rate of
Contributions, if necessary.
|
|
b)
|
The
participant will have no interest or voting right in shares covered by his
or her option until such option has been
exercised.
|
13.
|
Administration. The
Board shall administer the Plan. Subject to the provisions of
the Plan and applicable law, the Board shall have the authority in its
discretion: (a) to determine the fair market value; (b) to construe and
interpret the terms of the Plan; (c) to correct any defect, supply any
omission, or reconcile any inconsistency in the Plan in the manner and to
the extent it shall deem desirable to carry out the purposes of the Plan;
(d) to prescribe, amend, and rescind rules and regulations relating to the
Plan; and (e) to make all other determinations and take all other action
described in the Plan or as the Board otherwise deems necessary or
advisable for administering the Plan and effectuating its
purposes.
|
14.
|
Designation of
Beneficiary.
|
|
a)
|
A
participant may file a written designation of a beneficiary who is to
receive any shares and cash, if any, from the participant’s account under
the Plan in the event of such participant’s death subsequent to the end of
the Offering Period but prior to delivery to him or her of such shares and
cash. In addition, a participant may file a written designation of a
beneficiary who is to receive any cash from the participant’s account
under the Plan in the event of such participant’s death prior to the
Exercise Date of the Offering Period. If a participant is
married and the designated beneficiary is not the spouse, spousal consent
shall be required for such designation to be
effective.
|
|
b)
|
Such
designation of beneficiary may be changed by the participant (and his or
her spouse, if any) at any time by written notice. In the event
of the death of a participant and in the absence of a beneficiary validly
designated under the Plan who is living at the time of such participant’s
death, the Company shall deliver such shares and/or cash to the executor
or administrator of the estate of the participant, or if no such executor
or administrator has been appointed (to the knowledge of the Company), the
Company, in its discretion, may deliver such shares and/or cash to the
spouse or to any one or more dependents or relatives of the participant,
or if no spouse, dependent or relative is known to the Company, then to
such other person as the Company may
designate.
|
15.
|
Transferability. Neither
Contributions credited to a participant’s account nor any rights with
regard to the exercise of an option or to receive shares under the Plan
may be assigned, transferred, pledged or otherwise disposed of in any way
(other than by will, the laws of descent and distribution or as provided
in paragraph 14 hereof) by the participant. Any such attempt at
assignment, transfer, pledge or other disposition shall be without effect,
except that the Company may treat such act as an election to withdraw
funds in accordance with paragraph
10.
|
16.
|
Use of
Funds. All Contributions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and
the Company shall not be obligated to segregate such
Contributions.
|
17.
|
Reports. Individual
accounts will be maintained for each participant in the Plan. Statements
of account will be given to participating Employees promptly following the
Exercise Date, which statements will set forth the amounts of
Contributions, the per share purchase price, the number of shares
purchased and the remaining cash balance, if
any.
|
18.
|
Adjustments Upon
Changes in Capitalization. Subject to any required
action by the stockholders of the Company, the number of shares of Common
Stock covered by each option under the Plan which has not yet been
exercised and the number of shares of Common Stock which have been
authorized for issuance under the Plan but have not yet been placed under
option (collectively, the “Reserves”), as well as the price per share of
Common Stock covered by each option under the Plan which has not yet been
exercised, shall be proportionately adjusted for any increase or decrease
in the number of issued shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in
the number of shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been
“effected without receipt of consideration.” Such adjustment
shall be made by the Board, whose determination in that respect shall be
final, binding and conclusive. Except as expressly provided
herein, no issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect,
and no adjustment by reason thereof shall be made with respect to, the
number or price of shares of Common Stock subject to an
option.
