SCHEDULE 14A INFORMATION
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 Pursuant to Section240.14a-11(c) or
Section240.14a-12
AMGEN INC.
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(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.
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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/ / Fee paid previously with preliminary materials.
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[AMGEN LETTERHEAD]
March 26, 1998
DEAR STOCKHOLDER:
You are invited to attend the Annual Meeting of
Stockholders of Amgen Inc. to be held on Thursday, May 7,
1998, at 10:30 A.M., PDT, at the Regent Beverly Wilshire
Hotel, 9500 Wilshire Boulevard, Los Angeles, California.
At this year's meeting, you will be asked to elect two
directors and to ratify the selection of the independent
auditors. The accompanying Notice of Meeting and Proxy
Statement describe these proposals. We urge you to read this
information carefully.
Your Board of Directors unanimously believes that election
of its nominees for directors and ratification of its
selection of independent auditors are in the best interests of
Amgen and its stockholders, and, accordingly, recommends a
vote FOR Items 1 and 2 on the enclosed proxy card.
In addition to the formal business to be transacted,
management will make a presentation on developments of the
past year and respond to comments and questions of general
interest to stockholders.
I personally look forward to greeting those Amgen
stockholders able to attend the meeting. If you plan to attend
the Annual Meeting, please complete and return the postage
paid reply card enclosed with the Proxy Statement. We will
then send you a map with directions to the Regent Beverly
Wilshire Hotel and an admission badge to the Annual Meeting.
It is important that your shares be represented and voted
whether or not you plan to attend the Annual Meeting.
THEREFORE, PLEASE SIGN, DATE AND PROMPTLY MAIL THE ENCLOSED
PROXY IN THE PREPAID ENVELOPE PROVIDED.
Thank you.
Sincerely,
/s/ Gordon M. Binder
------------------------------
Gordon M. Binder
CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
AMGEN INC.
ONE AMGEN CENTER DRIVE
THOUSAND OAKS, CALIFORNIA 91320-1789
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 7, 1998
------------------------
TO THE STOCKHOLDERS OF AMGEN INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Amgen
Inc., a Delaware corporation (the "Company"), will be held on Thursday, May 7,
1998, at 10:30 A.M., PDT, at the Regent Beverly Wilshire Hotel, 9500 Wilshire
Boulevard, Los Angeles, California 90212, for the following purposes:
1. To elect two directors to hold office until the Annual Meeting of
Stockholders in the year 2001;
2. To ratify the selection of Ernst & Young LLP as independent auditors of
the Company for the year ending December 31, 1998; and
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on March 11, 1998, as
the record date for the determination of stockholders entitled to notice of and
to vote at this Annual Meeting and at any continuation or adjournment thereof.
By Order of the Board of Directors
/s/ George A. Vandeman
--------------------------------------
George A. Vandeman
SECRETARY
Thousand Oaks, California
March 26, 1998
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A PREPAID ENVELOPE IS ENCLOSED FOR THAT PURPOSE.
EVEN IF YOU HAVE VOTED YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND
THE MEETING. PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A
BROKER, BANK OR OTHER NOMINEE AND YOU WISH TO ATTEND AND VOTE AT THE MEETING,
YOU MUST OBTAIN FROM SUCH BROKER, BANK OR OTHER NOMINEE, A PROXY ISSUED IN YOUR
NAME.
AMGEN INC.
ONE AMGEN CENTER DRIVE
THOUSAND OAKS, CALIFORNIA 91320-1789
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PROXY STATEMENT
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INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors (the
"Board of Directors" or the "Board") of Amgen Inc., a Delaware corporation (the
"Company" or "Amgen"), for use at the Annual Meeting of Stockholders to be held
on Thursday, May 7, 1998, at 10:30 A.M., PDT, (the "Annual Meeting"), or at any
continuation or adjournment thereof, for the purposes set forth herein and in
the accompanying Notice of Annual Meeting. The Annual Meeting will be held at
the Regent Beverly Wilshire Hotel, 9500 Wilshire Boulevard, Los Angeles,
California 90212.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly and mailing of this proxy statement, the proxy and any
additional information furnished to stockholders. Copies of solicitation
materials will be furnished to banks, brokerage houses, fiduciaries and
custodians holding shares of the Company's common stock (the "Common Stock") in
their names which are beneficially owned by others to forward to such beneficial
owners. The Company may reimburse persons representing beneficial owners for
their costs of forwarding the solicitation material to such beneficial owners.
Original solicitation of proxies by mail may be supplemented by telephone,
telegram, telecopy or personal solicitation by directors, officers or other
regular employees of the Company. No additional compensation will be paid to
directors, officers or other regular employees for such services.
The Company intends to mail this proxy statement and accompanying proxy card
on or about March 26, 1998 to all stockholders entitled to vote at the Annual
Meeting.
STOCKHOLDER PROPOSALS
Stockholders interested in presenting a proposal for consideration at the
Company's 1999 Annual Meeting of Stockholders (the "1999 Annual Meeting") may do
so by following the procedures prescribed in Rule 14a-8 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and the Company's Amended
and Restated Bylaws (the "Bylaws"). To be eligible for inclusion in the
Company's 1999 proxy statement, stockholder proposals must be received by the
Company's Secretary no later than November 30, 1998. While the Board will
consider stockholder proposals, the Company however reserves the right to omit
from the Company's 1999 proxy statement stockholder proposals that it is not
required to include under the Exchange Act, including Rule 14a-8 thereunder. The
Company's Bylaws provide that stockholders desiring to nominate persons for
election to the Board of Directors or to bring any other business before the
stockholders at an annual meeting must notify the Secretary of the Company
thereof in writing and such notice must be delivered to or received by the
Secretary no later than 90 days prior to such meeting (provided, however, that
in the event that less than 100 days' notice or prior public disclosure of the
date of the meeting is made to stockholders, the notice must be received not
later than the close of business on the tenth day following the date on which
the notice of the date of such meeting was mailed or the public disclosure was
made). Such notice must include (a) the name and address of the stockholder who
intends to make the nominations or propose the business and, as the case may be,
of the person or persons to be nominated or of the business to be proposed; (b)
a representation that the stockholder is a holder of record of stock of the
Company entitled to vote at such meeting and, if applicable, intends to appear
in person or by proxy at the meeting to nominate the person or persons specified
in the notice;
1
(c) if applicable, a description of all arrangements or understandings between
the stockholder and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination or nominations are to be
made by the stockholder; (d) such other information regarding each nominee or
each matter of business to be proposed by such stockholder as would be required
to be included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission (the "SEC") had the nominee been nominated,
or intended to be nominated, or the matter been proposed, or intended to be
proposed by the Board of Directors; and (e) if applicable, the consent of each
nominee to serve as director of the Company if so elected.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on March 11,
1998, will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on March 11, 1998, there were outstanding and entitled to vote
254,956,329 shares of Common Stock. Stockholders of record on such date are
entitled to one vote for each share of Common Stock held on all matters to be
voted upon at the meeting. A majority of the outstanding shares of Common Stock,
represented in person or by proxy, will constitute a quorum at the Annual
Meeting.
All votes will be tabulated by the inspector of election appointed for the
Annual Meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Under the Company's Bylaws and Delaware law:
(1) shares represented by proxies that reflect abstentions or "broker non-votes"
(I.E., shares held by a broker or nominee which are represented at the meeting,
but with respect to which such broker or nominee is not empowered to vote on a
particular proposal) will be counted as shares that are present and entitled to
vote for purposes of determining the presence of a quorum; (2) there is no
cumulative voting and the director nominees receiving the highest number of
votes, up to the number of directors to be elected, are elected and,
accordingly, abstentions, broker non-votes and withholding of authority to vote
will not affect the election of directors; and (3) proxies that reflect
abstentions as to a particular proposal will be treated as voted for purposes of
determining the approval of that proposal and will have the same effect as a
vote against that proposal, while proxies that reflect broker non-votes will be
treated as unvoted for purposes of determining approval of that proposal and
will not be counted as votes for or against that proposal.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, One Amgen
Center Drive, Thousand Oaks, California 91320-1789, Mail Stop 27-4-A, a written
notice of revocation or a duly executed proxy bearing a later date, or it may be
revoked by attending the meeting and voting in person. Attendance at the meeting
will not, by itself, revoke a proxy.
