SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE
ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant |X|
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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 Rule 14a-11(c) or Rule 14(a)-12
ABIOMED, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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|X| No fee required.
| | Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11. (Set forth the
amount on which the filing fee is calculated and state how it
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| | Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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4) Date Filed:
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ABIOMED, INC.
TO BE HELD ON NOVEMBER 5, 2002
The Annual Meeting of Stockholders of ABIOMED, Inc. will be held on
November 5, 2002 at 8:00 a.m. at the offices of Foley Hoag LLP, 155 Seaport
Boulevard, Boston, Massachusetts, for the following purposes:
1. To elect two Class I directors, each to hold office until the
2005 Annual Meeting of Stockholders and until their respective
successors are elected and qualified; and
2. To consider and act upon any other matter which may properly
come before the Annual Meeting or any adjourned session
thereof.
The Board of Directors has fixed the close of business on September 13,
2002 as the record date for determining the stockholders entitled to notice of,
and to vote at, the Meeting. Accordingly, only stockholders of record at the
close of business on September 13, 2002 will be entitled to vote at the Meeting
or any adjournments thereof.
By Order of the Board of Directors
/s/ PETER W. COOGAN
PETER W. COOGAN, Secretary
Boston, Massachusetts
October 2, 2002
YOUR VOTE IS IMPORTANT
TO ASSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE URGED TO VOTE, SIGN, DATE
AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE POSTAGE-PAID
ENVELOPE ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE GIVEN YOUR PROXY, THE PROXY
MAY BE REVOKED AT ANY TIME PRIOR TO EXERCISE BY FILING WITH THE SECRETARY OF THE
COMPANY A WRITTEN REVOCATION, BY EXECUTING A PROXY WITH A LATER DATE, OR BY
ATTENDING AND VOTING AT THE MEETING.
ABIOMED, INC.
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 5, 2002
This proxy statement is furnished in connection with the solicitation
of proxies by and on behalf of the Board of Directors of ABIOMED, Inc., a
Delaware corporation with its principal executive offices at 22 Cherry Hill
Drive, Danvers, Massachusetts 01923 (the "Company"), for use at the Annual
Meeting of Stockholders to be held at the offices of Foley Hoag LLP, 155 Seaport
Boulevard, Boston, Massachusetts on November 5, 2002 and at any adjournment or
adjournments thereof (the "Meeting").
The cost of the solicitation will be borne by the Company. Certain of
the officers and regular employees of the Company may solicit proxies by
correspondence, telephone or in person, without extra compensation. The Company
may also pay to banks, brokers, nominees and other fiduciaries their reasonable
charges and expenses incurred in forwarding proxy material to their principals.
It is expected that this proxy statement and the accompanying proxy will be
mailed to stockholders on or about October 4, 2002.
The Company has fixed the close of business on September 13, 2002 as
the record date ("Record Date") for the Meeting. Only stockholders of record at
the close of business on the Record Date will be entitled to receive notice of,
and to vote at, the Meeting. As of the Record Date, there were outstanding and
entitled to vote 20,981,587 shares of Common Stock, $.01 par value (the "Common
Stock"), of the Company. The Company's by-laws require that a majority in
interest of all stock issued, outstanding and entitled to vote at a meeting
shall constitute a quorum. Abstentions and broker non-votes will be counted as
present or represented for purposes of determining the existence of a quorum. A
"non-vote" occurs when a broker or nominee holding shares for a beneficial owner
does not vote on a proposal because the broker or nominee does not have
discretionary voting power and has not received instructions from the beneficial
owner.
Proposal No. 1 (election of Directors) requires the affirmative vote of
a plurality of the votes cast by holders of Common Stock entitled to vote
thereon, provided a quorum is present. Abstentions and broker non-votes will not
be included in calculating the number of votes cast on Proposal 1. Votes will be
tabulated by American Stock Transfer & Trust Company, the Company's transfer
agent. The vote on each matter submitted to stockholders will be tabulated
separately.
THE ENCLOSED PROXY, IF EXECUTED AND RETURNED, WILL BE VOTED AS DIRECTED
ON THE PROXY OR, IN THE ABSENCE OF SUCH DIRECTION, FOR THE NOMINEES FOR
DIRECTORS (PROPOSAL NO. 1). IF ANY OTHER MATTERS SHALL PROPERLY COME BEFORE THE
MEETING, THEY WILL BE VOTED BY THE PROXIES IN ACCORDANCE WITH THEIR BEST
JUDGMENT. THE PROXY MAY BE REVOKED AT ANY TIME PRIOR TO EXERCISE BY FILING WITH
THE SECRETARY OF THE COMPANY A WRITTEN REVOCATION, BY EXECUTING A PROXY WITH A
LATER DATE, OR BY ATTENDING AND VOTING AT THE MEETING.
The Company's Annual Report to Stockholders and annual report on Form
10-K, as amended, for the fiscal year ended March 31, 2002, including financial
statements audited by PricewaterhouseCoopers LLP, are being mailed to each of
the stockholders simultaneously with this proxy statement.
