Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT SECTION 14(c) OF THE
SECURITIES
EXCHANGE ACT OF 1934 (Amendment
No. )
Check appropriate box:
þ Preliminary
Information Statement
o Confidential,
for Use of the Commission Only (as permitted by
Rule 14c-5(d)(2))
o Definitive
Information Statement
OPKO HEALTH, INC.
(Name of Registrant as Specified In
Its Charter)
Payment of Filing Fee (Check the appropriate box):
| þ | No fee required. |
| o | Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11. |
| (1) | Title of each class of securities to which transaction applies: |
| (2) | Aggregate number of securities to which transaction applies: |
| (3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
| (4) | Proposed maximum aggregate value of transaction: |
| (5) | Total fee paid: |
| o | Fee paid previously with preliminary materials. |
| o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
| (1) | Amount Previously Paid: |
| (2) | Form, Schedule or Registration Statement No.: |
| (3) | Filing Party: |
| (4) | Date Filed: |
TABLE OF CONTENTS
Table of Contents
OPKO
HEALTH, INC.
4400 Biscayne Blvd
Suite 1180
Miami, Florida 33137
4400 Biscayne Blvd
Suite 1180
Miami, Florida 33137
Dear Stockholder:
We are writing to advise you that effective as of
February 13, 2009, the Audit Committee of the Board of
Directors and stockholders holding a majority of the voting
power of the outstanding capital stock of OPKO Health, Inc., a
Delaware corporation (the “Company”), approved the
issuance to one or more members of The Frost Group, LLC, a
private investment group controlled by Phillip Frost, M.D.,
our Chairman and CEO (the “Frost Group”), of twenty
million shares (the “Shares”) of the Company’s
common stock, par value $0.01 per share, in exchange for
$20 million in cash to the Company (the
“Investment”). The Shares will be issued at a price of
$1.00 per share, which represents a discount of approximately
twenty percent (20%) to the average trading price of our common
stock on the NYSE Alternext U.S. Exchange for the five
trading days immediately preceding the effective date of Audit
Committee and stockholder approval. The Company has not granted
and will not grant any registration rights in respect of the
Shares, which will be “restricted securities” as
defined by Rule 144 promulgated under the Securities Act of
1933, as amended. Additionally, the Shares will be subject to a
two-year lockup, during which time the Shares may not be sold,
subject to certain exceptions.
The principal member of the Frost Group is Frost Gamma
Investments Trust (“FGIT”), of which Phillip
Frost, M.D., is the sole trustee. Additionally, the Frost
Group includes in its membership Dr. Jane Hsiao, our Vice
Chairman and Chief Technical Officer, Dr. Rao Uppaluri, our
Chief Financial Officer, and Mr. Steven D. Rubin, our
Executive Vice President-Administration and director. FGIT has
agreed to purchase all of the Shares to be issued in the
Investment. Immediately following issuance of the Shares, FGIT
will beneficially own an aggregate of approximately 52.2% of our
issued and outstanding common stock. The Frost Group, FGIT,
Drs. Hsiao and Uppaluri and Mr. Rubin voted those
shares of our common stock presently owned by them in favor of
the Investment.
Stockholder approval of the Investment was in the form of a
written consent of stockholders in lieu of a special meeting in
accordance with the relevant sections of the Delaware General
Corporation Law (the “DGCL”), and included those of
our stockholders holding a majority of the voting power of our
issued and outstanding shares of common stock and preferred
stock, voting together as a group. Stockholder approval was
sought in order to comply with applicable rules of the NYSE
Alternext U.S. Exchange, on which our common stock is
listed.
The Shares will be issued on or about • , 2009,
which is approximately twenty (20) days after the mailing
of this Information Statement; provided however, that the
issuance of the Shares is subject to expiration or termination
of any waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the “HSR Act”),
and the rules of the Federal Trade Commission relating to the
HSR Act.
WE ARE
NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
No action is required by you. The accompanying Information
Statement is furnished only to inform our stockholders of the
Investment and the approval of the issuance of the Shares before
they take effect in accordance with
Rule 14c-2
of the Securities Exchange Act of 1934, as amended. This
Information Statement is first mailed to you on or
about • , 2009. Additionally, in accordance with
Section 228 of the DGCL, this Information Statement
constitutes the notice of a corporate action taken without a
meeting by consent of a majority of the Company’s
stockholders. You are urged to read this Information Statement
carefully in its entirety.
By Order of the Board of Directors of
OPKO Health, Inc.
OPKO Health, Inc.
By: 
Phillip Frost, M.D.
CEO and Chairman of the Board
Phillip Frost, M.D.
CEO and Chairman of the Board
Table of Contents
Important
Notice Regarding the Availability of Information Statement
Materials Relating to a
Written Consent of a Majority of the Stockholders of the Company
Written Consent of a Majority of the Stockholders of the Company
The
Information Statement is available at www.opko.com
On February 13, 2009, holders of a majority of the voting
power of the outstanding capital stock of the Company approved,
by written consent, the issuance to one or more members of the
Frost Group, LLC of twenty million shares (the
“Shares”) of the Company’s common stock, par
value $0.01 per share, in exchange for $20 million in cash
to the Company.
Pursuant to
Rule 14c-2
of the Securities Exchange Act of 1934, the corporate action
authorized by the majority of stockholders can be taken no
sooner than 20 days after the accompanying Information
Statement is first mailed to the Company’s stockholders.
Accordingly, following expiration of such
20-day
period on or about • , 2009, and subject to
expiration or termination of any waiting period under the HSR
Act and the rules of the Federal Trade Commission relating to
the HSR Act, we will issue the Shares.