2
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation, as amended, and Bylaws
provide that the Board of Directors shall be divided into three classes, each
class consisting, as nearly as possible, of one-third of the total number of
directors, with each class having a three-year term. Vacancies on the Board may
be filled only by persons elected by a majority of the remaining directors. A
director elected by the Board to fill a vacancy (including a vacancy created by
an increase in the Board of Directors) will serve for the remainder of the full
term of the class of directors in which the vacancy occurred and until such
director's successor is elected and qualified, or until such director's earlier
death, resignation or removal.
On February 2, 1998, the Board of Directors adopted a resolution amending
the Bylaws to increase the authorized number of directors from eight to nine. As
permitted by the Company's Bylaws, the Board then appointed Mr. Frederick W.
Gluck to fill the vacancy on the Board resulting from the increase in the number
of directors. There are three directors in the class whose term of office
expires in 1998, two of whom are nominees for election to the Board. Mr. Edward
J. Ledder, whose term of office expires in 1998, is retiring from the Board of
Directors effective immediately prior to the Annual Meeting, and the Company's
Bylaws have been amended to decrease the authorized number of directors to eight
effective immediately upon Mr. Ledder's resignation. The Bylaws may be amended
in the future to increase the authorized number of directors. If elected at the
Annual Meeting, each of the two nominees, Mr. Steven Lazarus and Dr. Gilbert S.
Omenn, would serve until the Annual Meeting in the year 2001 and until his
successor is elected and qualified, or until such director's earlier death,
resignation or removal.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote at the Annual Meeting. Stockholders do
not have the right to cumulate their votes in the election of directors. It is
the intention of the persons named in the enclosed proxy, unless authorization
to do so is withheld, to vote the proxies received by them for the election of
the two nominees named below. If, prior to the Annual Meeting, any nominee
should become unavailable for election, an event which currently is not
anticipated by the Board, the proxies will be voted for the election of such
substitute nominee or nominees as the Board of Directors may propose. Each
person nominated for election has agreed to serve if elected and management has
no reason to believe that any nominee will be unable to serve.
Set forth below is biographical information for each person nominated and
for each person whose term of office as a director will continue after the
Annual Meeting.
NOMINEES FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT THE ANNUAL MEETING OF
STOCKHOLDERS IN THE YEAR 2001
STEVEN LAZARUS
Mr. Steven Lazarus, age 66, has served as a director of the Company since
May 1987. Since July 1994, he has been the managing general partner of ARCH
Venture Partners, L.P., an early stage venture capital partnership. He was
President and Chief Executive Officer of the Argonne National Laboratory/The
University of Chicago Development Corporation and was also dean at the Graduate
School of Business, the University of Chicago, from October 1986 to July 1994.
Mr. Lazarus also serves as a director of Illinois Superconductor Corporation,
the National Venture Capital Association, New Era of Networks, Inc., Nanophase
Technologies Corporation, Primark Corporation; and as Vice Chairman of the Board
of Directors of The Northwestern Healthcare Network, Chicago, Illinois.
GILBERT S. OMENN
Dr. Gilbert S. Omenn, age 56, has served as a director of the Company since
January 1987. He has been the Executive Vice President for Medical Affairs for
the University of Michigan Health System since September 1997. Previously, Dr.
Omenn had been the Dean of the School of Public Health and
3
Community Medicine at the University of Washington from 1982 to September 1997.
Dr. Omenn also is a director of Immune Response Corporation, Nutraceutix Inc.,
Ostex International Inc. and Rohm & Haas Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF EACH NAMED NOMINEE.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 1999 ANNUAL MEETING
WILLIAM K. BOWES, JR.
Mr. William K. Bowes, Jr., age 71, has served as a director of the Company
since April 1980. He has been a general partner of U.S. Venture Partners, a
venture capital investment entity, since July 1981. Mr. Bowes also serves as a
director of Applied Micro-Circuits, Inc., Lynx, Inc., Xoma Corporation and one
privately held U.S. Venture Partners portfolio company.
JUDITH C. PELHAM
Ms. Judith C. Pelham, age 52, has served as a director of the Company since
May 1995. She has been President and Chief Executive Officer of Mercy Health
Services, a unified system of institutions, programs and services established to
carry out the health ministry sponsored by the Sisters of Mercy Regional
Community of Detroit, since 1993. From 1987 to 1993, she was President and Chief
Executive Officer of Daughters of Charity Health Services, Austin, Texas.
KEVIN W. SHARER
Mr. Kevin W. Sharer, age 50, has served as a director of the Company since
November 1992. He also has served as President and Chief Operating Officer of
the Company since October 1992. Prior to joining the Company, Mr. Sharer served
as President of the Business Markets Division of MCI Communications Corporation,
a telecommunications company, from April 1989 to October 1992 and served in
numerous executive capacities at General Electric Company from February 1984 to
March 1989. Mr. Sharer also serves as a director of Unocal Corporation.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2000 ANNUAL MEETING
GORDON M. BINDER
Mr. Gordon M. Binder, age 62, has served as a director of the Company since
October 1988. He joined the Company in 1982 as Vice President-Finance and was
named Senior Vice President-Finance in February 1986. Mr. Binder was elected
Chief Executive Officer in October 1988 and Chairman of the Board in July 1990.
FREDERICK W. GLUCK
Mr. Frederick W. Gluck, age 62, was appointed to the Board of Directors of
the Company in February 1998. Mr. Gluck has worked with Bechtel Group, Inc.
since February 1995, where he served as Vice Chairman and Director from January
1996 until July 1997 and currently serves as a director. Prior to 1995, Mr.
Gluck was with McKinsey & Company, Inc. for 27 years, ultimately leading that
firm as its Managing Director from 1988 until 1994. Mr. Gluck retired from
McKinsey & Company in February 1995. Mr. Gluck is currently a director of the
New York and Presbyterian Hospital and The New York and Presbyterian Healthcare
System, ACT Networks, Inc., Broadband Associates, Harvard Business School Board
of Directors of the Associates, Price Waterhouse LLP, Russell Reynolds
Associates, and Thinking Tools, Inc.
4
FRANKLIN P. JOHNSON, JR.
Mr. Franklin P. Johnson, Jr., age 69, has served as a director of the
Company since October 1980. He is the general partner of Asset Management
Partners, a venture capital limited partnership. Mr. Johnson has been a private
venture capital investor for more than five years. He is also Chairman of the
Board of Boole & Babbage, Inc. and a director of IDEC Pharmaceuticals
Corporation and several private companies.
BOARD COMMITTEES AND MEETINGS
The Board of Directors, which held six meetings during the year ended
December 31, 1997, has an Audit Committee, a Compensation Committee, an
Executive Committee, a New Hire Stock Option Committee, a Nominating Committee
and a Strategy Committee.
The Audit Committee recommends engagement of the Company's independent
auditors and approves services performed by such auditors, including the review
and evaluation of the Company's accounting system and its system of internal
controls in connection with the Company's annual audit. During the year ended
December 31, 1997, the Audit Committee met twice. Mr. Bowes serves as Chairman,
and Dr. Omenn and Ms. Pelham serve as members of the Audit Committee.
The Compensation Committee sets guidelines for the administration of all
salaries within the Company, approves recommendations for officers' salaries,
administers incentive compensation and awards stock options to employees and
consultants under the Company's stock option plans and otherwise determines
compensation levels. During the year ended December 31, 1997, the Compensation
Committee met five times. Mr. Ledder serves as Chairman, and Messrs. Johnson and
Lazarus serve as members of the Compensation Committee.