|
In the
event of the proposed dissolution or liquidation of the Company, the Offering
Period will terminate immediately prior to the consummation of such proposed
action, unless otherwise provided by the Board. In the event of a
proposed sale of all or substantially all of the assets of the Company, or the
merger of the Company with or into another corporation, each option under the
Plan shall be assumed or an equivalent option shall be substituted by such
successor corporation or a parent or subsidiary of such successor corporation,
unless the Board determines, in the exercise of its sole discretion and in lieu
of such assumption or substitution, to shorten the Offering Period then in
progress by setting a new Exercise Date (the “New Exercise Date”). If
the Board shortens the Offering Period then in progress in lieu of assumption or
substitution in the event of a merger or sale of assets, the Board shall notify
each participant in writing, at least ten days prior to the New Exercise Date,
that the Exercise Date for his or her option has been changed to the New
Exercise Date and that his or her option will be exercised automatically on the
New Exercise Date, unless prior to such date he or she has withdrawn from the
Offering Period as provided in paragraph 10. For purposes of this
paragraph, an option granted under the Plan shall be deemed to be assumed if,
following the sale of assets or merger, the option confers the right to
purchase, for each share of option stock subject to the option immediately prior
to the sale of assets or merger, the consideration (whether stock, cash or other
securities or property) received in the sale of assets or merger by holders of
Common Stock for each share of Common Stock held on the effective date of the
transaction (and if such holders were offered a choice of consideration, the
type of consideration chosen by the holders of a majority of the outstanding
shares of Common Stock); provided, however, that if such consideration received
in the sale of assets or merger was not solely common stock of the successor
corporation or its parent (as defined in Section 424(e) of the Code), the Board
may, with the consent of the successor corporation, provide for the
consideration to be received upon exercise of the option to be solely common
stock of the successor corporation or its parent equal in fair market value to
the per share consideration received by holders of Common Stock and the sale of
assets or merger.
The Board
may, if it so determines in the exercise of its sole discretion, also make
provision for adjusting the Reserves, as well as the price per share of Common
Stock covered by each outstanding option, in the event that the Company effects
one or more reorganizations, recapitalizations, rights offerings or other
increases or reductions of shares of its outstanding Common Stock, and in the
event of the Company being consolidated with or merged into any other
corporation.
19.
|
Amendment or
Termination. The Board of Directors of the Company may
at any time terminate or amend the Plan; except that (a) if the approval
of any such amendment by the shareholders of the Company is required by
Section 423 of the Code, such amendment shall not be effected without such
approval, and (b) in no event may any amendment be made that would cause
the Plan to fail to comply with Section 423 of the
Code. Subject to paragraph 18, no action taken under this
paragraph may adversely affect the rights of any participant to any then
outstanding options.
|
20.
|
Notices. All
notices or other communications by a participant to the Company under or
in connection with the Plan shall be deemed to have been duly given when
received in the form specified by the Company at the location, or by the
person, designated by the Company for the receipt
thereof.
|
21.
|
Conditions Upon
Issuance of Shares. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance
and delivery of such shares pursuant thereto shall comply with all
applicable provisions of law, domestic or foreign, including, without
limitation, the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the
shares may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such
compliance.
|
As a
condition to the exercise of an option, the Company may require the person
exercising such option to represent and warrant at the time of any such exercise
that the shares are being purchased only for investment and without any present
intention to sell or distribute such shares if, in the opinion of counsel for
the Company, such a representation is required by any of the aforementioned
applicable provisions of law.
22.
|
Right to Terminate
Employment. Nothing in the Plan or in any agreement
entered into pursuant to the Plan shall confer upon any Employee or other
optionee the right to continue in the employment of the Company or any
Subsidiary, or affect any right which the Company or any Subsidiary may
have to terminate the employment of such Employee or other
optionee.
|
23.
|
Rights as a
Stockholder. Neither the granting of an option nor a
deduction from payroll shall constitute an Employee the owner of Shares
covered by an option. No optionee shall have any right as a
stockholder unless and until an option has been exercised, and the Shares
underlying the option have been registered in the Company’s share
register.
|
24.
|
Term of
Plan. The Plan, as amended and restated, shall be
effective July 1, 2009 and shall continue in effect until March 10, 2017
unless sooner terminated under paragraph
19.
|
25.