Your vote is not required to approve any of these actions, and
the Information Statement is not a request for your vote or a
proxy statement. The Information Statement is being provided
only to inform you of the actions that have been taken, in
accordance with
Rule 14c-2
of the Securities Exchange Act of 1934.
Table of Contents
OPKO
HEALTH, INC.
4400 Biscayne Blvd
Suite 1180
Miami, Florida 33137
4400 Biscayne Blvd
Suite 1180
Miami, Florida 33137
INFORMATION
STATEMENT REGARDING
ACTION TAKEN BY WRITTEN CONSENT OF
MAJORITY STOCKHOLDERS
IN LIEU OF A SPECIAL MEETING
ACTION TAKEN BY WRITTEN CONSENT OF
MAJORITY STOCKHOLDERS
IN LIEU OF A SPECIAL MEETING
WE ARE
NOT ASKING YOU FOR A PROXY,
AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
GENERAL
This Information Statement is being furnished to the
stockholders of OPKO Health, Inc., a Delaware corporation (the
“Company” or “OPKO”), in connection with the
issuance to one or more members of The Frost Group, LLC, a
private investment group controlled by Phillip Frost, M.D.,
our Chairman and CEO (the “Frost Group”), of twenty
million shares (the “Shares”) of the Company’s
common stock, par value $0.01 per share, in exchange for
$20 million in cash to the Company (the
“Investment”). The Shares will be issued at a price of
$1.00 per share, which represents a discount of approximately
twenty percent (20%) to the average trading price of our common
stock on the NYSE Alternext U.S. Exchange for the five
trading days immediately preceding the effective date of Audit
Committee and stockholder approval. The Investment was approved
effective as of February 13, 2009 by our Audit Committee of
the Board of Directors and pursuant to a written consent of the
holders of a majority of the voting power of our issued and
outstanding common stock and preferred stock on such date,
voting together as a group, in lieu of a special meeting of
stockholders. Stockholder approval was sought in order to comply
with applicable rules of the NYSE Alternext U.S. Exchange,
on which our common stock is listed.
The Company has not granted and will not grant any registration
rights in respect of the Shares, which will be “restricted
securities” as defined by Rule 144 promulgated under
the Securities Act of 1933, as amended (the “Securities
Act”). Additionally, the Shares will be subject to a
two-year lockup, during which time the Shares may not be sold,
subject to certain exceptions.
The principal member of the Frost Group is Frost Gamma
Investments Trust (“FGIT”), of which Dr. Phillip
Frost, M.D., is the sole trustee. Additionally, the Frost
Group includes in its membership Dr. Jane Hsiao, our
Vice Chairman and Chief Technical Officer, Dr. Rao
Uppaluri, our Chief Financial Officer, and Mr. Steven D.
Rubin, our Executive Vice President-Administration and director.
FGIT has agreed to purchase all of the Shares to be issued in
the Investment. Immediately following issuance of the Shares,
FGIT will beneficially own an aggregate of approximately 52.2%
of our issued and outstanding common stock. The Frost Group,
FGIT, Drs. Hsiao and Uppaluri and Mr. Rubin voted the
shares of our common stock presently owned by them in favor of
the Investment.
The elimination of the need for a meeting of stockholders to
approve the actions described in this Information Statement is
made possible by Section 228 of the Delaware General
Corporation Law (the “DGCL”), which provides that the
written consent of the holders of outstanding shares of voting
stock, having not less than the minimum number of votes that
would be necessary to authorize or take such action at a meeting
at which all shares entitled to vote thereon were present and
voted, may be substituted for such a meeting. In order to
eliminate the costs involved in holding a special meeting, the
stockholders signing the written consent elected to utilize the
written consent of the holders of in excess of a majority in
interest of our voting securities entitled to vote upon the
actions described in this Information Statement.
Pursuant to Section 228 of the DGCL, we are required to
provide prompt notice of the taking of those actions described
above without a meeting of stockholders to all stockholders who
did not consent in writing to such action. This Information
Statement serves as this notice. This Information Statement will
be mailed on or about • , 2009 to stockholders of
record on February 9, 2009, and is being delivered to
inform you of the
Table of Contents
corporate actions described herein before they take effect in
accordance with
Rule 14c-2
of the Securities Exchange Act of 1934, as amended.
The entire cost of furnishing this Information Statement will be
borne by the Company. We will request brokerage houses,
nominees, custodians, fiduciaries and other like parties to
forward this Information Statement to the beneficial owners of
our voting securities held of record by them, and we will
reimburse such persons for
out-of-pocket
expenses incurred in forwarding such material.
No
Dissenters’ Rights
No dissenters’ rights are afforded to our stockholders
under Delaware law as a result of the actions described in this
Information Statement.
Board of
Directors Voting
We currently have nine directors comprising the entirety of our
Board. The Frost Group, LLC (the “Frost Group”), an
entity controlled by our Chairman and CEO and several members of
our senior management, has agreed to vote for two of the
directors, Messrs. Paganelli and Baron, under the Board of
Director composition provisions of a voting agreement between
the Frost Group and the Company. In addition, three of our
current directors, Drs. Frost and Hsiao and Mr. Rubin,
were elected to the Board pursuant to the merger agreement
entered into on March 27, 2007 among the Company, Froptix
Corporation and Acuity Pharmaceuticals, Inc.
OUR
PRINCIPAL STOCKHOLDERS
Our voting securities are composed of our common stock, par
value $0.01 per share, and our Series A Preferred Stock,
par value $0.01 per share, of which 199,582,002 and
845,987 shares, respectively, were outstanding as of
February 10, 2009. The holders of our common stock and
Series A Preferred Stock are each entitled to one vote for
each outstanding share on all matters submitted to our
stockholders. The Frost Group, Frost Gamma Investments Trust,
Drs. Hsiao and Uppaluri and Mr. Rubin voted those
shares of our common stock presently owned by them in favor of
the Investment.