2
PROPOSAL NO. 1
ELECTION OF DIRECTORS
At the Meeting, two Class I directors are to be elected to serve for a
term of three years, until the 2005 Annual Meeting of Stockholders, and until
their respective successors have been elected and qualified. Messrs. David M.
Lederman and Desmond H. O'Connell, Jr. have been nominated by the Board of
Directors for election as directors. Both of these nominees are currently
serving as directors of the Company.
If any nominee at the time of the election is unable or unwilling to
serve or is otherwise unavailable for election, and the Board of Directors
designates another nominee, the persons named as proxies will vote the proxy for
such substitute, if any. The Board of Directors has no reason to believe that
any of the proposed nominees will be unable or unwilling to serve. The proposed
nominees are not being nominated pursuant to any arrangement or understanding
with any person.
INFORMATION ON NOMINEES AND DIRECTORS
Set forth below is certain biographical information with respect to the
nominees, including the year in which the nominee's term would expire, if
elected, and with respect to each of the Class II and Class III directors whose
terms will continue after the Meeting. The nominees for Class I directors are
indicated by an asterisk.
YEAR TERM
DIRECTOR EXPIRES, IF
NAME AGE POSITION SINCE ELECTED, AND CLASS
---- --- -------- -------- ------------------
*David M. Lederman, Ph.D........ 58 Chairman of the Board of Directors, 1981 2005-Class I
President and Chief Executive Officer
*Desmond H. O'Connell, Jr....... 66 Director 1995 2005-Class I
John F. O'Brien................. 59 Director 1989 2003-Class II
Henri A. Termeer................ 56 Director 1987 2003-Class II
W. Gerald Austen, M.D........... 72 Director 1985 2004-Class III
Paul B. Fireman................. 58 Director 1987 2004-Class III
DR. DAVID M. LEDERMAN founded the Company in 1981 and has served as
Chairman of the Board and Chief Executive Officer since that time. He has also
served as President of ABIOMED for the majority of the time. He was Chairman of
the Medical Research Group at the Everett Subsidiary of Avco Corporation, which
he joined in 1972. Dr. Lederman conceived and originated the BVS development
program and the design and development of the ventricles and valves that are
integral to the AbioCor(TM)implantable replacement heart. He holds various
degrees in Physics and Engineering, including a Ph.D. degree in Aerospace
Engineering from Cornell University.
MR. DESMOND H. O'CONNELL, JR. has served as Director of the Company
since 1995. He is currently the Chairman and a Director of Serologicals
Corporation and is also an independent management consultant. From December 1992
until December 1993, he served as the Chairman, Management Committee, of
Pharmakon Research International, Inc. During 1991, he briefly served as
Chairman of the Board and Chief Executive Officer of Osteotech, Inc. Mr.
O'Connell was with the BOC Group, PLC in senior management positions from 1983
to 1990. From April 1990 until September 1990, Mr. O'Connell was President and
Chief Executive Officer of BOC Health Care. From 1986 to April 1990, he was
Group Managing Director of BOC Group, PLC. Prior to joining BOC, Mr. O'Connell
held various positions at Baxter Laboratories, Inc., including Chief Executive
of the Therapeutic and Diagnostic Division and Vice President, Corporate
Development. Mr. O'Connell had been a Director of Chryslais International
Corporation from 1991 through May 1999.
3
MR. JOHN F. O'BRIEN has served as a Director of the Company since 1989.
Since August 1989 he has been the President and Chief Executive Officer and a
Director of First Allmerica Financial Life Insurance Company (formerly State
Mutual Life Assurance Company of America). Since January 1995 he has been
President, Chief Executive Officer and a Director of Allmerica Financial
Corporation. Mr. O'Brien is also Chairman of the Board and a Director of
Allmerica Property & Casualty Companies, Inc. and a Trustee and Chairman of the
Board of Allmerica Securities Trust and Allmerica Investment Trust. From 1972
until 1989, Mr. O'Brien was employed by Fidelity Investments in various
capacities, including as Group Managing Director of FMR Corp. Mr. O'Brien is
also a Director of Cabot Corporation and TJX Companies, Inc.
MR. HENRI A. TERMEER has served as a Director of the Company since
1987. Mr. Termeer has served as President and a Director of Genzyme Corporation
since 1983, as its Chief Executive Officer since 1985, and as its Chairman of
the Board since 1988. Mr. Termeer is also a past Chairman and a current Director
of the Board of Genzyme Transgenics Corporation. He is also a Director of
AutoImmune, Inc., GelTex Pharmaceuticals, Inc. and Diacrin, Inc. and serves as a
Trustee of Hambrecht & Quist Healthcare Investors and Hambrecht & Quist Life
Sciences Investors.
