SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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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 14a-12
ENZON PHARMACEUTICALS, INC.
(Name of Registrant as Specified In Its Charter)
KENNETH J. ZUERBLIS
(Name of Person(s) filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(I)(3).
[ ] 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
applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11: Set forth the
amount on which the filing fee is calculated and state how it
was determined.
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid.
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[ ] 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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[ENZON LOGO]
685 Route 202/206
Bridgewater, New Jersey 08807
(908) 541-8600
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 2, 2003
To our Stockholders:
You are hereby notified that the annual meeting of stockholders (the
"Annual Meeting") of Enzon Pharmaceuticals, Inc., a Delaware corporation
("Enzon" or the "Company") will be held at the Embassy Suites Hotel, 121
Centennial Avenue, Piscataway, New Jersey on Tuesday, December 2, 2003 at 10:00
a.m. local time, for the following purposes:
1. To elect two Class II directors, each for a term of three
years in accordance with the Company's Certificate of
Incorporation and By-Laws (Proposal No. 1);
2. To approve amendments to the Company's 2001 Incentive Stock
Plan to increase the number of shares of Common Stock
available for issuance under the 2001 Incentive Stock Plan
from 2,000,000 to 6,000,000, and to limit the maximum number
of shares of restricted stock and restricted stock units that
may be granted under the 2001 Incentive Stock Plan to 50% of
the total number of shares available for issuance under the
2001 Incentive Stock Plan (Proposal No. 2);
3. To ratify the selection of KPMG LLP, independent certified
public accountants, to audit the consolidated financial
statements of the Company for the fiscal year ending June 30,
2004 (Proposal No. 3); and
4. To transact such other matters as may properly come before the
Annual Meeting or any adjournment thereof.
Only holders of record of the Company's Common Stock, par value $.01
per share, at the close of business on October 24, 2003 are entitled to notice
of, and to vote at, the Annual Meeting.
We hope that as many stockholders as possible will personally attend
the Annual Meeting. Whether or not you plan to attend the Annual Meeting, your
proxy vote is important. To assure your representation at the meeting, please
complete, sign and date the enclosed proxy card and return it promptly in the
enclosed envelope. Sending in your proxy will not prevent you from voting in
person at the Annual Meeting.
By order of the Board of Directors,
/s/ Kenneth J. Zuerblis
--------------------------
Kenneth J. Zuerblis
Corporate Secretary
Bridgewater, New Jersey
October 28, 2003
[ENZON LOGO]
----------------------
PROXY STATEMENT
----------------------
This Proxy Statement is furnished to stockholders of record of Enzon
Pharmaceuticals, Inc. ("Enzon" or the "Company") as of October 24, 2003, in
connection with the solicitation of proxies for use at the annual meeting of
stockholders (the "Annual Meeting") to be held on Tuesday, December 2, 2003 and
at any adjournment thereof. The accompanying proxy is solicited by the Board of
Directors of the Company and is revocable by the stockholder any time before it
is voted. For more information concerning the procedure for revoking the proxy,
see "General." This Proxy Statement was first mailed to stockholders of the
Company on or about November 3, 2003, accompanied by the Company's Annual Report
to Stockholders for the fiscal year ended June 30, 2003. The principal executive
offices of the Company are located at 685 Route 202/206 Bridgewater, New Jersey
08807, telephone (908) 541-8600.
OUTSTANDING SHARES AND VOTING RIGHTS
Only holders of the Company's common stock, par value $.01 per share
(the "Common Stock" or "Common Shares") outstanding at the close of business on
October 24, 2003 (the "Record Date") are entitled to receive notice of and vote
at the Annual Meeting. As of the Record Date, there were 43,520,896 Common
Shares outstanding and entitled to vote at the meeting . Each Common Share is
entitled to one vote on all matters. No other class of securities will be
entitled to vote at the Annual Meeting. There are no cumulative voting rights.