|
Notification Upon Sale
of Shares. Each participant agrees, by enrolling in the
Plan, to promptly give the Company notice of any disposition of shares
purchased under the Plan where such disposition occurs within two years
after the date of grant of the option pursuant to which such shares were
purchased.
|
26.
|
Issuance of
Shares. Shares may be issued upon exercise of an
Option from authorized but unissued Common Stock, from shares of Common
Stock held in the treasury of the Company, or from any other proper
source.
|
27.
|
Applicable
Law. This Plan shall be governed in accordance with the
laws of Delaware.
|
|
VOTE BY INTERNET - www.proxyvote.com
|
ARIAD
PHARMACEUTICALS, INC.
|
Use
the Internet to transmit your voting instructions and for electronic
delivery of information up until 11:59 P.M. Eastern Daylight
Time on June 18, 2009. Have your proxy card in hand when you
access the web site and follow the instructions to obtain your records and
to create an electronic voting instruction form.
|
26 LANDSDOWNE
STREET
|
|
CAMBRIDGE,
MA 02139
|
ELECTRONIC
DELIVERY OF FUTURE STOCKHOLDER COMMUNICATIONS
|
|
If
you would like to reduce the costs incurred by ARIAD Pharmaceuticals, Inc.
in mailing proxy materials, you can consent to receiving all future proxy
statements, proxy cards and annual reports electronically via e-mail or
the Internet. To sign up for electronic delivery, please follow
the instructions above to vote using the
Internet and, when prompted, indicate that you
agree to receive or access
stockholder communications electronically in future
years.
|
|
|
|
VOTE
BY PHONE - 1-800-690-6903
|
|
Use
any touch-tone telephone to
transmit your voting instructions up until 11:59
P.M. Eastern Daylight Time on June 18, 2009. Have your proxy
card in hand when you call and then follow the
instructions.
|
|
|
|
VOTE
BY MAIL
|
|
Mark, sign and date your proxy
card and return it in
the postage-paid envelope we have provided or
return it to ARIAD Pharmaceuticals, Inc., c/o
Broadridge, 51 Mercedes Way, Edgewood, NY
11717.
|
TO VOTE, MARK BLOCKS
BELOW IN BLUE OR BLACK INK AS FOLLOWS |
M14312
- P78764
|
KEEP
THIS PORTION FOR YOUR RECORDS
|
|
|
DETACH
AND RETURN THIS PORTION
ONLY
|
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
|
ARIAD
PHARMACEUTICALS, INC.
Summary
of Proposals to be Voted Upon By Stockholders
|
For
All
|
Withhold All
|
For
All Except
|
To
withhold authority to vote for any individual nominee(s),
mark
“For All Except” and write the number(s) of the nominee(s)
on the line below.
|
Proposal 1. Election of
Two Class 3 Directors to Hold Office Until
the 2012 Annual Meeting
|
[
]
|
[
]
|
[
]
|
|
Our
Board of Directors is divided into three classes of directors. This year,
two current Class 3 directors have been nominated to serve
until the 2012 Annual Meeting and until their successors have been duly
elected and qualified. Nominated directors include:
|
|
|
|
|
1) Harvey
J. Berger, M.D., our Chairman and Chief Executive Officer, who
has served on our Board of Directors since April 1991.
2) Wayne
Wilson, who has served on our Board of Directors since
October 2008.
The
Board of Directors recommends that
stockholders vote "FOR" Proposal 1.
|
|
|
|
|
|
|
|
|
Proposal 2. Approval of
an Amendment to the ARIAD
Pharmaceuticals, Inc. 2006
Long-Term Incentive Plan.
Approval
of an amendment to the 2006 Long-Term Incentive Plan to reserve
an additional 7,000,000 shares of common stock for
issuance under the plan and to remove the limitation on the
number of full-value awards issuable under the plan will enable
us to continue to attract and retain
talented employees, directors and consultants, and
to achieve strong performance in the
future.