DR. W. GERALD AUSTEN, M.D., has served as a Director of the Company
since 1985. Since 1974 he has been the Edward D. Churchill Professor of Surgery
at Harvard Medical School and at Massachusetts General Hospital. From 1969 to
1997, Dr. Austen was Chief of the Surgical Services at Massachusetts General
Hospital. Dr. Austen is the former President of the American College of
Surgeons, the American Association for Thoracic Surgery, the American Surgical
Association and the Massachusetts and American Heart Associations. Dr. Austen is
a member of the Institute of Medicine of the National Academy of Sciences, a
Fellow of the American Academy of Arts and Sciences, a life member of the
corporation of the Massachusetts Institute of Technology and Chairman of the
Board of Trustees of the John S. and James L. Knight Foundation.
MR. PAUL B. FIREMAN has served as a Director of the Company since 1987.
Mr. Fireman has served as Chief Executive Officer and as a Director of Reebok
International Ltd., which he founded, from 1979 to the present. He has served as
Reebok's Chairman of the Board of Directors from 1985 to the present. He has
also served as Reebok's President from 1989 to the present, after initially
serving as President from 1979 to 1987. Mr. Fireman has served as the Chairman
of the Entrepreneurial Advisory Board of Babson College since 1995.
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors held seven meetings during the fiscal year ended
March 31, 2002 and acted once by written consent. Each director attended at
least 75% of the aggregate number of meetings of the Board of Directors and
committees of which he was a member held during such fiscal year.
The Board of Directors has an Executive Committee, which is currently
composed of David M. Lederman, Desmond H. O'Connell, Jr. and Paul B. Fireman.
The Executive Committee has, and may exercise, all the powers and authority of
the Board of Directors, except those which by law may not be delegated to it by
the Board of Directors. The Executive Committee did not act during the fiscal
year ended March 31, 2002.
The Board of Directors has an Audit Committee, which is currently
composed of W. Gerald Austen, John F. O'Brien and Desmond H. O'Connell, Jr. The
responsibilities of the Audit Committee are detailed in the Company's AUDIT
COMMITTEE CHARTER, adopted in May 2000. These responsibilities include
recommending to the Board of Directors the engagement of the independent
auditors, reviewing the adequacy and effectiveness of accounting and financial
controls, reviewing the Company's financial reporting practices, meeting with
the Company's auditors to review the results of the annual audit and quarterly
reviews and reviewing the implementation by management of recommendations made
by the independent auditors. The Audit Committee met three times during the
fiscal year ended March 31, 2002 and acted once by written consent.
The Company has a Compensation Committee, which is currently composed
of Paul B. Fireman, John F. O'Brien and Henri A. Termeer. The functions of the
Compensation Committee include establishing the compensation and bonuses of
executive officers, determining the persons to whom both incentive stock options
and non-qualified stock options will be granted and adopting rules and making
other determinations with respect to the administration of the 1992 Combination
Stock Option Plan (the "Combination Plan"), the Employee Stock Purchase
4
Plan, the ABIOMED Retirement Savings Plan (401(k) Plan), the 1998 Equity
Incentive Plan and the 2000 Stock Incentive Plan. During the fiscal year ended
March 31, 2002, the Compensation Committee held two meetings.
The Company has a Nominating Committee, which is currently composed of
Henri A. Termeer, W. Gerald Austen and Desmond H. O'Connell, Jr. The nominating
committee is responsible for reviewing the qualifications of potential nominees
for election to the Board of Directors and recommending to the Board of
Directors the election of directors of the Company. Stockholders may make
nominations for the election of directors by delivering notice in writing to the
secretary of the Company not less than 45 days nor more than 60 days prior to
any meeting of the stockholders called for the election of directors. The
Nominating Committee did not meet during the fiscal year ended March 31, 2002.
SECURITIES BENEFICIALLY OWNED BY CERTAIN PERSONS
The following table sets forth certain information as of July 1, 2002
with respect to the beneficial ownership of the Company's Common Stock of each
director and nominee for director, each named executive officer in the Summary
Compensation Table under "Executive Compensation," below, all directors and
current executive officers of the Company as a group, and each person known by
the Company to be the beneficial owner of five percent or more of the Company's
common stock. This information is based upon information received from or on
behalf of the individuals named therein.
SHARES OF STOCK
NAME BENEFICIALLY OWNED (1) PERCENT OF CLASS
---- ---------------------- ----------------
Dr. David M. Lederman (2)(3)................................. 2,327,250 11.1%
c/o ABIOMED, Inc.
22 Cherry Hill Drive
Danvers, MA 01923
Genzyme Corporation.......................................... 2,307,692 11.0%
One Kendall Square
Cambridge, MA 02139
Dr. W. Gerald Austen (3)..................................... 78,200 *
Paul B. Fireman (3).......................................... 430,155 2.0%
John F. O'Brien (3).......................................... 194,887 *
Desmond H. O'Connell, Jr. (3)................................ 87,887 *
Henri A. Termeer (3)(4)...................................... 2,397,243 11.4%
William J. Bolt (3).......................................... 151,000 *
Dr. Robert T.V. Kung (3)(5).................................. 489,228 2.3%
Eugene D. Rabe (3)........................................... 186,250 *
John F. Thero (3)............................................ 195,562 *
All Current Executive Officers and Directors................. 6,537,662 29.5%
As a group (10 persons) (2)(3)(4)(5)
--------------------
* Less than 1%.