Security
Ownership of Certain Beneficial Owners
The following table contains information regarding the
beneficial ownership of our common stock as of February 10,
2009, held by:
| • | each stockholder known by us to beneficially own more than 5% of our common stock; | |
| • | our directors; | |
| • | our Named Executive Officers in 2008 (as defined in the paragraph preceding the Summary Compensation Table) and our current executive officers; and | |
| • | all current directors and executive officers as a group. |
For purposes of calculating each person’s or group’s
percentage ownership, shares of common stock issuable pursuant
to stock options that may be exercised or settled on or within
60 days of February 10, 2009 are included as
outstanding and beneficially owned by that person or group but
are not treated as outstanding for the purpose of computing the
percentage ownership of any other person or group.
2
Table of Contents
Unless otherwise noted, the address of each person listed below
is 4400 Biscayne Blvd., Suite 1180, Miami, FL 33137.
|
After Giving Effect to the |
||||||||||||||||
| Before Giving Effect to the Issuance of Shares** | Issuance of Shares*** | |||||||||||||||
|
Number of |
Percentage of |
Number of |
Percentage of |
|||||||||||||
|
Outstanding |
Outstanding |
Outstanding |
Outstanding |
|||||||||||||
|
Shares |
Shares of |
Shares |
Shares of |
|||||||||||||
|
Name and Title of |
Beneficially |
Common |
Beneficially |
Common |
||||||||||||
|
Beneficial Owner
|
Owned(1) | Stock | Owned | Stock | ||||||||||||
|
Frost Gamma Investments Trust
|
102,514,639 | (2) | 47.8 | % | 122,514,639 | (2) | 52.2 | % | ||||||||
|
The Frost Group, LLC
|
20,286,704 | (3) | 9.9 | % | 20,286,704 | (3) | 9.0 | % | ||||||||
|
Johnson & Johnson Development Corporation One
Johnson & Johnson Plaza
New Brunswick, NJ 08933 |
15,487,145 | (4) | 7.6 | % | 15,487,145 | (4) | 7.0 | % | ||||||||
|
Phillip Frost, M.D., CEO & Chairman of the Board
|
102,764,639 | (5) | 47.8 | % | 122,764,639 | (5) | 52.3 | % | ||||||||
|
Jane H. Hsiao, Ph.D., MBA, Vice Chairman of the
Board & Chief Technical Officer
|
24,134,111 | (6) | 11.9 | % | 24,134,111 | (6) | 10.8 | % | ||||||||
|
Steven D. Rubin, Executive Vice President-Administration and
Director
|
5,350,608 | (7) | 2.7 | % | 5,350,608 | (7) | 2.4 | % | ||||||||
|
Rao Uppaluri, Ph.D., Chief Financial Officer
|
5,033,939 | (8) | 2.5 | % | 5,033,939 | (8) | 2.3 | % | ||||||||
|
Naveed K. Shams, M.D., Ph.D. Senior
Vice President — Research and Development and Chief Medical Officer |
43,700 | (9) | * | 43,700 | (9) | * | ||||||||||
|
Robert Baron, Director
|
343,000 | (10) | * | 343,000 | (10) | * | ||||||||||
|
John A. Paganelli, Director
|
291,861 | (10) | * | 291,861 | (10) | * | ||||||||||
|
Richard A. Lerner, M.D., Director
|
40,000 | (11) | * | 40,000 | (11) | * | ||||||||||
|
Pascal J. Goldschmidt, Director
|
40,000 | (11) | * | 40,000 | (11) | * | ||||||||||
|
Richard C. Pfenniger, Jr., Director
|
90,000 | (11) | * | 90,000 | (11) | * | ||||||||||
|
Thomas E. Beier, Director
|
140,000 | (11) | * | 140,000 | (11) | * | ||||||||||
|
All Executive Officers and Directors as a group (11 persons)
|
138,271,858 | 62.7 | % | 158,271,858 | 65.8 | % | ||||||||||
| * | Less than 1% | |
| ** | Percentages based upon 199,582,002 shares of our common stock issued and outstanding at February 10, 2009. | |
| *** | Percentages based upon 219,582,002 shares of our common stock issued and outstanding after giving effect to the issuance of 20,000,000 shares of common stock to members of the Frost Group. | |
| (1) | All shares beneficially owned represent shares of common stock unless otherwise indicated. | |
| (2) | Includes warrants to purchase 10,201,093 shares of common stock. Also includes 15,490,546 shares of common stock and warrants to purchase 4,796,158 shares of common stock held by The Frost Group, LLC, of which Frost Gamma Investments Trust is a principal member. Frost Gamma Investments Trust disclaims beneficial ownership of the common stock and warrants held by The Frost Group, LLC, except to the extent of its pecuniary interest therein. | |
| (3) | Includes warrants to purchase 4,796,158 shares of common stock. | |
| (4) | Includes warrants to purchase 2,949,142 shares of common stock and options to purchase 243,903 shares of common stock. | |
| (5) | Includes shares of common stock and warrants to purchase 10,201,093 shares of common stock held by Frost Gamma Investments Trust. It also includes options to purchase 250,000 shares of common stock by Dr. Frost. Dr. Frost is the trustee and Frost Gamma, Limited Partnership is the sole and exclusive beneficiary of Frost Gamma Investments Trust. Dr. Frost is one of two limited partners of Frost Gamma, |
3
Table of Contents
| Limited Partnership. The general partner of Frost Gamma, Limited Partnership is Frost Gamma Inc. and the sole stockholder of Frost Gamma, Inc. is Frost-Nevada Corporation. Dr. Frost is also the sole stockholder of Frost-Nevada Corporation. The number of shares included above also includes 15,490,546 shares of common stock and warrants to purchase 4,796,158 shares of common stock owned directly by The Frost Group, LLC. Frost Gamma Investments Trust is a principal member of The Frost Group, LLC. Dr. Frost and the Frost Gamma Investments Trust disclaim beneficial ownership of these shares of common stock and warrants to purchase common stock, except to the extent of any pecuniary interest therein. | ||