The Executive Committee may exercise, when the Board of Directors is not in
session, all powers of the Board of Directors in the management of the business
and affairs of the Company to the extent permitted by law, the Bylaws of the
Company and as specifically granted by the Board of Directors. During the year
ended December 31, 1997, the Executive Committee met once. Mr. Binder serves as
Chairman, and Messrs. Bowes and Johnson serve as members of the Executive
Committee.
The New Hire Stock Option Committee principally grants stock options to
non-officer employees upon commencement of employment with the Company and its
subsidiaries in accordance with the guidelines established by the Compensation
Committee. During the year ended December 31, 1997, the New Hire Stock Option
Committee did not meet, but did take action by written consent. Mr. Binder is
the sole member of the New Hire Stock Option Committee and Mr. Sharer is an
alternate member who may act in the absence of Mr. Binder.
The Nominating Committee interviews, evaluates, nominates and recommends
individuals for membership on the Company's Board of Directors and committees
thereof and nominates specific individuals to be elected as officers of the
Company by the Board of Directors. During the year ended December 31, 1997, the
Nominating Committee met twice. Mr. Bowes serves as Chairman, and Mr. Johnson
and Dr. Omenn serve as members of the Nominating Committee. The Nominating
Committee will consider nominees for directors nominated by stockholders upon
submission in writing to the Secretary of the Company of the names of such
nominees in accordance with the Company's Bylaws.
The Strategy Committee meets with management of the Company to review
research strategies and major proposals for collaborations and licensing of
technology. During the year ended December 31, 1997, the Strategy Committee met
three times. Mr. Lazarus serves as Chairman, and Mr. Ledder, Dr. Omenn and Ms.
Pelham serve as members of the Strategy Committee.
During the year ended December 31, 1997, all of the directors attended at
least 75% of the total number of meetings of the Board of Directors and
committees on which they served.
5
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP as the Company's
independent auditors for the year ending December 31, 1998, and has further
directed that management submit the selection of independent auditors for
ratification by the stockholders at the Annual Meeting. Ernst & Young LLP has
audited the Company's financial statements since the Company's inception in
1980. Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting and will have an opportunity to make a statement if they so
desire and will be available to respond to appropriate questions.
Stockholder ratification of the selection of Ernst & Young LLP as the
Company's independent auditors is not required by the Company's Bylaws or
otherwise. However, the Board is submitting the selection of Ernst & Young LLP
to the stockholders for ratification as a matter of corporate practice. If the
stockholders fail to ratify the selection, the Board will reconsider whether or
not to retain that firm. Even if the selection is ratified, the Board in its
discretion may direct the appointment of a different independent accounting firm
at any time during the year if the Board determines that such a change would be
in the best interests of the Company and its stockholders.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the meeting will be
required to ratify the selection of Ernst & Young LLP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 2.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of March 2, 1998, by: (i) each
director; (ii) the Company's Chief Executive Officer and each of its other four
most highly compensated executives (collectively the "Named Executive Officers")
for the year ended December 31, 1997; and (iii) all directors and executive
officers of the Company as a group. The Company is not aware of any person who
is a beneficial owner of more than 5% of its Common Stock.
COMMON STOCK
BENEFICIALLY OWNED
(1)(2)
-----------------------
NUMBER OF PERCENT OF
BENEFICIAL OWNER SHARES TOTAL
- ----------------------------------------------------------------------------------------- ---------- -----------
Gordon M. Binder......................................................................... 1,513,850 *
William K. Bowes, Jr..................................................................... 2,476,200 *
Frederick W. Gluck....................................................................... 0 *
Franklin P. Johnson, Jr. (3)............................................................. 1,263,100 *
Steven Lazarus........................................................................... 91,980 *
Edward J. Ledder......................................................................... 63,500 *
Gilbert S. Omenn (4)..................................................................... 139,370 *
Judith C. Pelham......................................................................... 20,300 *
Kevin W. Sharer.......................................................................... 171,592 *
N. Kirby Alton (5)....................................................................... 32,457 *
George A. Vandeman....................................................................... 66,591 *
George Morstyn........................................................................... 48,933 *
All directors and executive officers as a group (20 persons) (3)(4)...................... 6,274,727 2.4
- ------------------------
* Less than 1%
(1) This table is based upon information supplied by directors and executive
officers. To the Company's knowledge, no Schedules 13D and 13G were filed
with the SEC. Unless otherwise indicated in the
6
footnotes and subject to community property laws where applicable, each of
the stockholders has sole voting and/or investment power with respect to
such shares.
(2) Includes shares which the individuals shown have the right to acquire on
March 2, 1998, or within 60 days thereafter, pursuant to outstanding
options, as follows: Mr. Binder-1,344,274 shares; Mr. Bowes-120,300 shares;
Mr. Johnson-120,300 shares; Mr. Lazarus-76,379 shares; Mr. Ledder-60,300
shares; Dr. Omenn-64,245 shares; Ms. Pelham-19,300 shares; Mr.
Sharer-167,580 shares; Dr. Alton-16,560 shares; Mr. Vandeman-66,420 shares;
Dr. Morstyn-45,748 shares; and all current directors and executive officers
as a group-2,379,150 shares. Such shares are deemed to be outstanding in
calculating the percentage ownership of such individual (and the group), but
are not deemed to be outstanding as to any other person.
(3) Includes 1,118,800 shares held by Asset Management Partners, a venture
capital limited partnership, of which Mr. Johnson is the general partner. As
the general partner, Mr. Johnson may be deemed to have voting and investment
power as to all of these shares, and therefore may be deemed to be a
beneficial owner of such shares.
(4) Includes 1,240 shares held by one of Dr. Omenn's children.
(5) Excludes 6,438 shares held by trusts established for the benefit of Dr.
Alton's children. Dr. Alton disclaims beneficial ownership of all such
shares.
In 1993, the Company exercised its option to purchase the Class A and Class
B limited partnership interests of Amgen Clinical Partners, L.P. (the
"Partnership"), a limited partnership previously formed to develop and
commercialize products from certain technologies for human pharmaceutical use in
the United States. As a result of the Company exercising such option, each
holder of a limited partnership interest in the Partnership acquired contractual
contingent payment rights based on the number of such holder's interests. The
contractual contingent payment rights are not voting securities but entitle the
holders thereof to receive quarterly payments, subject to certain adjustments,
equal to a stated percentage of the Company's sales of certain products in
specified geographic areas. In 1997, holders received $57,787 for each whole
contractual contingent payment right held. The following table sets forth
certain information regarding the ownership of the Company's contractual
contingent payment rights as of March 2, 1998, by: (i) each director; (ii) each
of the five Named Executive Officers of the Company; and (iii) all directors and
executive officers of the Company as a group:
CONTRACTUAL CONTINGENT
PAYMENT RIGHTS
BENEFICIALLY OWNED(1)
-----------------------
NUMBER OF PERCENT OF
BENEFICIAL OWNER RIGHTS TOTAL
- -------------------------------------------------------------------------------------------- ---------- -----------
Gordon M. Binder............................................................................ 1 *
William K. Bowes, Jr........................................................................ 2 *
Frederick W. Gluck.......................................................................... 0 *
Franklin P. Johnson, Jr. (2)................................................................ 4 *
Steven Lazarus.............................................................................. 0 *
Edward J. Ledder............................................................................ 0 *
Gilbert S. Omenn............................................................................ .5 *
Judith C. Pelham............................................................................ 0 *
Kevin W. Sharer............................................................................. 0 *
N. Kirby Alton.............................................................................. .25 *
George A. Vandeman.......................................................................... 0 *
George Morstyn.............................................................................. 0 *
All directors and executive officers as a group (20 persons) (2)............................ 8 *
- ------------------------
* Less than 1%
7
(1) This table is based upon information supplied by the directors and executive
officers. To the Company's knowledge, no Schedules 13D and 13G were filed
with the SEC. Unless otherwise indicated in the footnotes and subject to
community property laws where applicable, each holder of a contractual
contingent payment right(s) has sole investment power with respect to such
right(s) beneficially owned.