(1) Unless otherwise noted, each person identified possesses sole voting
and investment power over the shares listed.
(2) Includes 1,141,196 shares held by the wife of Dr. Lederman, as to which
Dr. Lederman disclaims beneficial ownership.
(3) Includes the following shares subject to currently exercisable options
(includes options that will become exercisable within 60 days of July
1, 2002): Dr. Lederman--95,000; Dr. Austen--55,000; Mr.
Fireman--60,000; Mr. O'Brien--60,000; Mr. O'Connell--45,000; Mr.
Termeer--60,000; Mr. Bolt--151,000; Dr. Kung--277,000; Mr.
Rabe--186,250; and Mr. Thero--191,872.
(4) Includes 2,307,692 shares held by Genzyme Corporation, as to which Mr.
Termeer disclaims beneficial ownership. Mr. Termeer is the Chief
Executive Officer of Genzyme.
(5) Includes 108,200 shares held by the wife of Dr. Kung and 104,028 shares
held in trust for the benefit of certain relatives of Dr. Kung, as to
which Dr. Kung disclaims beneficial ownership.
5
EXECUTIVE COMPENSATION
The following table sets forth the compensation during the last three
fiscal years of (i) the Chief Executive Officer of the Company and (ii) the four
most highly compensated executive officers other than the Chief Executive
Officer who were serving as executive officers at the end of the last fiscal
year, whose annual salary and bonus exceeded $100,000 for services in all
capacities to the Company during the last fiscal year (the "named executive
officers").
SUMMARY COMPENSATION TABLE
--------------------------
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------- -----------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
FISCAL YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION ENDED 3/31 ($) ($) ($) (#) ($)(1)
--------------------------- ---------- ---------- ---------- ---------- --------- ------------
Dr. David M. Lederman...... 2002 $300,000 $137,500(2) -- 50,000 $ 37,619
Chairman of the Board, 2001 300,000 100,000 -- 100,000 36,444
President and Chief 2000 281,250 200,000 -- 130,000 35,058
Executive Officer
Dr. Robert T.V. Kung....... 2002 $195,000 $ 50,000 -- 20,000 $ 11,337
Senior Vice President - 2001 186,250 200,000 -- 40,000 9,000
Research and Chief 2000 172,500 87,500 -- 20,000 5,894
Scientific Officer
Eugene D. Rabe............. 2002 $177,500 $ 20,000 -- 20,000 $6,369
Senior Vice President - 2001 167,500 100,000 -- 40,000 5,544
Chief Sales Officer 2000 155,000 90,000 -- 30,000 4,145
John F. Thero.............. 2002 $195,000 $ 20,000 -- 20,000 $6,296
Senior Vice President - 2001 182,500 100,000 -- 50,000 5,471
Chief Financial Officer 2000 155,000 100,000 -- 40,000 3,947
and Treasurer
William J. Bolt............ 2002 $167,500 $ 30,000 -- 25,000 $6,293
Senior Vice President - 2001 155,000 100,000 -- 40,000 5,399
Product Engineering 2000 137,500 65,000 -- 20,000 3,592
--------------------
(1) Includes for the fiscal year ended March 31, 2002 (a) the following
matching contributions to the ABIOMED Retirement Savings Plan for
fiscal 2002: Dr. Lederman - $1,500; Dr. Kung - $1,500; Mr. Rabe -
$1,500; Mr. Thero - $1,500; and Mr. Bolt - $1,500; (b) the following
profit sharing allocations under the ABIOMED Retirement Savings Plan
contributions paid in fiscal 2002, subject to applicable vesting based
on years of service: Dr. Lederman - $3,640; Dr. Kung - $3,640; Mr. Rabe
- $3,640; Mr. Thero - $3,640; and Mr. Bolt - $3,640; (c) the following
life insurance premiums paid for term life insurance in excess of
$50,000 in fiscal 2002: Dr. Lederman - $30,239; Dr. Kung - $1,812; Mr.
Rabe - $564; Mr. Thero - $421; and Mr. Bolt - $526; (d) the following
long-term disability insurance premiums for fiscal 2002: Dr. Lederman -
$1,140; Dr. Kung - $735; Mr. Rabe - $665; Mr. Thero - $735; and Mr.
Bolt - $627; and (e) the following awards paid in fiscal 2002 in
connection with newly issued patents: Dr. Lederman - $1,100 and Dr.
Kung - $3,650.
(2) $100,000 of the bonus paid to Dr. Lederman during fiscal 2002
represents an amount deferred at his request from the amount that would
have been paid, and was provided for, in fiscal 2001. At the request of
Dr. Lederman, the compensation committee had deferred Dr. Lederman's
receipt of a portion of his bonus until the first patient participating
in the AbioCor clinical trials had survived for more than sixty days
after receipt
6
of the AbioCor. The bonus granted to Dr. Lederman for fiscal 2002 also
includes $37,500 granted to Dr. Lederman for his performance during the
past year.