| (6) | Includes warrants to purchase 2,936,580 shares of common stock and options to purchase 162,500 shares of common stock. It also includes 1,000,000 shares of common stock held by each of The Chiin Hsiung Hsiao Family Trust A and The Chiin Hsiung Hsiao Family Trust B, for which Dr. Hsiao serves as the sole trustee of both. It also includes 2,354,800 shares of common stock held by Hsu Gamma Investment, L.P., for which Dr. Hsiao is the general partner. Dr. Hsiao is a member of the Frost Group, LLC, which holds 15,490,546 shares of common stock and warrants to purchase 4,796,158 shares of common stock. Dr. Hsiao disclaims beneficial ownership of the shares of common stock and warrants held by The Frost Group, LLC, except to the extent of any pecuniary interest therein. | |
| (7) | Includes warrants to purchase 1,036,440 shares of common stock and options to purchase 125,000 shares of common stock. Mr. Rubin is a member of the Frost Group, LLC, which holds 15,490,546 shares of common stock and warrants to purchase 4,796,158 shares of common stock. Mr. Rubin disclaims beneficial ownership of the shares of common stock and warrants held by The Frost Group, LLC, except to the extent of any pecuniary interest therein. | |
| (8) | Includes warrants to purchase 950,070 shares of common stock and options to purchase 100,000 shares of common stock. It also includes 161,000 shares held directly by Dr. Uppaluri’s wife. Dr. Uppaluri is a member of the Frost Group, LLC, which holds 15,490,546 shares of common stock and warrants to purchase 4,796,158 shares of common stock. Dr. Uppaluri disclaims beneficial ownership of the shares of common stock and warrants held by The Frost Group, LLC, except to the extent of any pecuniary interest therein. Dr. Uppaluri also disclaims ownership of 161,000 shares held by his wife. | |
| (9) | Includes options to purchase 37,500 shares of common stock. | |
| (10) | Includes options to purchase 95,000 shares of common stock. | |
| (11) | Includes options to acquire 40,000 shares of common stock. |
4
Table of Contents
COMPENSATION
OF DIRECTORS AND EXECUTIVE OFFICERS
Compensation
Committee Interlocks and Insider Participation
The current members of our compensation committee are
Dr. Lerner, Mr. Beier, and Dr. Goldschmidt. None
of these individuals was at any time during fiscal 2008 or at
any time prior thereto, an officer or employee of ours.
Compensation
Committee Report
The compensation committee of our Board has submitted the
following report for inclusion in this Information Statement on
Schedule 14C.
The compensation committee reviewed and discussed the
Compensation Discussion and Analysis (appearing below) required
by Item of 402(b) of
Regulation S-K
with management and, based on such review and discussion, the
compensation committee recommended to the board of directors
that the Compensation Discussion and Analysis be included in
this Information Statement on Schedule 14C.
Compensation Committee
Richard A. Lerner, M.D., Chairman
Thomas E. Beier
Pascal J. Goldschmidt, M.D.
Thomas E. Beier
Pascal J. Goldschmidt, M.D.
The compensation committee report above shall not be deemed
to be “soliciting material” or to be “filed”
with the Securities and Exchange Commission, nor shall such
information be incorporated by reference into any future filing
under the Securities Act of 1933 or the Securities Exchange Act
of 1934, each as amended, except to the extent that we
specifically incorporate it by reference into such filing.
5
Table of Contents
COMPENSATION
DISCUSSION AND ANALYSIS
Our compensation philosophy is to attract and retain talented
and dedicated executives who will work to achieve our desired
business direction, strategy, and performance. The primary goals
of our compensation program for our Named Executive Officers (as
defined in the paragraph preceding the Summary Compensation
Table) are (i) to attract, motivate, and retain talented
executives with the skill sets and expertise we need to meet our
scientific and business objectives; (ii) to be competitive
in the marketplace; (iii) to tie annual and long-term cash
and equity incentives to the achievement of specified
performance objectives that will result in increased stockholder
value; and (iv) to be cost-effective. To achieve these
goals, we have formed a compensation committee that recommends
executive compensation packages to our Board of Directors. These
packages are generally based on a mix of salary, discretionary
bonus, and equity awards. Although we have not adopted any
formal guidelines for allocating total compensation between
equity compensation and cash compensation, we maintain
compensation plans that tie a substantial portion of our
executives’ overall compensation to the achievement of
corporate goals.
Benchmarking
of Cash and Equity Compensation
Our compensation committee reviews executive compensation levels
on an annual basis to ensure they remain competitive in our
industry. Data for this review is prepared and provided to the
compensation committee by our Vice President, Human Resources,
with input from our Chief Executive Officer, as well as other
members of senior management. This data details relevant market
rates for executive base salaries, annual cash incentive,
long-term incentive, and total compensation for companies of
similar size in our industry. The sources for this data for the
previous fiscal year included the Executive Compensation Survey,
a survey of 67 biotech companies ranging in size from less than
$20 million in revenues with less than 150 employees
to over $500 million in revenue with over
1,000 employees. The data we used for our analysis focused
on 24 companies with less than $20 million in revenues
and less than 150 employees. We believe that criteria used
by the Executive Compensation Survey were effective in yielding
a comprehensive survey group of companies, or peer groups,
comparable to the Company for the previous fiscal year.