(2) Includes four rights held by Asset Management Partners, a venture capital
limited partnership, of which Mr. Johnson is the general partner. As the
general partner, Mr. Johnson may be deemed to have investment power as to
all of these rights, and therefore may be deemed to be a beneficial owner of
such rights.
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
Directors of the Company who are also employees of the Company are not
separately compensated for their services as directors. During the year ended
December 31, 1997, each non-employee director received a quarterly retainer of
$5,000 (plus $1,500 for a committee chairman) and a per Board meeting fee of
$1,250 (plus $750 for committee members attending a committee meeting, up to a
maximum of $1,500 for all committee meetings held on the same day). The members
of the Board of Directors also are entitled to reimbursement of their expenses
incurred in connection with attendance at Board and committee meetings in
accordance with Company policy. There are no family relationships among any
directors of the Company.
Under the Amended and Restated 1991 Equity Incentive Option Plan (the "1991
Plan"), in 1997 each non-employee director was automatically granted a
non-discretionary option (a "Formula Grant") to purchase shares of Common Stock
of the Company. The number of shares subject to such Formula Grant was
determined under a formula set forth in the 1991 Plan, which also provided that
in no event would the number of shares subject to such Formula Grant exceed
10,000 shares. The exercise price of options granted under the 1991 Plan is
equal to 100% of the fair market value of the underlying stock on the date of
the option grant. In addition, newly appointed non-employee directors may
receive an inaugural option pursuant to a formula set forth in the 1991 Plan on
terms comparable to the Formula Grants.
A Formula Grant awarded to a non-employee director under the 1991 Plan may
not be exercised: (a) unless such director has, at the date of grant, provided
three years of prior continuous service as a non-employee director, in which
case such Formula Grant will vest upon grant; or (b) until the date upon which
such director has provided one year of continuous service as a non-employee
director following the date of grant of such Formula Grant, whereupon such
Formula Grant will become fully vested and exercisable. No option under the 1991
Plan is exercisable by the optionee after the expiration of ten years from the
date the original option is granted.
A non-employee director optionee is entitled to a reload option ("Reload
Option") in the event the optionee exercises his or her option, in whole or in
part, by surrendering other shares of Common Stock of the Company held by such
non-employee director in accordance with the 1991 Plan and the terms of the
option grant. Any such Reload Option: (i) will be for a number of shares of
Common Stock equal to the number of shares of Common Stock surrendered as part
or all of the exercise price of the original option; (ii) will have an
expiration date that is the same as the expiration date of the original option;
and (iii) will have an exercise price that is equal to 100% of the fair market
value of the Common Stock subject to the Reload Option on the date of exercise
of the original option. Any such Reload Option will be subject to the
availability of sufficient shares under the 1991 Plan. There will be no Reload
Option on a Reload Option.
8
The Company granted in January 1997, to the seven non-employee directors who
served during the year ended December 31, 1997, Formula Grants under the 1991
Plan covering an aggregate of 20,300 shares at an exercise price of $54.9375 per
share. In addition, in September 1997, Reload Options for 3,945 shares, at an
exercise price of $49.375 per share, were granted to Dr. Omenn. On December 9,
1997, Ms. Pelham received a discretionary option grant for 11,000 shares, with
an exercise price of $52.6875 per share; and on February 2, 1998, Mr. Gluck
received an inaugural option grant for 15,000 shares, with an exercise price of
$54 per share, upon his appointment to the Board.
In December 1997, the Board amended the formula pursuant to which
non-employee directors receive automatic annual grants. Accordingly, beginning
in January 1998, non-employee directors received Formula Grants of 4,000 shares;
inaugural grants to new non-employee directors are 15,000 shares.
COMPENSATION OF EXECUTIVE OFFICERS
The following table shows for the years ended December 31, 1997, 1996 and
1995, respectively, certain compensation awarded or paid to, or earned by, the
Named Executive Officers for all services rendered in all capacities to the
Company:
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
ANNUAL COMPENSATION -------------
----------------------------------------- SECURITIES ALL OTHER
NAME AND OTHER ANNUAL UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($) COMPENSATION($) OPTIONS(#)(2) ($)(3)(4)
- ----------------------------------- --------- ----------- --------- ----------------- ------------- -------------
Gordon M. Binder, 1997 799,024 638,123 335,965 242,180
Chief Executive Officer and 1996 724,311 900,000 112,600 163,128
Chairman of the Board 1995 613,176 900,000 150,000 129,142
Kevin W. Sharer, 1997 506,755 326,157 178,958 147,567
President, Chief Operating 1996 471,669 733,187 55,000 108,259
Officer and Director 1995 427,916 623,265 90,000 66,237
N. Kirby Alton, 1997 383,779 298,583 109,373 109,352
Senior Vice President, 1996 353,957 453,517 28,000 72,341
Development 1995 313,500 345,525 40,000 45,195
George A. Vandeman, 1997 352,492 268,884 3,137(7) 103,873 88,154
Senior Vice President, General 1996 336,040 432,743 868(7) 32,100 51,727
Counsel and Secretary 1995 163,846(5) 662,429(6) 200,000(8) 49,535
George Morstyn, 1997 337,644 210,479 86,712 84,944
Vice President, Clinical
Development and Chief Medical
Officer (9)
- ------------------------
(1) Includes compensation deferred under the Company's Retirement and Savings
Plan, as amended (the "401(k) Plan") otherwise payable in cash during each
calendar year.
(2) For 1995, the number of securities underlying options has been adjusted to
reflect the Company's 2 for 1 stock split in the form of a 100% stock
dividend to stockholders of record on August 1, 1995.
(3) The amounts shown for 1997 are comprised primarily of Company credits to the
Supplemental Retirement Plan (the "SRP"), with additional amounts included
as a result of a contribution (the "Company Contribution") to the Company's
401(k) Plan for each of the Named Executive Officers (see footnote 4 below
for a description of the Company Contribution). The SRP is a non-qualified,
9
unfunded, deferred compensation plan. Participation in the SRP is available
to selected participants in the Company's 401(k) Plan who are affected by
the Internal Revenue Code limits on the amount of employee compensation that
may be recognized for purposes of calculating the Company's contributions to
the 401(k) Plan. Pursuant to the SRP, the following Named Executive Officers
were credited with the following amounts, including accrued dividends,
interest and unrealized gains or losses for the years ended December 31,
1997, 1996 and 1995, respectively: Mr. Binder, $229,380, $151,590 and
$117,792; Mr. Sharer, $134,767, $96,721 and $54,887; Dr. Alton, $96,552,
$60,803 and $33,845; Mr. Vandeman, $75,354, $40,289 and $39,685; and Dr.
Morstyn, $72,144. Dr. Morstyn was promoted to an executive officer on
November 17, 1997, and, accordingly, pursuant to the SEC rules and
regulations no figures are required to be reported prior to 1997.
(4) The amounts shown for 1997 include a Company Contribution in the amount of
$12,800 to the Company's 401(k) Plan for each of the Named Executive
Officers. The amounts shown for 1996 and 1995 include a Company Contribution
pursuant to the 401(k) Plan in the amount of $11,538 and $11,350,
respectively, for each of the Named Executive Officers, except for Mr.
Vandeman for whom the Company Contribution for 1995 was $9,850.
(5) Represents Mr. Vandeman's salary paid from commencement of his employment as
Senior Vice President, General Counsel and Secretary on June 30, 1995.
(6) Includes a signing bonus of $509,335 and a payment of $153,094 under the
Company's performance based Management Incentive Plan.
(7) Represents payments to Mr. Vandeman for taxes payable by him as a result of
payments to or on behalf of Mr. Vandeman in connection with his relocation
to the Thousand Oaks area.