The following tables set forth certain information with respect to
option grants and exercises to the named executive officers.
OPTION GRANTS IN LAST FISCAL YEAR
---------------------------------
INDIVIDUAL GRANTS
-------------------------------------------------------- POTENTIAL REALIZABLE
NUMBER OF % OF TOTAL VALUE AT ASSUMED
SECURITIES OPTIONS ANNUAL RATES OF STOCK
UNDERLYING GRANTED TO EXERCISE PRICE APPRECIATION FOR
OPTIONS GRANTED EMPLOYEES IN PRICE EXPIRATION OPTION TERM(2)
NAME (#)(1) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
---- --------------- ------------ ---------- ----------- ----- ------
Dr. David M. Lederman....... 50,000 13.3% $24.120 06/22/11 $758,447 $1,922,053
Dr. Robert T.V. Kung........ 20,000 5.3% $24.120 06/22/11 $303,379 $ 768,821
Eugene D. Rabe.............. 20,000 5.3% $24.120 06/22/11 $303,379 $ 768,821
John F. Thero............... 20,000 5.3% $24.120 06/22/11 $303,379 $ 768,821
William J. Bolt............. 25,000 6.6% $24.120 06/22/11 $379,223 $ 961,027
--------------------
(1) The options granted to Dr. Lederman, Dr. Kung, Mr. Rabe, Mr. Thero and
Mr. Bolt were granted under the 2000 Stock Incentive Plan and become
exercisable in three annual installments of 30%, 30% and 40% commencing
two years from the date of grant such that they will be fully
exercisable four years after the date of grant.
(2) The assumed rates are compounded annually for the full term of the
options.
AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
---------------------------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS AT 3/31/02 OPTIONS AT 3/31/02
ON EXERCISE VALUE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
NAME (#) ($) (#) ($)(1)
---- ----------- -------------- ------------------------- -------------------------
Dr. David M. Lederman............ -- -- 32,500/247,500 $133,250/$399,750
Dr. Robert T.V. Kung............. 30,000 $205,500 246,500/96,500 $1,415,212/$160,883
Eugene D. Rabe................... -- -- 152,750/102,250 $835,768/$187,738
John F. Thero.................... 3,600 $ 42,966 152,372/120,500 $822,499/$222,651
William J. Bolt.................. 5,000 $ 34,000 133,000/79,000 $816,209/$61,768
--------------------
(1) Based upon the $11.100 closing price of the Company's Common Stock on
March 28, 2002 on the Nasdaq National Market minus the respective
option exercise price.
EQUITY COMPENSATION PLANS
The following table provides information as of March 31, 2002 regarding
securities authorized for issuance under the Company's equity compensation
plans, including individual compensation arrangements. The equity compensation
plans of the Company include the 1989 Non-Qualified Stock Option Plan for
Non-Employee Directors, the 1992 Combination Stock Option Plan, the 1998 Equity
Incentive Plan, the 2000 Stock Incentive Plan and the Employee Stock Purchase
Plan. All of these equity compensation plans have been approved by the Company's
stockholders.
7
EQUITY COMPENSATION PLAN INFORMATION
------------------------------------
WEIGHTED-AVERAGE NUMBER OF SHARES
NUMBER OF SHARES TO BE EXERCISE PRICE OF REMAINING FOR FUTURE
ISSUED UPON EXERCISE OF OUTSTANDING ISSUANCE UNDER EQUITY
PLAN CATEGORY OUTSTANDING OPTIONS OPTIONS COMPENSATION PLANS
------------- ----------------------- ----------------- ---------------------
Equity compensation plans
approved by stockholders:
Stock option plans (1) 2,810,637 $10.09 1,649,396
Employee Stock Purchase Plan -- 100,518
Equity compensation plans not
approved by stockholders -- --
----------- ------------
Total 2,810,637 1,749,914
=========== ============
--------------------
(1) Our 1992 Combination Stock Option Plan authorizes the issuance of
incentive stock options, nonqualified stock options, stock appreciation
rights, performance share awards, restricted stock awards and stock
unit awards. On March 31, 2002, there were 355,996 shares of common
stock available for future grants under the 1992 Combination Stock
Option Plan all of which expired on May 1, 2002. Our 1989 Non-Qualified
Stock Option Plan for Non-Employee Directors authorizes the issuance of
nonqualified stock options to non-employee Directors. On March 31,
2002, there were 55,000 shares of common stock available for future
grants under the 1989 Non-Qualified Stock Option Plan for Non-Employee
Directors. Our 1998 Equity Incentive Plan authorizes the issuance of
incentive stock options, nonqualified stock options, stock appreciation
rights, performance share awards, restricted stock awards and stock
unit awards. On March 31, 2002, there were 138,100 shares of common
stock available for future grants under the 1998 Equity Incentive Plan.