The
Board of Directors recommends that
stockholders vote "FOR"
Proposal 2.
|
For
[
]
|
Against
|
Abstain
[
]
|
|
|
|
|
|
Proposal
3. Approval of an Amendment to the Amended
60;and Restated ARIAD Pharmaceuticals, Inc. 1997 Employee Stock
Purchase
Plan.
Approval
of an amendment to the Amended and Restated 1997
Employee Stock Purchase Plan to reserve an additional
750,000 shares of our common stock
under the plan will enable us to
continue to provide employees with the
opportunity to purchase shares of our
common stock through payroll deduction, assisting us
to
attract and retain talented employees.
The
Board of Directors recommends that
stockholders vote "FOR"
Proposal 3.
|
[
]
|
[
]
|
|
|
|
|
|
|
Proposal 4. Ratification of
Selection of
Independent Registered Public
Accounting Firm.
|
|
The Audit
Committee of the Board of Directors has
selected Deloitte & Touche LLP to be our
independent registered public
|
|
accounting firm
for the year ending December 31, 2009. The Board of Directors has ratified
this selection. Deloitte & Touche LLP has
|
|
served as our
independent registered public accounting firm since
1991.
|
[
]
|
[
]
|
[
]
|
The Board of Directors recommends that stockholders vote "FOR" Proposal
4.
|
|
|
|
For address changes and/or comments, please check this box and write them on the
back where indicated.
|
[
]
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Signature
[PLEASE SIGN WITHIN BOX] |
Date |
|
Signature (Joint
Owners) |
Date |
|
|
Important
Notice Regarding the Availability of Proxy Materials for
the Annual Meeting:
The Notice
and Proxy Statement, Annual Report and Shareholder Letter
are available at www.proxyvote.com.
|
|
|
|
|
|
|
ARIAD
PHARMACEUTICALS, INC.
|
|
|
|
|
|
|
|
|
|
|
26
Landsdowne Street
|
|
|
|
|
Cambridge,
Massachusetts 02139
|
|
|
|
|
|
|
|
|
|
|
ANNUAL
MEETING OF STOCKHOLDERS — JUNE 19, 2009
|
|
|
|
|
|
|
|
|
|
|
PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
|
|
|
|
|
|
|
|
|
|
The
undersigned, revoking all prior proxies, hereby
appoints Harvey J. Berger, M.D. and Raymond T. Keane, Esq., or
either of them, as Proxies, with full power of
substitution of each, to vote for and on behalf of the
undersigned at the 2009 Annual Meeting of Stockholders
of ARIAD Pharmaceuticals, Inc. to be held at the
Company's offices at 26 Landsdowne Street,
Cambridge, Massachusetts 02139 on Friday, June 19,
2009 at 10:00 a.m., Eastern Daylight Time, and at any
adjournment or
postponement thereof. The
undersigned hereby directs the said Proxies to vote in
accordance with their judgment on any
matters which may properly come before the Annual
Meeting, all as indicated in the Notice of Annual Meeting of
Stockholders, receipt of which is hereby acknowledged, and to
vote on the matters set forth on the reverse side
hereof, as specified by the undersigned. |
|
|
THIS
PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER(S).
IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED "FOR"
PROPOSALS 1, 2, 3 and 4. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PLEASE VOTE,
DATE AND SIGN ON REVERSE AND
RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE.
|
|
|
|
|
|
|
|
|
|
Please
sign exactly as your name(s) appear(s) on the reverse
side. Joint owners should each sign personally. Trustees and
other fiduciaries should indicate the capacity in which they sign, and
where more than one name appears, a majority must sign. If a
corporation, this signature should be
that of an authorized officer who should
state his or her title.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Address Changes/Comments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(If
you noted any Address
Changes/Comments above, please mark
corresponding box on the reverse side.)
|
|
|
|
|
|
|
|
|
|
|
(Continued and
to be signed on the reverse side)
|
|
|
GRAPHIC
2
logo.jpg
ARIAD LOGO
begin 644 logo.jpg
M_]C_X``02D9)1@`!`0$`8`!@``#_VP!#``@&!@<&!0@'!P<)"0@*#!0-#`L+
M#!D2$P\4'1H?'AT:'!P@)"XG("(L(QP<*#7J#A(6&AXB)BI*3E)66EYB9FJ*CI*6FIZBIJK*SM+6VM[BYNL+#Q,7&
MQ\C)RM+3U-76U]C9VN'BX^3EYN?HZ>KQ\O/T]?;W^/GZ_\0`'P$``P$!`0$!