(8) Represents stock options granted to Mr. Vandeman in connection with his
employment by the Company.
(9) Dr. Morstyn was promoted to an executive officer on November 17, 1997, and,
accordingly, pursuant to the SEC rules and regulations no figures are
required to be reported prior to 1997.
10
STOCK OPTION GRANTS AND EXERCISES
The Company has granted options to its executive officers under the 1991
Plan and other Company stock option plans (collectively, the "Option Plans").
The following tables show for the year ended December 31, 1997, certain
information regarding options granted to, exercised by, and held at year end by
each of the Named Executive Officers:
OPTION GRANTS IN FISCAL YEAR 1997
INDIVIDUAL GRANTS
- --------------------------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES PERCENT OF TOTAL PRICE APPRECIATION FOR
UNDERLYING OPTIONS GRANTED EXERCISE OR OPTION TERM(1)
OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION ----------------------
NAME GRANTED(#)(2)(3) FISCAL YEAR(4) ($/SH) DATE 5%($) 10%($)
- ------------------------------ ---------------- ---------------- ----------- ----------- ---------- ----------
Gordon M. Binder.............. 17,000(5) .13% 57.875 02/18/04 400,536 933,419
141,800(6) 1.10% 56.5625 07/01/04 3,265,174 7,609,245
177,165(8) 1.37% 52.375 12/23/04 3,777,492 8,803,162
Kevin W. Sharer............... 81,800(6) .63% 56.5625 07/01/04 1,883,577 4,389,536
97,158(8) .75% 52.375 12/23/04 2,071,592 4,827,690
N. Kirby Alton................ 49,100(6) .38% 56.5625 07/01/04 1,130,607 2,634,795
60,273(8) .47% 52.375 12/23/04 1,285,134 2,994,909
George A. Vandeman............ 43,600(6) .34% 56.5625 07/01/04 1,003,961 2,339,655
60,273(8) .47% 52.375 12/23/04 1,285,134 2,994,909
George Morstyn................ 32,700(6) .25% 56.5625 07/01/04 752,970 1,754,741
6,720(7) .05% 52.6875 12/09/04 144,138 335,903
47,292(8) .37% 52.375 12/23/04 1,008,355 2,349,895
- ------------------------
(1) The potential realizable value is based on the term of the option at the
time of its grant, which is seven years for the stock options granted to the
Named Executive Officers in the table. The assumed 5% and 10% annual rates
of appreciation over the term of the options are set forth in accordance
with rules and regulations adopted by the SEC and do not represent the
Company's estimates of stock price appreciation. The potential realizable
value is calculated by assuming that the stock price on the date of grant
appreciates at the indicated rate, compounded annually, for the entire term
of the option and that the option is exercised and the stock sold on the
last day of its term at this appreciated stock price. No valuation method
can accurately predict future stock prices or option values because there
are too many unknown factors. No gain to the optionee is possible unless the
stock price increases over the option term. Such a gain in stock price would
benefit all stockholders.
(2) Under the terms of the Option Plans, the Board of Directors retains
discretion, subject to plan limitations, to modify the terms of outstanding
options and to reprice the options. The Board of Directors has delegated
administration of the Option Plans to the Compensation Committee of the
Board of Directors.
(3) The options were granted to the Named Executive Officers in the table for a
term of seven years, subject to earlier termination if the optionee ceases
employment with the Company. Each option agreement contains a provision
entitling the optionee to a Reload Option in the event the optionee
exercises the option, in whole or in part, by surrendering shares of Common
Stock in accordance with the Option Plans. Any such Reload Option: (i) will
be for a number of shares of Common Stock equal to the number of shares of
Common Stock surrendered as part or all of the exercise price of the
original option; (ii) will have an expiration date that is the same as the
expiration date of the original
11
option; and (iii) will have an exercise price that is equal to 100% of the
fair market value of the Common Stock subject to the Reload Option on the
date of exercise of the original option. There will be no Reload Option on a
Reload Option.
(4) In 1997, the Company granted stock options covering a total of 12,911,531
shares of Common Stock to Company employees under its various option plans
and this number was used in calculating the percentages.
(5) Represents an option for 17,000 shares granted to Mr. Binder that became
fully vested on its grant date.
(6) Represents options granted as part of the annual periodic stock option
grants made to all eligible employees of the Company, and such options
become exercisable as to 20% of the shares covered thereby one year after
the grant date and an additional 20% on each successive anniversary date,
with full vesting occurring on the fifth anniversary date. The vesting of
all options issued pursuant to the Option Plans will be automatically
accelerated in the event of a change in control (as defined in the Option
Plans). In addition, the options are subject to certain accelerated vesting
upon the death or disability of the optionee while in the employ of the
Company, death within three months after termination of employment or
voluntary retirement of the optionee, as provided in the option grant
agreement.
(7) Represents an option granted to Dr. Morstyn, in connection with his
promotion to executive officer on November 17, 1997, that becomes
exercisable as to 25% of the shares covered thereby one year after the grant
date and an additional 25% on each successive anniversary date, with full
vesting occurring on the fourth anniversary date.
(8) Represents options granted as part of options granted in December 1997 to
all eligible employees of the Company, and such options become fully
exercisable on the earlier of (i) the date on which the Fair Market Value
(as defined in the option grant agreement utilized for such options) of a
share of the Company's Common Stock equals or exceeds $75 per share or (ii)
the fifth anniversary of the date of the grant.
12
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1997
AND FISCAL YEAR-END 1997 OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN- THE-MONEY OPTIONS
SHARES OPTIONS AT FY-END(#) AT FY-END($)(2)
ACQUIRED ON VALUE ----------------------- -----------------------
NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------------------- -------------- ------------- ----------------------- -----------------------
Gordon M. Binder............... 154,904 8,863,550 1,355,274/548,671 59,348,465/3,233,084
Kevin W. Sharer................ 75,000 2,542,950 187,080/393,040 4,134,033/4,139,450
N. Kirby Alton................. 60,696 1,744,552 16,560/178,229 247,600/1,196,104
George A. Vandeman............. 0 0 66,420/249,553 1,068,750/2,242,978
George Morstyn................. 42,400 1,899,726 48,748/143,724 1,107,694/906,010
- ------------------------
(1) Value realized is based on the market value of the Company's Common Stock on
the date of exercise, minus the exercise price, and does not necessarily
indicate that the optionee sold such stock.
(2) Value of unexercised in-the-money options is calculated based on the market
value of the underlying securities, minus the exercise price, and assumes
sale of the underlying securities on December 31, 1997 at a price of $54.125
per share, the fair market value of the Company's Common Stock on such date.
COMPENSATION ARRANGEMENTS
In June 1995, Mr. Vandeman became Senior Vice President, General Counsel and
Secretary of the Company. In connection with Mr. Vandeman's employment, the
Company granted him an option to purchase 200,000 shares of Common Stock with an
exercise price equal to 100% of the fair market value of the Common Stock on
June 1, 1995. This option vests in five equal annual installments commencing
with the first anniversary of grant and expires seven years from the date of
grant. The Company has guaranteed that, calculated as if Mr. Vandeman had not
sold any of the underlying shares, the then vested portion of such options will
appreciate in value by at least $2.5 million on at least one day on or before
June 1, 2000. Notwithstanding the foregoing, the Company has not guaranteed that
Mr. Vandeman will realize this profit if Mr. Vandeman does not sell all of the
vested option shares on the date that such value is realizable.
COMPENSATION COMMITTEE REPORT(1)
The Board of Directors has delegated to the Compensation Committee of the
Board of Directors (the "Compensation Committee") the authority to establish and
maintain the Job Grade and Compensation Range Tables and Merit Increase
Guidelines used to establish initial salary guidelines and merit pay increases
throughout the Company and as the basis for making specific recommendations to
the Board concerning the compensation of senior officers, including the Chief
Executive Officer. In addition, the Compensation Committee administers the
performance based Management Incentive Plan (the "MIP"), the Company's various
stock option plans (collectively the "Stock Option Plans"), the 401(k) Plan, the
SRP, the Employee Stock Purchase Plan and all other compensation and benefit
programs currently in place at the Company. Compensation Committee members are
all non-employee directors.