Utilizing the compiled information, the compensation committee
in 2008 reviewed the various components of executive
compensation to determine the base salary, annual cash
incentive, long term incentive, and equity compensation. The
Compensation Committee has not determined whether to increase,
decrease or maintain current compensation levels for the
Company’s Named Executive Officers for 2009.
We may retain the services of third-party executive compensation
specialists from time to time in connection with the
establishment of cash and equity compensation and related
policies, although we have not previously done so.
Elements
of Compensation
We evaluate individual executive performance with a goal of
setting compensation at levels the Board of Directors and the
compensation committee believe are comparable with executives in
other companies of similar size and stage of development. At the
same time, our Board of Directors and compensation committee
takes into account our relative performance and our own
strategic goals. The primary elements of our compensation plans
are base salary, discretionary annual bonus, and equity
compensation, each of which is described in greater detail below.
Base Salary. We establish and maintain
competitive annual base salaries for our Named Executive
Officers by utilizing available resources, which include surveys
as discussed above. While base salaries are not primarily
performance-based, we believe it is important to provide
adequate, fixed compensation to executives working in a highly
volatile and competitive industry such as ours. We provide fixed
salary compensation to our Named Executive Officers based on
their responsibilities and individual experience, taking into
account competitive market compensation paid by other companies
for similar positions within the pharmaceutical industry.
Although it is the general intent of the compensation committee
to position base salaries at approximately the competitive
median of the Company’s peer groups based on data reviewed,
the base salaries for the Company’s Named Executive
Officers in 2007 were below the median of our peer group.
Because we
6
Table of Contents
are a development stage company and have generated little
revenue, we have tried to place an emphasis on incentive forms
of compensation, such as stock option grants. For 2008, none of
the Named Executive Officers were granted increases in their
base salaries. The compensation committee has not determined
whether to increase, decrease or maintain current base salary
levels for the Company’s Named Executive Officers for 2009.
Discretionary Annual Bonus. In addition to
base salaries, our compensation committee has the authority to
award discretionary annual bonuses to our Named Executive
Officers based on corporate and individual performance.
Incentives, as a percent of salary, increase with executive rank
so that, as rank increases, a greater portion of total annual
cash compensation is based on annual corporate and individual
performance. Furthermore, as an executive’s rank increases,
a greater percentage of that executive’s cash bonus is
based on corporate performance, rather than individual
performance. Because we are a development stage company and
generated little revenue during fiscal 2007, the compensation
committee determined not to award annual cash incentive bonuses
for fiscal 2007 and to focus on other forms of incentive
compensation, such as stock option grants. The Compensation
Committee has not yet evaluated awarding incentive bonuses to
the Named Executive Officers for fiscal 2008.
Equity Compensation. We believe that equity
compensation should be a primary component of our executive
compensation program. Stock options are a critical element of
our long-term incentive strategy. The primary purpose of stock
options is to provide Named Executive Officers and other
employees with a personal and financial interest in our success
through stock ownership, thereby aligning the interests of such
persons with those of our stockholders. This broad-based program
is a vital element of our goal to empower and motivate
outstanding long-term contributions by our Named Executive
Officers and other employees. The compensation committee
believes that the value of stock options will reflect our
financial performance over the long-term. Under our employee
stock option program, options are granted at fair market value
at the date of grant, and options granted under the program
become exercisable only after a vesting period. Consequently,
employees benefit from stock options only if the market value of
our common stock increases over time. With respect to these
stock options, we recognize compensation expense based on the
Statement of Financial Accounting Standard 123R,
“Share-Based Payments” (“SFAS 123R”).
The compensation committee typically grants stock options to our
Named Executive Officers under our 2007 Equity Incentive Plan.
For all executives, other than the Chief Executive Officer, the
compensation committee considers the recommendations of our
Chief Executive Officer based on his subjective assessment of
their performance. We have not granted any restricted stock or
restricted stock awards pursuant to our equity benefit plans.
However, our compensation committee, in its discretion, may in
the future elect to make such grants to our Named Executive
Officers if it deems it advisable.
Employment Agreements. We have not entered
into an employment agreement with any of our current executive
officers.
Severance and
Change-in-Control
Benefits. None of our current executive officers
are entitled to individual severance or change of control
benefits; provided that the OPKO Health, Inc. 2007 Equity
Incentive Plan provides for certain accelerated vesting upon
change in control events.
401(k) Profit Sharing Plan. We have adopted a
tax-qualified 401(k) Profit Sharing Plan (the “401(k)
Plan”) covering all qualified employees. The effective date
of the 401(k) Plan is January 2008. Participants may elect a
salary reduction of at least 1% as a contribution to the 401(k)
Plan, up to the statutorily prescribed annual limit for
tax-deferred contributions ($15,500 for employees under
age 50 and an additional $5,000 for employees 50 and above
in 2008). In 2008, the Company adopted the Roth contribution for
employee elections. The 401(k) Plan permits employer matching of
up to 4% of a participant’s salary up to the statutory
limits. In 2008, we elected a safe harbor contribution at 4% of
annual compensation. All of our safe harbor contributions are
immediately vested.
Other Compensation. All of our Named Executive
Officers have standard benefits that are offered to all
full-time, exempt employees. These standard benefits include
health, dental and life insurance, and short and long term
disability. We intend to continue to maintain the current
benefits and perquisites for our Named
7
Table of Contents
Executive Officers; however, our compensation committee, in its
discretion, may in the future revise, amend, or add to the
benefits and perquisites of any Named Executive Officer if it
deems it advisable.