M`0$!`0````````$"`P0%!@<("0H+_\0`M1$``@$"!`0#!`<%!`0``0)W``$"
M`Q$$!2$Q!A)!40=A<1,B,H$(%$*1H;'!"2,S4O`58G+1"A8D-.$E\1<8&1HF
M)R@I*C4V-S@Y.D-$149'2$E*4U155E=865IC9&5F9VAI:G-T=79W>'EZ@H.$
MA8:'B(F*DI.4E9:7F)F:HJ.DI::GJ*FJLK.TM;:WN+FZPL/$Q<;'R,G*TM/4
MU=;7V-G:XN/DY>;GZ.GJ\O/T]?;W^/GZ_]H`#`,!``(1`Q$`/P#W^L75?$]C
MICRPI'QT:\;_EVG@\MB
M?^F4COLE&,/?NQG[@_@%02>/;#3%E
M750XCC*K'J%O&7M)R3M`\W[D39ZAV`&1\QZU1TYA#:2ZOJ$32^&KV:2[@A52
MZVR.Q;S95',B2$F3D?NB_(PI9>R34;"73UOTO+9[)U#+<"53&P/<-G!%`&8M
M^/$%AB#2H+NREZFYN(FAD7VV&0'\16!/\.=#OV(N?!7AZ(8X-O.R<]N%B7O[
MTMYX5\!WUTMW#HK"?.5N=)@GB#$\Y\R#"M]$?#6Y2&!=-S`CT9D)'UKHDFU>-?GTZP2-!TC
MO6)`'H#$!T]ZY>U\,"+_`%R^-+C"_P#+;7<9(_W)QR?RK0M=$T.VV/<^'+EG
M!RLM\OVV13DD?,6D8=,]<4T:#JS!L%1[FJ'AW;+<:G>6D+0Z;=3B2W#+M$K;1YDJ@\A6/L,E6?
MG?D@&[1110`4444`%%%%`!1110!R>A7TMI%;>$@/*U.PMU0R2#*M;I\B3+ZE
M@/N_PMNSD*-T%Y\,=!GO/[0LY;_2]4+M(U]87!CD=F^^2N"GS=\**N:O:6(\
M0;]6A#65_##;Q3DE?(N$:39\X.8V;S<(PQAEQD,R@TIK'Q7#+=VN@ZW%=6T+
M(NW58_G4\,8TF09QM(^9T=N?O9S@`JR>'O'VG;Y;;Q];7,"NQ_[:%'X_2IXOB-$"B-X-\7P`^ND,0OUVD_I0!GQ:]XM=L7?BKP';)D?-
M"))"?;#2COBMK3['5]2W2/XZ$Z@DXTJTMT7&>AWB4_J*2V\=2WDFRW\'>*6.