Our 2000 Stock Incentive Plan authorizes the issuance of incentive
stock options, nonqualified stock options, restricted stock awards,
unrestricted stock awards, stock appreciation rights and performance
share awards. On March 31, 2002, there were 1,100,300 shares of common
stock available for future grants under the 2000 Stock Incentive Plan.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company receive an annual
retainer of $15,000 or an equivalent value of the Company's Common Stock, at the
individual's option, and $1,000 for attendance at each meeting of the Board of
Directors or a committee thereof or consultation at the offices of the Company.
The Company has a 1989 Non-Qualified Stock Option Plan for Non-Employee
Directors (the "Directors Plan"). Under the Directors Plan, options to purchase
Common Stock are granted to directors of the Company who are not employees of
the Company and who do not own or are not affiliated with any person who owns,
directly or indirectly, more than fifteen percent (15%) of the Company's
outstanding voting stock (the "Eligible Directors"). The Current Eligible
Directors, are Dr. Austen and Messrs. Fireman, O'Brien, Termeer and O'Connell.
Each of these Eligible Directors was granted 5,000 options under the Directors
Plan on August 8, 2001. These granted options have an exercise price of $18.40
per share and vest fully on August 8, 2002.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
The Compensation Committee consists of Paul B. Fireman, John F. O'Brien
and Henri A. Termeer. No member of the Compensation Committee is a former or
current officer or employee of the Company. Dr. Lederman, while not a member of
the Compensation Committee, makes recommendations to the Compensation Committee
regarding executive officer compensation, including the awards of stock options,
and often participates in the Committee's deliberations but does not vote on
such matters. None of the Company's executive officers serves as a member of the
board of directors or compensation committee of any entity that has one or more
executive officers serving as members of the Company's Board of Directors or
Compensation Committee.
8
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The primary objectives of the Compensation Committee in developing
executive compensation policies are to attract and retain superior talent to
enable the Company to achieve its business objectives and to align the financial
interests of its executive officers with the stockholders of the Company. The
compensation of executive officers consists of base compensation, bonus, the
grant of options and participation in benefit plans generally available to
employees.
In setting overall compensation for the last fiscal year, the
Compensation Committee reviewed the recommendations of the Chief Executive
Officer and strove to maintain base compensation for the Company's executive
officers at levels which the Compensation Committee believes are competitive
with the compensation of comparable executive officers in similarly situated
companies, while relying upon the Company's stock option plans and a bonus
program to provide significant performance incentives.
The Company maintains an informal bonus plan for its executive
officers. Under the bonus plan, a bonus was determined for each executive
officer (other than the Chief Executive Officer) based on Company performance
and achievement of certain objective and subjective goals and the Chief
Executive Officer's evaluation of the individual's performance. The goals
established for each executive officer varies depending upon the
responsibilities of the officer, and include goals based upon operating results,
product development or regulatory milestones and the cost of achieving those
milestones, and the achievement of certain sales objectives. Certain of the
executive officers' goals, including certain of the Chief Executive Officer's
goals, have milestones that do not directly correspond in timing with the
Company's fiscal year-end and certain of the goals are measured in intervals of
greater than one year. Accordingly, bonus amounts for which executive officers
are eligible can vary from fiscal year to fiscal year. In granting these
bonuses, the Committee gave substantial weight to and followed the Chief
Executive Officer's recommendations.
Each of the executives is eligible to receive grants of options under
the Combination Plan, 1998 Equity Incentive Plan and 2000 Stock Incentive Plan.
In determining the number of options to be granted to each executive officer,
the Compensation Committee reviews recommendations provided by the Chief
Executive Officer based upon the officer's position of responsibility and
anticipated contribution to the Company, the number of shares of Common Stock
subject to options held or previously granted to the officer and the individual
performance of the officer.
For the fiscal year ended March 31, 2002, Dr. Lederman, the Chief
Executive Officer of the Company, received a base salary of $300,000 and a bonus
of $137,500. Of this amount, $100,000 of the bonus paid to Dr. Lederman during
fiscal 2002 represents an amount deferred at his request from the amount that
would have been paid, and was provided for, in fiscal 2001. At the request of
Dr. Lederman, the Compensation Committee had deferred Dr. Lederman's receipt of
a portion of his bonus until the first patient participating in the AbioCor
clinical trials had survived for more than sixty days after receipt of the
AbioCor. Dr. Lederman's base salary and bonus was determined by the Compensation
Committee based upon review of industry references and Dr. Lederman's
recommendation to keep his base salary at that level, notwithstanding the
Compensation Committee's belief that this base salary and bonus were low
compared to his responsibilities, importance and contributions to the Company.
Compensation Committee
Paul B. Fireman
John F. O'Brien
Henri A. Termeer
9
REPORT OF THE AUDIT COMMITTEE
All three directors who are members of the Audit Committee are
"independent" of the Company and management, as that term is defined in Rule
4200(a)(15) of the National Association of Securities Dealers' listing
standards.
In fulfilling its responsibilities, the Audit Committee conferred with
PricewaterhouseCoopers LLP ("PWC"), the Company's independent auditors for the
fiscal year ended March 31, 2002, the overall scope and plans for PWC's audit of
the Company's financial statements for the fiscal year ended March 31, 2002.