Section 162(m)
of the Internal Revenue Code
Section 162(m) of the Internal Revenue Code generally does
not allow a deduction for annual compensation in excess of
$1,000,000 paid to our executive officers. This limitation on
deductibility does not apply to certain compensation, including
“performance based” compensation under a plan approved
by our stockholders. It is expected that equity grants under our
2007 Equity Incentive Plan will qualify for the
“performance-based” exceptions from the
Section 162(m) limitations. Our policy is generally to
preserve the federal income tax deductibility of compensation
and to qualify eligible compensation for the performance-based
exception in order for compensation not to be subject to the
limitation on deductibility imposed by Section 162(m) of
the Internal Revenue Code. We may, however, approve compensation
that may not be deductible if we determine that the compensation
is in our best interests as well as the best interests of our
stockholders.
Summary
Compensation Table
The following table sets forth information regarding
compensation earned in or with respect to fiscal 2007 and 2008
by:
| • | The person who served as our Chief Executive Officer during fiscal 2008; | |
| • | The person who served as our Principal Financial Officer during fiscal 2008; | |
| • | Our three executive officers (other than individuals serving as our Chief Executive Officer or our Principal Financial Officer) who were serving as executive officers at the end of the last completed fiscal year; and |
We refer to these officers collectively as our Named Executive
Officers.
|
Stock |
Option |
All Other |
||||||||||||||||||||||||||
|
Salary |
Bonus |
Award(s) |
Award(s) |
Compensation |
Total |
|||||||||||||||||||||||
|
Name and Principal Position
|
Year | ($) | ($) | ($) | ($)(2) | ($)(3) | ($) | |||||||||||||||||||||
|
Phillip
Frost, M.D.(1)
|
2008 | 325,000 | — | — | 809,899 | 9,200 | 1,144,099 | |||||||||||||||||||||
|
Chief Executive Officer
|
2007 | 208,332 | — | — | 503,517 | 133,333 | 845,182 | |||||||||||||||||||||
|
Jane H.
Hsiao, Ph.D.(1)
|
2008 | 300,000 | — | — | 536,449 | 9,200 | 845,649 | |||||||||||||||||||||
|
Chief Technical Officer
|
2007 | 192,307 | — | — | 327,286 | 7,692 | 527,286 | |||||||||||||||||||||
|
Steven D.
Rubin(1)
|
2008 | 300,000 | — | — | 414,054 | 9,200 | 723,254 | |||||||||||||||||||||
|
Executive Vice President-Administration
|
2007 | 192,307 | — | — | 251,758 | 7,692 | 451,278 | |||||||||||||||||||||
|
Rao
Uppaluri, Ph.D.(1)
|
2008 | 275,000 | — | — | 333,974 | 9,200 | 618,174 | |||||||||||||||||||||
|
Senior Vice President and
Chief Financial Officer |
2007 | 176,284 | — | — | 201,407 | 7,051 | 384,743 | |||||||||||||||||||||
|
Naveed K.
Shams(1)
|
2008 | 259,135 | — | — | 71,430 | 25,830 | 356,395 | |||||||||||||||||||||
|
Senior Vice President — Research and Development
and Chief Medical Officer
|
2007 | — | — | — | — | — | — | |||||||||||||||||||||
| (1) | Dr. Frost became our Chief Executive Officer on March 27, 2007. Dr. Hsiao was appointed as Chief Technical Officer in May 2007. Mr. Rubin and Dr. Uppaluri were appointed as Executive Vice President, Administration and Senior Vice President, Chief Financial Officer, respectively, in May 2007. Dr. Shams joined the Company on January 14, 2008. None of our current executive officers received any compensation from the Company prior to 2007. | |
| (2) | Reflects the dollar amounts recognized for financial statement reporting purposes for the year ended December 31, 2008, in accordance with Statement of Financial Accounting Standards No. 123R, or SFAS No. 123R, excluding the impact of estimated forfeitures related to service-based vesting conditions. Assumptions made in the calculation of these amounts are included in Note 8 to the Company’s audited |
8
Table of Contents
| financial statements, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 30, 2008. | ||
| (3) | Includes (i) $125,000 for a Hart-Scott-Rodino Antitrust Improvements Act filing fee paid on behalf of Dr. Frost in June 2007; (ii) contributions made by the Company under its 401(k) Plan during fiscal 2007 in the amount of $8,333 on behalf of Dr. Frost, $7,692 on behalf of each of Dr. Hsiao and Mr. Rubin and $7,051 on behalf of Dr. Uppaluri; (iii) contributions made by the Company under its 401(k) Plan during fiscal 2008 in the amount of $9,200 for each of Drs. Frost, Hsiao, Shams, and Uppaluri, and Mr. Rubin; and (iv) temporary housing costs (including tax gross ups) for Dr. Shams in connection with his joining the Company in 2008. |
Grants of
Plan-Based Awards in 2008
The following table presents information concerning grants of
plan-based awards to each of the Named Executive Officers and
certain other persons during the year ended December 31,
2008. The exercise price per share of each option granted to our
Named Executive Officers during 2008 was equal to the fair
market value of our common stock, as determined by our
compensation committee on the date of the grant.
|
Grant Date |
||||||||||||||||
|
Number of Securities |
Exercise Price |
Fair Value of |
||||||||||||||
|
Name
|
Grant Date | Underlying Options | per Share ($) | Option Awards ($) | ||||||||||||
|
Phillip
Frost, M.D.(1)
|
4/28/08 | 300,000 | 1.65 | 291,330 | ||||||||||||
|
Jane H.