The Compensation Committee intends to design and administer its compensation
plans to support the achievement of the Company's long-term strategic
objectives, to enhance stockholder value and, to the
- ------------------------
1 The material in this report and in the performance graph is not soliciting
material, is not deemed filed with the SEC, and is not incorporated by
reference in any filing of the Company under the Securities Act of 1933, as
amended, or the Exchange Act whether made before or after the date of this
proxy statement and irrespective of any general incorporation language in
such filing.
13
extent possible, to maximize the deductibility of compensation for tax purposes.
The Omnibus Budget Reconciliation Act of 1993 placed a one million dollar limit
on the amount of non-performance based compensation for Named Executive Officers
that may be deducted by the Company for tax purposes. The Committee has been
advised that based upon prior stockholder approval of the material terms of the
MIP and the 1991 Plan, and Section 162(m) transition rules, compensation under
these plans is excluded from this limitation.
The method used by the Compensation Committee to determine executive
compensation is designed to provide for a base salary that, while competitive
with comparable companies, is nevertheless calculated to result in a base salary
that is slightly lower than the middle of the competitive range for those
companies. Base salary is supplemented by two additional compensation
components: first, the MIP, designed to reward participants for individual and
Company-wide performance; and second, the Company's Stock Option Plans, designed
to provide long-term incentives to all employees of the Company. Each of these
components is described below.
BASE SALARY
Base Salaries for all employees, including executive officers of the
Company, are determined based on an established Job Grade and Compensation Range
Table that is designed to provide a Base Salary that ensures that salaries,
while remaining competitive with comparable companies, are slightly lower than
the middle of the range for executive officers and at the middle of the range
for all other employees of the companies surveyed. In monitoring the Executive
Job Grade and Compensation Range Table, the members of the Compensation
Committee compared compensation information derived from compensation surveys
outlining compensation levels at major pharmaceutical companies, the majority of
which are included in the Standard & Poor's Drug Index, leading biotechnology
companies and other high technology companies.(2) Adjustments to each
individual's Base Salary are made in connection with annual performance reviews.
The amounts of such increases are calculated using compensation levels at
comparable companies and the Merit Increase Guidelines that provide for
percentage salary increases based on the position in the Compensation Range and
the result of each individual's annual performance review. The recommended
percentage increases are adjusted annually and reflect the Compensation
Committee's assessment of appropriate salary adjustments given the results of
competitive surveys and general economic conditions.
PERFORMANCE BASED MANAGEMENT INCENTIVE PLAN
The MIP has been established to reward participants for their contributions
to the achievement of Company-wide performance goals. All officers of the
Company and certain other key employees, as determined by the Compensation
Committee, participate in the MIP. MIP payouts are established at a level
designed to ensure that when such payouts are added to a participant's Base
Salary, the resultant compensation for above average performance will exceed the
average cash compensation level of comparable companies.
The structure of the MIP provides for the development of a compensation pool
(the "Pool"). Amounts attributable to the Pool are based upon the achievement of
certain specified performance goals and milestones established by members of
management and approved by the Compensation Committee at the beginning of each
MIP period. As implemented by the Compensation Committee, at least 50% of the
Pool determination will be based upon Return on Capital Employed ("ROCE") and
Growth in Revenue,
- ------------------------
2 The Committee utilizes data and summaries provided by independent consulting
firms to determine comparable companies, including major pharmaceutical,
leading biotechnology and other high technology companies, and their
compensation levels.
14
with the remainder based upon two or three major goals selected by the
Compensation Committee from the goals established by management in connection
with the planning process. Target awards for participants are established
pursuant to a percentage formula relating to Base Salary. The MIP provides for a
range of payouts based on actual achievements, with both the size of the Pool
and the individual awards subject to an upside potential of 150% of applicable
targets for the achievement of performance that is significantly above the
target levels. No awards are made to the participants, regardless of the
performance achieved on the other goals or by individual participants, unless
either the minimum ROCE or the minimum Growth in Revenue goal is achieved.
At the beginning of each MIP period, participants in the MIP are required to
work with upper management to define individual performance objectives that will
contribute to the success of the Company. Each participant's payout from the MIP
Pool is based upon the respective supervisor's and the Compensation Committee's
assessment of achievement of the participant's goals. Performance objectives are
stated as a range of possible measured achievements. In order to be eligible to
receive a payout from the MIP, each individual participant must have achieved
his or her individual performance objectives at least at the minimum threshold.
The minimum threshold represents significant, but less than planned,
performance. The payout at the minimum threshold is usually 50% of the target
payout, assuming Pool goals are achieved at target. The maximum amount payable
under the MIP to any participant may not exceed $900,000.
The Pool goals for the MIP period ended December 31, 1997 included goals
related to ROCE, Growth in Revenue, specific product development objectives and
profit after taxes. The relative weightings of these four factors in determining
the total Pool were 30%, 20%, 25% and 25%, respectively. Based upon evaluations
by management and approved by the Compensation Committee, the Company achieved
78.4% of the target Pool goals established under the MIP for the period ended
December 31, 1997. For 1997, in order to stimulate increased effort toward the
development of potential products, the Pool included an incentive equal to 5% of
the maximum payable under the Pool goals for the development and/or acquisition
of two novel molecules with therapeutic potential. The achievement of these
objectives resulted in the inclusion of this incentive in the MIP payout.
STOCK OPTION PLANS
The Stock Option Plans offered by the Company have been established to
provide all employees with an opportunity to share, along with stockholders, in
the long-term performance of the Company.
In December 1997, the Compensation Committee recommended and the Board of
Directors approved the adoption of the 1997 Special Non-Officer Equity Incentive
Plan (the "1997 Plan"). The provisions of the 1997 Plan are substantially the
same as those of the 1991 Plan except that under the 1997 Plan: 1) awards are
limited to non-officer employees of the Company; 2) option awards will be in the
form of Non-Qualified Stock Options; 3) Reload Options may not be granted; and
4) the repricing of awards previously granted under the 1997 Plan is not
permitted.
Periodic grants of stock options are generally made annually to all eligible
employees, with additional grants being made to certain employees upon
commencement of employment and occasionally, following a significant change in
job responsibility, scope or title or a particularly noteworthy achievement.
Stock options granted under the Stock Option Plans generally have a three-,
four- or five-year vesting schedule and generally expire seven years from the
date of grant. The exercise price of options granted under the Stock Option
Plans is 100% of the fair market value of the underlying stock on the date of
grant. Guidelines for the number of stock options for each participant in the
periodic grant program generally are determined by a procedure established by
the Compensation Committee based upon several factors including the salary grade
midpoint, the performance of each participant and the approximate market price
of the stock at the time of grant. The size of the grants, as developed under
the procedure, are targeted to be somewhat above competitive levels as a
reflection of both the added incentive to continue
15
the favorable competitive performance of the Company, as well as the risk
attached to the future growth of the biotech industry.
In December 1997, the Compensation Committee approved a special stock option
award to all eligible employees. These awards were intended to serve as a means
to retain valuable contributors to Amgen's long-term success. The options have
an exercise price equal to 100% of the fair market value of the underlying stock
on the grant date and contain a special vesting provision providing that the
options will vest on the earlier of (i) the date on which the closing price of
Amgen Common Stock equals or exceeds $75 per share or (ii) 5 years from the
grant date.
CEO COMPENSATION
Mr. Binder's Base Salary, MIP payout and grants of stock options were
determined in accordance with the criteria described in the "Base Salary,"
"Management Incentive Plan" and "Stock Option Plans" sections of this report.