The Audit Committee reviewed the Company's audited financial statements
with management and PWC. The Audit Committee discussed with PWC the matters
required to be discussed by Statement of Auditing Standards No. 61, including a
discussion of PWC's judgments as to the quality, not just the acceptability, of
the Company's reporting mechanisms and such other matters as are required to be
discussed with the Audit Committee under generally accepted auditing standards.
In addition, the Audit Committee received from PWC the written disclosures and
the letter required by Independence Standards Board Standard No. 1 and discussed
these documents with PWC, as well as other matters related to PWC's independence
from management and the Company.
Based on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors, and the Board approved, that
the Company's audited financial statements be included in its Annual Report on
Form 10-K for the fiscal year ended March 31, 2002 for filing with the
Securities and Exchange Commission.
The Board of Directors has adopted a written charter for the Audit
Committee, a copy of which was included with the Company's filing of its Proxy
Statement with the Securities and Exchange Commission dated July 9, 2001. In
conjunction with its review of the Company's audited financial results, the
Audit Committee reviewed this charter and determined that no modification was
necessary.
Audit Committee
W. Gerald Austen
John F. O'Brien
Desmond H. O'Connell, Jr.
PERFORMANCE GRAPH
The following graph compares the yearly change in the cumulative total
stockholder return for the Company's last five full fiscal years, based upon the
market price of the Company's Common Stock, with the cumulative total return on
the Nasdaq Stock Market (U.S. Companies) and the Nasdaq Stocks-SIC Group Code
384 for that period. The performance graph assumes the investment of $100 on
March 31, 1997 in the Company's Common Stock, the Nasdaq Stock Market (U.S.
Companies) and the Nasdaq Stocks--SIC Group Code 384, and the reinvestment of
any and all dividends.
10
COMPARISON OF FIVE YEAR -- CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR ABIOMED, INC.
(ASSUMES $100 INVESTED ON LAST DAY OF MARCH 1997 AND THE REINVESTMENT
OF ALL DIVIDENDS.)
03/31/97 03/31/98 03/31/99 03/31/00 03/31/01 03/31/02
ABIOMED, Inc. 100 129 106 345 268 189
Nasdaq
(U.S. Companies) 100 152 205 381 152 153
Peer Index
(SIC 3840-3849) 100 134 144 190 144 182
OTHER MATTERS
INDEPENDENT PUBLIC ACCOUNTANTS
On June 6, 2002, the Company dismissed its independent auditors, Arthur
Andersen LLP, and engaged PWC as its new independent auditors. The change in
auditors became effective on June 6, 2002. This determination followed the
Company's decision to seek proposals from independent accountants to audit its
financial statements, and was unanimously approved by the Board of Directors
upon the recommendation of the Audit Committee. PWC was engaged to audit the
Company's financial statements for the fiscal year ending March 31, 2002.
The Board of Directors has not yet selected an independent accountant to
audit the consolidated financial statements of the Company for the fiscal year
ending March 31, 2003. At an upcoming meeting, the Audit Committee will
recommend to the Board the selection of the Company's independent auditor for
the current fiscal year.
The audit report of Arthur Andersen on the Company's financial statements
for the fiscal years ended March 31, 2001 and 2000 and the audit report of PWC
on the Company's financial statements for the fiscal year ended March 31, 2002
did not contain an adverse opinion or disclaimer of opinion, nor were they
qualified or modified as to uncertainty, audit scope or accounting principles.
During the three most recent fiscal years ended March 31, 2002, and the
subsequent interim period through June 6, 2002, there were no disagreements
between the Company and Arthur Andersen on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure.
None of the reportable events described under Item 304(a)(1)(v) of
Regulation S-K have occurred within the two most recent fiscal years ended March
31, 2002, or within the interim period through June 6, 2002.
During the two most recent fiscal years ended March 31, 2002, and the
subsequent interim period through June 6, 2002, the Company did not consult with
PWC regarding any of the matters or events set forth in Item 304(a)(2)(i) and
(ii) of Regulation S-K.
11
A representative of PWC will be present at the Annual Meeting to
respond to appropriate questions and will be given an opportunity to make a
statement if they so desire. We do not expect any representative of Arthur
Andersen to be present at the Annual Meeting.
AUDIT AND RELATED FEES
During the fiscal year ended March 31, 2002, Arthur Andersen provided
services to the Company in the following categories and amounts:
DESCRIPTION AMOUNT
----------- ------
Audit and Review Service Fees $ 46,500
Tax Return Preparation Fees $ 66,800
Financial Information Systems Designs and Implementation Fees $ --
All Other Fees $ --
The above amounts excluded audit fees and tax return preparation fees
for work performed by PWC after March 31, 2002, including fees for the audit of
the Company's financial results for the three years ended March 31, 2002 and
related tax return preparation which fees are estimated to be $650,000 and
$40,000, respectively. The Company expects to be billed for these services
during its ongoing fiscal year. PWC has not performed services for the Company
other than audit services and tax return preparation services. The Audit
Committee has determined that PWC's services to the Company were at all times
compatible with that firm's independence.