M<9ELXX!]?PMI%Q%LO
M[=M1.=P:^D:@I/#(<1I(RZ;<,JN@<%A&Q'!X/(%
M`&%-K'CJ:V1K?1+*Y@#NCW%A>A))0,8>-)TVJI.1R6SU!QABY;R^0J;CPAXK
M\V1L?N]6C9>W)Q<@+^0%7+;PE/I]C"OAKQ)?V-N(T$4$Y%Y;[0N!@29=1C'"
MNH]J?/%XZA/[O4_#C(P(/XB@!]%%%`!2,JNA5E#*PP01D$4M%`''Z1?IX,CM_#VM
M7'EV:-Y.EZA*-L3Q?P0N_19%`VC.-X`(RQ8#-^*UKJ.OZ+_PC>DLRW$L$M_,
M4P24@`*(/1GE:/!]%;TKOYH8KB%X9XTEB=2KHZAE8'J"#U%<#X6\(:%J#:EK
M-I!<65K=W31VD>G7LUJGD1'8#B)E!#.))!VPX]3D`TO#WC[2K_P'I7B'4KV&
MW-U&(W4_>>*Z(@RS'<#A0"2,<5E_&:"VF^'[S3P0N4NK;:\J`E`95!Z],C
M@^U8W@+0],\(?%3Q!X=;3[<,\:ZAI-S)*L+?*\:NGVWA>.YTRVAM_$B7,0TE[5`EPTI<`JF,$C:6R.
MF.2.!7H\>_RU\S&_`W;>F>^*\PU.SM_AK\0;?Q#;0Q6_AW6L6>HA8U5;2;K'
M(#QM5C][MU)R2N/4:`/,/A[8V<7Q,^(,D=K"CQW<`1E0`KN5RV/3)Y/KWKTF
M\NX+"RN+RZD$=O;QM+*YZ*JC)/X`5Y]X`_Y*3\1!GG[7;\`>NA\7`ZDVF^
M'%R1J<^ZZP2"+6+#R\C'WCY79XJM/[01)6'^CW
M48_>0+CJ%C*C/<(OO7II&1@]*\M^)_ADZ7H%KXGT=KZ34-!NDO`)[V>?=$#B
M11O=MHQ@M[*:])TZ_@U33+74+5BUO=0I-$2,$JP!'Z&@#SCX9:982ZOXX\RQ
MMGV:_.B[HE.U0>`..E6/B#H:^&-+D\8^%XH]/U/3F66XBMU"17L.[#I*HP&X
M).>HQQS@B7X8J%UCQUAMP_X2"//7:ZAA^AJU5'1M.71]"T
M_3$?>MG;1VX;'4(H7/Z5>H`****`*]]8P:E92V=R)##*-KB.5HR1Z;E((_/D
M<=*K:+H>G^'K`6.F0O#:J,5-+X:TJ;6AK#P2_V@N`LXN)`0HQ\@PV`F1DI
M]TG)())K6HH`IZGIEIJ]D]G>H\EN_P!^-970.,8*MM(W*02"IX/<5#IF@Z=H
M^G/I^G0O;VC9Q$DSX3/79S\@[X7'))ZG-:5%`&!#X+T*V:=[6WN+62XD\V>2
MVO9X7F?GYG9'!8\GJ3UJ[8:!I>FW+75M:#[6Z>6UU*S2S,F<[3(Y+$9&<9QF
JM*B@`HHHH`****`"BBB@`HHHH`****`"BBB@`HHHH`****`"BBB@#__9
`
end
GRAPHIC
3
berger.jpg
BERGER SIGNATURE
begin 644 berger.jpg
M_]C_X``02D9)1@`!`0$`8`!@``#_VP!#``@&!@<&!0@'!P<)"0@*#!0-#`L+
M#!D2$P\4'1H?'AT:'!P@)"XG("(L(QP<*#7J#A(6&AXB)BI*3E)66EYB9FJ*CI*6FIZBIJK*SM+6VM[BYNL+#Q,7&
MQ\C)RM+3U-76U]C9VN'BX^3EYN?HZ>KQ\O/T]?;W^/GZ_\0`'P$``P$!`0$!