Mr. Binder's Base Salary of $799,024 reflects the Board's assessment of his very
favorable performance and his position in the Grade and Range Table.
The MIP target for Mr. Binder for the MIP period ended December 31, 1997 was
set at 93% of Base Salary. The actual award under the MIP for the MIP period
ended December 31, 1997 was $638,123 or 79.9% of Base Salary. Payments made to
Mr. Binder as a participant in the MIP for the period ended December 31, 1997
reflect both the Company's level of achievement of the Pool goals and Mr.
Binder's level of achievement of his individual performance objectives, which
included goals relating to ROCE; Growth in Revenue; product development
objectives; income after taxes; research; government affairs; and licensing and
acquisition of product candidates. As previously discussed, no awards are made
to MIP participants unless the Company achieves either the minimum ROCE or
minimum Growth in Revenue goal.
In February 1997, Mr. Binder was granted an option to purchase 17,000 shares
of Common Stock of the Company at 100% of fair market value on the date of
grant, or $57.88 per share, to reflect Mr. Binder's MIP achievements in excess
of the maximum award permitted thereunder for 1996. In July 1997 and December
1997, Mr. Binder was granted a periodic option and a special option,
respectively, to purchase 141,800 and 177,165 shares of Common Stock of the
Company at 100% of fair market value on the date of grant, or $56.56 and $52.38
per share, respectively. All three grants reflect the Board's assessment of the
substantial contributions made by Mr. Binder to the performance and long-term
growth of the Company.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Edward J. Ledder, Chairman
Steven Lazarus
Franklin P. Johnson, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1997, the Company's Compensation Committee consisted of Messrs.
Johnson, Lazarus and Ledder, and Dr. Raymond F. Baddour, all of whom are or were
during their service non-employee directors. Dr. Baddour retired from the Board
of Directors and therefore the Compensation Committee effective May 8, 1997. No
member of the Compensation Committee has a relationship that would constitute an
interlocking relationship with executive officers or directors of another
entity.
16
PERFORMANCE MEASUREMENT COMPARISON
The chart set forth below shows the value of an investment of $100 on
December 31, 1992 in each of Amgen Common Stock, the Nasdaq Pharmaceutical Index
(the "Nasdaq Pharmaceutical"), the Standard & Poor's Drug Index (the "S&P Drug")
and the Standard & Poor's 500 Index (the "S&P 500"). All values assume
reinvestment of the pre-tax value of dividends paid by companies included in
these indices and are calculated as of December 31 of each year.
The historical stock price performance of the Common Stock shown in the
performance graph below is not necessarily indicative of future stock price
performance.
AMGEN STOCK PRICE VS. NASDAQ PHARMACEUTICAL, S&P DRUG, S&P 500 INDEXES
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN VALUE OF INVESTMENT OF $100 ON DECEMBER 31,
1992
Amgen Inc. Nasdaq Pharmaceutical
12/31/92 $100.00 $100.00
12/31/93 70.09 89.13
12/31/94 83.54 67.08
12/31/95 168.14 122.72
12/31/96 153.98 123.08
12/31/97 153.27 127.19
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN VALUE OF INVESTMENT OF $100 ON DECEMBER 31,
1992
S&P Drug S&P 500
12/31/92 $100.00 $100.00
12/31/93 88.52 110.06
12/31/94 99.60 111.51
12/31/95 170.96 153.42
12/31/96 213.10 188.64
12/31/97 339.53 251.58
12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
--------- --------- --------- --------- --------- ---------
Amgen........................................... $ 100.00 $ 70.09 $ 83.54 $ 168.14 $ 153.98 $ 153.27
Nasdaq Pharmaceutical........................... $ 100.00 $ 89.13 $ 67.08 $ 122.72 $ 123.08 $ 127.19
S&P Drug........................................ $ 100.00 $ 88.52 $ 99.60 $ 170.96 $ 213.10 $ 339.53
S&P 500......................................... $ 100.00 $ 110.06 $ 111.51 $ 153.42 $ 188.64 $ 251.58
17
CERTAIN TRANSACTIONS
The Company has made loans to Mr. Stan M. Benson, Ms. Kathryn E. Falberg,
Mr. Edward F. Garnett, and Messrs. Sharer and Vandeman, all of whom are
executive officers of the Company. Each such loan is evidenced by a full
recourse promissory note secured by real estate valued in excess of the
principal balance of such loan. The loans to Messrs. Benson, Garnett, Sharer and
Vandeman were made in connection with their respective relocations closer to the
Thousand Oaks vicinity. The loan to Ms. Falberg was made for home improvement
purposes. The annual interest rate on each such loan was 4.1% during the year
ended December 31, 1997 and will be 4.3% for the year ending December 31, 1998.
These interest rates are established and adjusted annually based on the average
introduction rates on adjustable loans offered by California banks and savings
and loans. Including principal and accrued interest, the largest aggregate
indebtedness since January 1, 1997, of Messrs. Benson, Garnett, Sharer and
Vandeman and Ms. Falberg under such loans was $400,000, $100,000, $200,000,
$1,769,700 and $79,000, respectively. The aggregate outstanding indebtedness at
March 15, 1998, of Messrs. Benson, Garnett, Sharer and Vandeman and Ms. Falberg
under such loans was $400,000, $100,000, $200,000, $1,715,229 and $79,000,
respectively.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who own more than 10% of a registered class of the
Company's equity securities ("Reporting Persons"), to file reports of ownership
and changes in ownership with the SEC and with The Nasdaq Stock Market.
Reporting Persons are required by SEC regulations to furnish the Company with
copies of all forms they file pursuant to Section 16(a).
Based solely on its review of the copies of such reports received by it, and
written representations from certain Reporting Persons that no other reports
were required for those persons, the Company believes that, during the year
ended December 31, 1997, the Reporting Persons complied with all Section 16(a)
filing requirements applicable to them.
OTHER BUSINESS
The Board of Directors knows of no other business that will be presented for
consideration at the Annual Meeting. If other matters are properly brought
before the meeting, it is the intention of the persons named in the accompanying
proxy to vote the shares represented thereby on such matters in accordance with
their best judgment.
By Order of the Board of Directors
/s/ George A. Vandeman
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George A. Vandeman
SECRETARY
March 26, 1998
18
[AMGEN LOGO]
Amgen Inc.
One Amgen Center Drive
Thousand Oaks, CA 91320-1789
[Recycled Paper Logo] Printed on recycled paper -C- 1998 Amgen Inc. All rights
reserved.
P50206 300M/3-98
NO POSTAGE
NECESSARY
IF MAILED
IN THE
UNITED STATES
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BUSINESS REPLY MAIL
FIRST CLASS MAIL PERMIT NO. 67 THOUSAND
OAKS, CA
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POSTAGE WILL BE PAID BY ADDRESSEE
AMGEN INC.
Attn: Secretary, Mail Stop 27-4-A
One Amgen Center Drive
Thousand Oaks, CA 91320-1789
Amgen Inc.
/ / Yes, I do plan to attend the Annual Stockholders' Meeting on Thursday, May
7, 1998.
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Name (Please print)
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Address
( )
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City State Zip Telephone
/ / No, I do not plan to attend the Annual Stockholders' Meeting on Thursday,
May 7, 1998.
PROXY/DIRECTION CARD
AMGEN INC.
ONE AMGEN CENTER DRIVE, THOUSAND OAKS, CA 91320-1789
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS-MAY 7, 1998
Gordon M. Binder and George A. Vandeman (the "Proxy Holders"), or either of
them, each with the power of substitution, hereby are authorized to represent
the undersigned, with all powers which the undersigned would possess if
personally present, to vote the shares of Amgen Inc. Common Stock of the
undersigned at the Annual Meeting of Stockholders of Amgen Inc., to be held
at the Regent Beverly Wilshire Hotel, 9500 Wilshire Boulevard, Los Angeles,
California 90212, at 10:30 A.M., PDT, on Thursday, May 7, 1998, and at any
adjournments of that meeting upon and in respect of the following matters and
in accordance with the following instructions, with discretionary authority
as to any and all other business that may properly come before the meeting.