REPORTING UNDER SECTION 16(a) OF THE SECURITIES AND EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who own more than 10% of
the Company's Common Stock, to file reports of ownership and changes of
ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission, and
furnish the Company with copies of such Forms.
Based solely upon review of Forms 3, 4 and 5 and amendments thereto
furnished to the Company with respect to the fiscal year ended March 31, 2002
and on written representations from certain reporting persons that were not
required to file Forms 5 with respect to the Company's most recent fiscal year,
the Company believes that all Section 16(a) filing requirements applicable to
its officers, directors and greater-than-10% stockholders were fulfilled in a
timely manner.
OTHER PROPOSED ACTION
The Board of Directors knows of no other business to come before the
Meeting. However, if any other business should properly be presented to the
Meeting, the proxies will be voted in accordance with the judgment of the person
or persons holding the proxies.
STOCKHOLDER PROPOSALS
Proposals which stockholders intend to present at the Company's 2003
Annual Meeting of Stockholders and wish to have included in the Company's proxy
materials must be received by the Company no later than March 17, 2003.
Any stockholder proposal to be considered at the Company's 2003 Annual
Meeting of Stockholders, but not included in the proxy materials, must be
submitted in writing by May 30, 2003, or the persons appointed as proxies may
exercise their discretionary voting authority with respect to that proposal.
12
INCORPORATION BY REFERENCE
To the extent that this Proxy Statement has been or will be
specifically incorporated by reference into any filing by the Company under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, the sections of the Proxy Statement entitled "Compensation Committee
Report on Executive Compensation" and "Performance Graphs" shall not be deemed
to be so incorporated, unless specifically otherwise provided in any such
filing.
ANNUAL REPORT AND FORM 10-K
ADDITIONAL COPIES OF THE ANNUAL REPORT TO STOCKHOLDERS FOR THE FISCAL YEAR
ENDED MARCH 31, 2002 AND COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR
THE FISCAL YEAR ENDED MARCH 31, 2002 AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ARE AVAILABLE TO STOCKHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST
ADDRESSED TO: INVESTOR RELATIONS, ABIOMED, INC., 22 CHERRY HILL DRIVE, DANVERS,
MASSACHUSETTS 01923.
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IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, STOCKHOLDERS ARE
URGED TO FILL IN, SIGN AND RETURN THE ACCOMPANYING FORM OF PROXY IN THE ENCLOSED
ENVELOPE.
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13
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
ABIOMED, INC.
PROXY
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF EACH PROPOSAL
The undersigned, revoking all prior proxies, hereby appoints John F.
Thero and Charles B. Haaser, and each of them acting singly, proxies, with
full power of substitution, to vote all shares of capital stock of ABIOMED,
Inc. which the undersigned is entitled to vote at the 2002 Annual Meeting of
Stockholders of ABIOMED, Inc., to be held on November 5, 2002, and at any
adjournments or postponements thereof, upon the matters set forth in the
Notice of Annual Meeting and the related Proxy Statement, copies of which
have been received by the undersigned, and in their discretion upon any
business that may properly come before the meeting or any adjournment or
postponement thereof. Attendance of the undersigned at the Annual Meeting or
any adjournment or postponement thereof will not be deemed to revoke this
proxy unless the undersigned shall affirmatively indicate the intention of
the undersigned to vote the shares represented hereby in person prior to the
exercise of this proxy.
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
(Please fill in the reverse side and mail in enclosed envelope)
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
ABIOMED, INC.
NOVEMBER 5, 2002
Please Detach and Mail in the Envelope Provided
A [X] Please mark your
vote as in this
example.
1. Election of
Class 1 Directors: FOR all nomineess WITHHOLD
listed at right AUTHORITY
(except as marked to to vote for
the contrary) all nominees
NOMINEES:
(01) David M. Lederman
(02) Desmond H. O'Connell, Jr.
(INSTRUCTIONS: To withhold authority to vote for any
individual nominee, write that nominee's name in the
space provided below.)
______________________________________________
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED. IF NO
DIRECTION IS GIVEN WITH RESPECT TO ANY OF THE PROPOSALS, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED FOR EACH PROPOSAL OR OTHERWISE IN
ACCORDANCE WITH THE RECOMMENDATION OF THE BOARD OF DIRECTORS.
MARK HERE FOR CHANGE OF ADDRESS AND NOTE AT LEFT [ ]
Please promptly date and sign this proxy and mail it in
the enclosed envelope to ensure representation of
your shares. No postage need be affixed if mailed in
the United States.
Signature:_______________ Date:________ Signature:_______________ Date:________
NOTE: Please sign exactly as name(s) appears on stock certificate. If shares
are held as joint tenants, both should sign. If stockholder is a
corporation, please sign full corporate name by president or other
authorized officer and, if a partnership, please sign in full
partnership name by an authorized partner or other person. If signing
as attorney, executor, administrator, trustee or guardian, please give
full title as such.