Hsiao, Ph.D.(1)
|
4/28/08 | 250,000 | 1.65 | 242,775 | ||||||||||||
|
Steven D
Rubin(1)
|
4/28/08 | 200,000 | 1.65 | 194,220 | ||||||||||||
|
Rao
Uppaluri, Ph.D.(1)
|
4/28/08 | 175,000 | 1.65 | 169,943 | ||||||||||||
|
Naveed K.
Shams, M.D.(2)
|
1/14/08 | 150,000 | 3.24 | 285,720 | ||||||||||||
| (1) | Options vest in four equal annual tranches beginning April 28, 2009 and will expire on April 27, 2015. | |
| (2) | Options vest in four equal annual tranches beginning January 14, 2009 and will expire on January 13, 2015. |
Outstanding
Equity Awards at Fiscal Year-End
The following table sets forth information as of
December 31, 2008 with respect to equity awards outstanding
at December 31, 2008.
| Option Awards | Stock Awards | |||||||||||||||||||||||
|
Number of |
Number of |
Number of |
Market Value |
|||||||||||||||||||||
|
Securities |
Securities |
Shares |
of Shares or |
|||||||||||||||||||||
|
Underlying |
Underlying |
or Units of |
Units of |
|||||||||||||||||||||
|
Unexercised |
Unexercised |
Option |
Option |
Stock That |
Stock That |
|||||||||||||||||||
|
Options (#) |
Options (#) |
Exercise |
Expiration |
Have Not |
Have Not |
|||||||||||||||||||
|
Name
|
Exercisable | Unexercisable | Price ($) | Date | Vested (#) | Vested ($) | ||||||||||||||||||
|
Phillip Frost, M.D.
|
250,000 | (1) | 750,000 | (1) | 4.88 | 5/2/14 | — | — | ||||||||||||||||
| — | 300,000 | (2) | 1.65 | 4/27/15 | ||||||||||||||||||||
|
Jane H. Hsiao, Ph.D.
|
162,500 | (1) | 487,500 | (1) | 4.88 | 5/2/14 | — | — | ||||||||||||||||
| — | 250,000 | (2) | 1.65 | 4/27/15 | ||||||||||||||||||||
|
Steven D. Rubin
|
125,000 | (1) | 375,000 | (1) | 4.88 | 5/2/14 | — | — | ||||||||||||||||
| — | 200,000 | (2) | 1.65 | 4/27/15 | ||||||||||||||||||||
|
Rao Uppaluri, Ph.D.
|
100,000 | (1) | 300,000 | (1) | 4.88 | 5/2/14 | — | — | ||||||||||||||||
| — | 175,000 | (2) | 1.65 | 4/27/15 | ||||||||||||||||||||
|
Naveed K. Shams, M.D.
|
— | 150,000 | (3) | 3.24 | 1/13/15 | |||||||||||||||||||
| (1) | Options were issued on May 3, 2007 and vest in four equal annual tranches beginning on May 3, 2008. | |
| (2) | Options were issued on April 28, 2008 and vest in four equal annual tranches beginning on April 28, 2009. |
9
Table of Contents
| (3) | Options were issued on January 14, 2008 and vest in four equal annual tranches beginning on January 14, 2009. |
Employment
Agreements and Change in Control Arrangements
None of our current executive officers are entitled to
individual severance or change of control benefits; provided
however, that the OPKO Health, Inc. 2007 Equity Incentive Plan
provides for certain accelerated vesting upon change in control
events.
Director
Compensation
The following table sets forth information with respect to
compensation of non-employee directors of the Company during
fiscal year 2008.
|
Nonqualified |
||||||||||||||||||||||||||||
|
Fees Earned |
Non-Equity |
Deferred |
||||||||||||||||||||||||||
|
or Paid |
Stock |
Option |
Incentive Plan |
Compensation |
All Other |
|||||||||||||||||||||||
|
in Cash |
Award |
Awards |
Compensation |
Earnings |
Compensation |
Total |
||||||||||||||||||||||
|
Name
|
($) | ($) | ($)(1)(2) | ($) | ($) | ($) | ($) | |||||||||||||||||||||
|
Robert Baron
|
15,000 | — | 47,769 | — | — | — | 62,769 | |||||||||||||||||||||
|
David A,
Eichler(3)
|
3,750 | — | — | — | — | — | 3,750 | |||||||||||||||||||||
|
Michael
Reich(4)
|
10,000 | — | 195,110 | — | — | — | 205,110 | |||||||||||||||||||||
|
Richard Lerner, M.D.
|
15,000 | — | 39,839 | — | — | — | 54,839 | |||||||||||||||||||||
|
Pascal Goldschmidt, M.D.
|
10,000 | — | 69,327 | — | — | — | 79,327 | |||||||||||||||||||||
|
Richard C. Pfenniger, Jr.