You are encouraged to specify your choices by marking the appropriate boxes,
SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in
accordance with the Board of Directors recommendations. PLEASE MARK, SIGN
AND DATE THE REVERSE SIDE AND MAIL PROMPTLY IN THE ENCLOSED ENVELOPE.
Change of Address:
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(If you have written in the above space,
please mark the corresponding box on the
reverse side of this card.)
[SEE REVERSE SIDE]
PLEASE MARK, SIGN, DATE AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE.
/X/ Please mark your votes as in this example.
1. To elect two directors to hold office until the Annual Meeting of
Stockholders in the year 2001.
WITHHOLD
FOR AUTHORITY
/ / / /
NOMINEES: Steven Lazarus and Gilbert S. Omenn
TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S), WRITE SUCH NOMINEE(S)'
NAME(S) BELOW:
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/ / Please indicate if a change of address was given on the reverse side.
2. To ratify the selection of Ernst & Young LLP as independent auditors of the
Company for the year ending December 31, 1998.
FOR AGAINST ABSTAIN
/ / / / / /
In their discretion, the Proxy Holders are authorized to vote upon such other
matters as may properly come before the Annual Meeting of Stockholders and at
any adjournments thereof. The Board of Directors at present knows of no other
business to be presented by or on behalf of the Company or the Board of
Directors at the Annual Meeting of Stockholders.
This Proxy/Direction Card will be voted as specified or, if no choice is
specified, will be voted FOR the election of the named nominees and FOR
ratification of the selection of Ernst & Young LLP as the independent auditors
of the Company for the year ending December 31, 1998. This Proxy/Direction Card
also serves to instruct the respective trustees of the Amended and Restated
Amgen Retirement and Savings Plan and of the Amended and Restated Retirement and
Savings Plan for Amgen Puerto Rico, Inc. on how to vote shares held by the
participants of such plans. The Board of Directors recommends a vote FOR
election of the nominees for director and FOR proposal 2.
As of the date hereof, the undersigned hereby acknowledges receipt of the Notice
of Annual Meeting of Stockholders to be held May 7, 1998, the accompanying Proxy
Statement and the accompanying Annual Report of the Company for the year ended
December 31, 1997.
Signature(s) Date: Signature(s) Date:
-------------- ------ --------------- ------
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS HEREON. IF THE STOCK IS
REGISTERED IN THE NAMES OF TWO OR MORE PERSONS, EACH SHOULD SIGN.
EXECUTORS, ADMINISTRATORS, TRUSTEES, GUARDIANS AND ATTORNEYS-IN-FACT
SHOULD ADD THEIR TITLES. IF SIGNER IS A CORPORATION, PLEASE GIVE FULL
CORPORATE NAME AND HAVE A DULY AUTHORIZED OFFICER SIGN, STATING TITLE.
IF SIGNER IS A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
2
[AMGEN LOGO]
MEMORANDUM
TO: ALL EMPLOYEES HOLDING AMGEN INC. COMMON STOCK
THROUGH PARTICIPATION IN THE
AMGEN RETIREMENT AND SAVINGS PLAN AND/OR IN THE
RETIREMENT AND SAVINGS PLAN FOR AMGEN PUERTO RICO, INC.
FROM: ARMECIA S. MEDLOCK
DATE: MARCH 26, 1998
SUBJ: AMGEN INC. - 1998 PROXY MATERIAL
Since you have allocated a portion of your contributions in the Amgen
Retirement and Savings Plan and/or in the Retirement and Savings Plan for Amgen
Puerto Rico, Inc. (each referred to individually as the "Plan") toward
purchasing shares of Common Stock of Amgen Inc., you are entitled to vote on the
proposals to be presented at the 1998 Annual Stockholders' Meeting based on the
number of shares of the Company's Common Stock that were allocated to your Plan
account as of March 10, 1998. If more than one Proxy/Direction card is enclosed,
the number of such shares are printed above your name and address on the
enclosed Plan Proxy/Direction card(s) that has "401(K)" next to such number of
shares.
YOUR VOTING WITH RESPECT TO THE COMMON STOCK IN YOUR PLAN ACCOUNT IS HELD IN
THE STRICTEST CONFIDENCE. No officer or employee of the Company or Amgen Puerto
Rico, Inc. has the right to review your completed Plan Proxy/Direction card(s)
indicating your voting preferences. If you return your completed Plan
Proxy/Direction card(s) to any officer or employee of the Company or Amgen
Puerto Rico, Inc., your votes cannot be counted. PLEASE VOTE, SIGN, DATE AND
PROMPTLY MAIL THE ENCLOSED PLAN PROXY/DIRECTION CARD(S) TO AMERICAN STOCK
TRANSFER & TRUST COMPANY ("ASTTC") IN THE ENVELOPE PROVIDED. If ASTTC does not
receive your completed Plan Proxy/Direction card(s) in a timely fashion, the
trustee under the Plan will vote your shares in accordance with the voting
instructions that have been received from other Plan participants.
If you held additional Common Stock of the Company as of March 11, 1998 in
certificate form, please check this package to make sure you have removed all of
the Proxy/Direction cards sent to you. If you held additional Common Stock of
the Company as of March 11, 1998 through a bank or broker, you will receive
additional proxy cards for those shares from such bank or broker. In order for
all of your shares to be voted, you should complete and return promptly each
proxy card that you receive.
If you have any questions regarding this memorandum or the enclosures,
please call me at Extension 72409. Thank you for your prompt attention to this
matter.
Enclosures
[AMGEN LOGO]
MEMORANDUM
TO: ALL THOUSAND OAKS-BASED EMPLOYEE
STOCKHOLDERS OF RECORD AS OF MARCH 11, 1998
FROM: ARMECIA S. MEDLOCK
DATE: MARCH 26, 1998
SUBJECT: AMGEN INC. - 1998 PROXY SOLICITATION MATERIAL
The Company's Annual Stockholders' Meeting (the "Annual Meeting") will be
held this year on May 7, 1998. As a stockholder of record on March 11, 1998, the
record date for the Annual Meeting, you are entitled to vote on the proposals
included on the agenda for the Annual Meeting. We have included in this mailing
a return envelope and your Proxy/Direction card(s) representing those shares of
Company Common Stock held by you in certificate form. Also enclosed, if
applicable, are Proxy/Direction card(s) representing those shares of the
Company's Common Stock allocated to your account in the Company's Retirement and
Savings Plan and/or in the Retirement and Savings Plan for Amgen Puerto Rico,
Inc. and an accompanying memorandum regarding the confidential voting of such
shares. WE HAVE EXCLUDED FROM THIS MAILING PAPER VERSIONS OF THE COMPANY'S 1997
ANNUAL REPORT AND 1998 PROXY STATEMENT (THE "PROXY SOLICITATION MATERIAL")
BECAUSE THIS YEAR, AS WITH LAST YEAR, YOU WILL BE ABLE TO ACCESS THIS MATERIAL
ON THE INTERNAL AMGENWEB UNDER "NEWS."
After you have reviewed the proxy solicitation material, please promptly
complete, sign and date all of the enclosed Proxy/Direction card(s) and return
it/them to American Stock Transfer and Trust Company in the enclosed return
envelope.
We hope that you will take advantage of this opportunity to access the proxy
solicitation material on AmgenWeb and, at the same time, assist the Company in
its VEP effort to reduce distribution and printing costs. If you have any
questions about accessing the proxy solicitation material on the AmgenWeb,
please contact the Corporate Information Systems Service Center at Extension
74248. If you prefer to receive the printed version of the proxy solicitation
material, please contact Beverly Alexander at Extension 76264.
If you have any questions regarding this memorandum, please call me at
Extension 72409.
Thank you.
Enclosures