M`0$!`0````````$"`P0%!@<("0H+_\0`M1$``@$"!`0#!`<%!`0``0)W``$"
M`Q$$!2$Q!A)!40=A<1,B,H$(%$*1H;'!"2,S4O`58G+1"A8D-.$E\1<8&1HF
M)R@I*C4V-S@Y.D-$149'2$E*4U155E=865IC9&5F9VAI:G-T=79W>'EZ@H.$
MA8:'B(F*DI.4E9:7F)F:HJ.DI::GJ*FJLK.TM;:WN+FZPL/$Q<;'R,G*TM/4
MU=;7V-G:XN/DY>;GZ.GJ\O/T]?;W^/GZ_]H`#`,!``(1`Q$`/P#WJZN8+*TF
MN[F58K>"-I)9'.`BJ,DGV`%<=X,UZ]D\)ZAXAUZ[VP74T^I6D4Q57M[$\QAL
M<=`3GG[PYKC_`(@Q^(KWQHVABZOKNTO$\X6>F3*K)IX51<+(AP=[,FV,D[3O
M89YP,KQ7I-S*EEIL7A.WT,WMU'8I/)?M)*UK%'N<$*3^["I@\G(`XSB@#TOX
M9MJ=SX,BU/5I[B2XU.:2]6.>1G,,;ME$4G^$+@C&!STKL*^<=,^(6LW?BS0+
MW4O$,%GHF^2Y`'R)O#%Y=V\VA>'+
MB=V9)T8W,ZJ/XT4$J#QA>I[T`>R56O=0L]-A$U]=0VT18*'F<*"3T&3WKR2X
M\;^++WQS<0Z9HE_&]SIZ#3+2Y"B--S\W%P`?D`'13S63J>E37'CN]L?%UOJG
MB_4;>*%]+LXHOL\#AA\[-@[$4-QDGMR#0![T#D9%,BFCGB66&1)(V&5=#D'\
M:\UT[4_B(J77AVXTE4U"2X_=ZQ&%-I:6S`'*@X,CIR`N.3@DX!S;^"TL
MT)I9%12TR@L<`DW,@`^I)`'N:`.VU75;'0]+N-3U.YCMK.W3?+*_11_,DG``
M'))`&2:XCP)XJUS7_&_BFUU0BTMK9;9[339HU6>%)$W`MCG)!4LIW88XR,F7PQX5B^WWDL#DI=7(!>,#`^98@C.<-RQ3@XS7,ZWXRL+W
MQW::]X5TFZNQIFG75YO3LL5X9(/*C51_K,2YP`>Q'8T`>P4U'61=R,&7U!S7S
M]#X[UK2O@G';?;&EUR[N9;6R1"9)DA5MK-QDG'(#'U%=3X1TGQK_`,(38:+I
M0_L"&.(M)J&H+YMS)(3N.R'HJY/5CG':@#UJBN"M/$'CZPJ>$HK]HDQ]M
ML+M528]B$?!7CK[TY_%'CF2Z>.V\"XCY9'GU!%R%&2#C.&8\#MW/%`'=T5A^
M%[O7+RQO'UVTBMIEO[B.!8R3N@5R$8Y`[`X.!D`'O10`MAX:@L_%>K>(I)Y+
MB[OTBAC$@!%M"BC]W&>H#/EV&<$XXR,E^H>'+34O$>CZW.\OGZ4)Q!&"-A,J
MA6+#'.`./K6Q10!G6>@Z186MI;6NFVL4-FQ:V18AB$G.2OH3D\CUJ^\4&?"
MU_-+)-]K>UE-O%;@F4D#&\8^ZJEE);H,CN0#SGA'X?W5YX:T:+Q?-%<6UK:Q
M"WT:U&RU0C:=\V#^_D.T$[LIDO@'.:YR]L+KQ`;*VOU+>(?%TJ272`G.GZ1&
MP?RP1]P'"@]`[,IM')K%[<2WVHRQGY9
M)Y&R3CH,#:/E`'RYQS72000VMO%;V\4<,$2!(XXU"JB@8``'``'&*DHH`0``
M8`P*X_QAXDNK>^A\/:/)'%J%Q`]Q<7D@W)8VR_>E8=SV4=,UV->>>)_`>IZS
MXNFNK.]B@TO5+1+75"<^22
M2Z9?WDR;SM)/8$8..G->CU%:VL%E:0VMM$L4$*"..-1@*H&`!4M`!1110`44
M44`%%%%`!1110`5D^)="3Q)H%SI,ES+;+/M_>Q`$@JP8<$$$9'(/4444`5_#
MWA6TT"6YNS//?:I=D&YO[G!DD`Z*```B#LJ@`5O444`%%%%`!1110`4444`%
*%%%`!1110!__V3\_
`
end
GRAPHIC
4
keane.jpg
KEANE SIGNATURE
begin 644 keane.jpg
M_]C_X``02D9)1@`!`0$`R0#)``#_VP!#``P("0L)"`P+"@L.#0P.$AX4$A$1
M$B4;'!8>+"7J#A(6&AXB)BI*3E)66EYB9FJ*CI*6FIZBIJK*SM+6VM[BYNL+#Q,7&
MQ\C)RM+3U-76U]C9VN'BX^3EYN?HZ>KQ\O/T]?;W^/GZ_\0`'P$``P$!`0$!