|
15,000 | — | 68,556 | — | — | — | 83,556 | |||||||||||||||||||||
|
Thomas E. Beier
|
10,000 | — | 68,556 | — | — | — | 78,556 | |||||||||||||||||||||
|
John Paganelli
|
10,000 | — | 47,769 | — | — | — | 57,769 | |||||||||||||||||||||
| (1) | Reflects the dollar amounts recognized for financial statement reporting purposes for the year ended December 31, 2008, in accordance with Statement of Financial Accounting Standards No. 123R, or SFAS No. 123R, excluding the impact of estimated forfeitures related to service-based vesting conditions. Assumptions made in the calculation of these amounts are included in Note 8 to the Company’s audited financial statements, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 31, 2008. | |
| (2) | Effective as of September 19, 2007, (i) each non-employee director is entitled to receive: (a) an annual retainer of $10,000, payable in quarterly installments; and (b) options to acquire 40,000 shares of the Company’s common stock upon initial appointment to the Board and options to acquire 20,000 shares each year thereafter; and (ii) the chairman of each committee of the Board shall receive $5,000 annually, payable in quarterly installments | |
| (3) | On January 18, 2008, David Eichler resigned as a member of the Board of Directors. Amount was paid in 2008 for services to the Company in 2007. | |
| (4) | On January 27, 2009, Michael Reich resigned as a member of the Board of Directors. |
AUTHORIZATION
OR ISSUANCE OF SECURITIES OTHERWISE THAN FOR EXCHANGE
As of February 13, 2009, our Audit Committee and certain
stockholders holding a majority of our outstanding capital stock
entitled to vote, approved the issuance (the
“Issuance”) to one or more members of The Frost Group,
LLC, a private investment group controlled by Phillip
Frost, M.D., our Chairman and CEO (the “Frost
Group”), of twenty million shares (the “Shares”)
of the Company’s common stock, par value $0.01 per share,
in exchange for $20 million in cash to the Company (the
“Investment”). The Shares will be issued at a price of
$1.00 per share, which represents a discount of approximately
twenty percent (20%) to the average trading price of our common
stock on the NYSE Alternext U.S. Exchange for the five
trading days immediately preceding the date as of which the
Audit Committee and stockholders approved the transaction.
10
Table of Contents
The principal member of the Frost Group is Frost Gamma
Investments Trust, of which Dr. Phillip Frost, M.D.,
is the sole trustee. Additionally, the Frost Group includes in
its membership Dr. Jane Hsiao, our Vice Chairman and Chief
Technical Officer, Dr. Rao Uppaluri, our Chief Financial
Officer, and Mr. Steven D. Rubin, our Executive Vice
President-Administration and director. FGIT has agreed to
purchase all of the Shares to be issued in the Investment.
Immediately following issuance of the Shares, FGIT will
beneficially own an aggregate of approximately 52.2% of our
issued and outstanding common stock. As a result, the Company
may be deemed to be a “controlled company” under the
NYSE Alternext Company Guide and, therefore, would not be
subject to NYSE Alternext’s rules otherwise requiring
companies listed thereon to have a Board of Directors consisting
of at least a majority of “independent directors,”
governing the determination of executive compensation and
governing the nomination of directors. The Company intends,
however, to continue to comply with NYSE Alternext’s
minimum independent director rules, executive compensation
determination rules, and director nomination rules.
The Shares will be issued in a transaction not involving any
public offering and will therefore be “restricted
securities” as defined by Rule 144 promulgated under
the Securities Act of 1933, as amended. Additionally, the Shares
will be subject to a two-year lockup, during which time the
Shares may not be sold, subject to certain exceptions. The
proceeds from the Investment will be used to fund research and
development efforts, including the ongoing clinical trials for
our products, to fund potential acquisitions, and for general
working capital. The Issuance of the Shares will not affect the
rights of our existing security holders.
Pursuant to the authority granted to it by our Board of
Directors on December 10, 2008, our Audit Committee of the
Board of Directors reviewed the proposed Investment. Our Audit
Committee discussed and considered, among other things, our
current liquidity, capital resources and cash needs, market
discounts in arms-length private-investment-in-public-entity
(PIPE) transactions, the volatility in our stock price, the
ongoing turmoil in the equity and credit markets and current
market conditions which made several types of financing
transactions unattractive or altogether unavailable to the
Company, and timing and expense considerations associated with
various alternative financing strategies. Upon consideration of
the foregoing, the Audit Committee approved the Issuance in
exchange for the substantial investment in our Company by one or
more members of the Frost Group. This capital inflow will
provide additional financial resources to support our ongoing
efforts to bring our ophthalmic drugs and instrumentation
products to the market. The Issuance is solely a reasonable
means of obtaining financing and is not compensatory.
Notwithstanding the foregoing, the NYSE Alternext
U.S. Exchange interprets any issuance of shares below
market to be compensatory under Section 711 of the Company
Guide and requires stockholder approval of such issuances.
Accordingly, we have obtained stockholder approval of the
Issuance and we are delivering this Information Statement to
stockholders.
Subject to the prior rights of the holders of any shares of
preferred stock currently outstanding or which may be issued in
the future, the holders of the common stock are entitled to
receive dividends from our funds legally available therefor
when, as and if declared by our board of directors, and are
entitled to share ratably in all of our assets available for
distribution to holders of common stock upon the liquidation,
dissolution or
winding-up
of our affairs subject to the liquidation preference, if any, of
any then outstanding shares of preferred stock. Holders of our
common stock do not have any preemptive, subscription,
redemption or conversion rights. Holders of our common stock are
entitled to one vote per share on all matters which they are
entitled to vote upon at meetings of stockholders or upon
actions taken by written consent pursuant to Delaware corporate
law. The holders of our common stock do not have cumulative
voting rights, which means that the holders of a plurality of
the outstanding shares can elect all of our directors. All of
the shares of our common stock currently issued and outstanding
are fully-paid and nonassessable. No dividends have been paid to
holders of our common stock since our incorporation, and no cash
dividends are anticipated to be declared or paid in the
reasonably foreseeable future.
11
Table of Contents
WHERE YOU
CAN OBTAIN ADDITIONAL INFORMATION
We are required to file annual, quarterly and special reports,
proxy statements and other information with the SEC. You may
read and copy any document we file at the SEC’s public
reference rooms at 100 F Street, N.E.,
Washington, D.C. 20549. You may also obtain copies of the
documents at prescribed rates by writing to the Public Reference
Section of the SEC at 100 F Street, N.E.,
Room 1580, Washington, D.C. 20549. Please call the SEC
at
1-800-SEC-0330
for more information on the operation of the public reference
rooms. Copies of our SEC filings are also available to the
public from the SEC’s web site at www.sec.gov.
12