M`0$!`0````````$"`P0%!@<("0H+_\0`M1$``@$"!`0#!`<%!`0``0)W``$"
M`Q$$!2$Q!A)!40=A<1,B,H$(%$*1H;'!"2,S4O`58G+1"A8D-.$E\1<8&1HF
M)R@I*C4V-S@Y.D-$149'2$E*4U155E=865IC9&5F9VAI:G-T=79W>'EZ@H.$
MA8:'B(F*DI.4E9:7F)F:HJ.DI::GJ*FJLK.TM;:WN+FZPL/$Q<;'R,G*TM/4
MU=;7V-G:XN/DY>;GZ.GJ\O/T]?;W^/GZ_]H`#`,!``(1`Q$`/P#U"XGBMH7F
MG=8XD&69C@`5S>H>,/(-N]IIUQ<6\\JQ)*Q$86^N,5!\0[^VLXM,^T
M.2#=!O))&V10,G(/![#G@9SVK3T?3))Y4U34W2:Y9$8VN7A<_=LXCO/]Z>3#/\`D"!^)H`ZZF22)$A>1U51
MU+'`%$J;XV4,5)&,CJ*Q(?"FGH?-OFGU!QSNO)3(!_P'H/RH`MIX@TN2X6WB
MNTEE8A0L67Y_#I6G5/2Y;.XM%EL`GD$D*47:.#CC\JC\07RZ;HE[=NP410LP
M/OCC]:`)["]@U"W\^V8M&6902",D$@]?<4EK?P75S=6\3$R6KA)01T)4,/T-
M[^(4T-OIAM;);N254%P`V/WA`RB>I&>?3
MBH=4\0^)=+U-0PBD>>T>=[ISZFK[Q)("'16!!4Y'4>E`'G^O_`!#<6MO;:)$L^HRHC2$?,D1;''N<
MG%.U/6/$^B7]JEP1R+;JP_A#?>/X#-;/2@@$@D`
MXZ4`9-M>VVGWEMHEM;39CA!#+&=B*.F6Z9XK(\365_XBO'L+WGMOEF@9<%"!T'J/0BN;F\:O<:9<
M2V"&:]E0FWM8(VD>(=-TAZ#Z5V^!SQUZTU(8T)*1JN>3@8S0!X['=S6T#6=I
MJ"1WFH#S+Z_D8J$0?PKNP2>3G'TK:\':DVC6%RL%Q+J$=S.4TZW/WVQ]YSW5
M<^OI7H<]C:7,B23VT4LD?W6=`2OTJ&ST?3[&XFN+2TBAFF.9'5<%J`.*\+>)
MO$EU!)?7EFMU9+<-&ZPK^]7_`'1W`_/FGW6I32^,;+6;FWU"TTFW@:+=+$5`
MD.>2O4#D07!4?,(Y`V/KBBIXK
M:"%F:*&.-F^\54#/UHH`EHHHH`****`"BBB@`HHHH`****`"BBB@`HHHH`**
1**`"BBB@`HHHH`****`/_]D_
`
end
-----END PRIVACY-ENHANCED MESSAGE-----