To be elected, a director must receive a plurality of the votes of the
Common Shares, present in person or represented by proxy at the Annual Meeting
and entitled to vote on the election of directors. The affirmative vote of at
least a majority of the Common Shares, present in person or represented by proxy
at the Annual Meeting and entitled to vote thereon, is necessary for approval of
Proposal No. 2 and No. 3. A quorum is representation in person or by proxy at
the Annual Meeting of at least one-third of the Common Shares outstanding as of
the Record Date.
Pursuant to the Delaware General Corporation Law, only votes cast "For"
a matter constitute affirmative votes. Proxy cards which are voted by marking
"Withheld" or "Abstain" on a particular matter are counted as present for quorum
purposes and for purposes of determining the outcome of such matter, but since
they are not cast "For" a particular matter, they will have the same effect as
negative votes or votes cast "Against" a particular matter. If a validly
executed proxy card is not marked to indicate a vote on a particular matter and
the proxy granted thereby is not revoked before it is voted, it will be voted
"For" such matter. Where brokers are prohibited from exercising discretionary
authority for beneficial owners who have not provided voting instructions
(commonly referred to as "broker non-votes"), such broker non-votes will be
treated as shares that are present for purposes of determining the presence of a
quorum; however, with respect to proposals which require the affirmative vote of
a percentage of shares present at the Annual Meeting for approval, such broker
non-votes will be treated as not present for purposes of determining the outcome
of any such matter. With respect to proposals which require the affirmative vote
of a percentage of the outstanding shares for approval, since such broker
non-votes are not cast "For" a particular matter, they will have the same effect
as negative votes or votes cast "Against" such proposals.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
Pursuant to the provisions of the Company's Certificate of
Incorporation and By-laws, the Board of Directors is comprised of three classes
of directors, designated Class I, Class II and Class III. One class of directors
is elected each year to hold office for a three-year term and until successors
of such directors are duly elected and qualified. Two Class II directors will be
elected at this year's Annual Meeting to serve until the 2006 Annual Meeting.
The nominees for election to the office of director, and certain information
with respect to their backgrounds and the backgrounds of non-nominee directors,
are set forth below. It is the intention of the persons named in the
accompanying proxy card, unless otherwise instructed, to vote to elect the
nominees named herein as Class II directors. Each of the nominees named herein
presently serves as a director of the Company. In the event any of the nominees
named herein is unable to serve as a director, discretionary authority is
reserved to the Board of Directors to vote for a substitute. The Board of
Directors has no reason to believe that any of the nominees named herein will be
unable to serve if elected.
Nominees for Election to the Office of Director
at the 2003 Annual Meeting
Nominee Age Director Since Position with the Company
--------------------------------- ------- -------------- ---------------------------------------
Dr. David W. Golde (2)(5) 63 1998 Director
Robert L. Parkinson Jr. (1) 52 2002 Director
Non-Nominee Directors Continuing to Serve
in the Office of Director after the 2003 Annual Meeting
Nominee Age Director Since Position with the Company
--------------------------------- ------- -------------- ------------------------------------
David S. Barlow (1)(2)(3)(6) 46 1999 Director
Rolf A. Classon (1)(3)(6) 58 1997 Director
Dr. Rosina B. Dixon (1)(2)(5)(7) 60 1994 Director
Arthur J. Higgins (4)(7) 47 2001 President and Chief Executive Officer,
Chairman of the Board
Robert LeBuhn (3)(4)(5) (6) 71 1994 Director
(1) Member of the Compensation Committee
(2) Member of Scientific Advisory Committee
(3) Member of the Finance and Audit Committee
(4) Member of the Executive Committee
(5) Member of Corporate Governance Committee
(6) Class III director serving until the 2004 Annual Meeting
(7) Class I director serving until the 2005 Annual Meeting
2
BUSINESS EXPERIENCE OF DIRECTORS
Class II Director Nominees for Election at the 2003 Annual Meeting
Dr. David W. Golde, has served as a director of the Company since March
1998. Dr. Golde is currently a Professor of Medicine at Cornell University
Medical College, a Professor of Molecular Pharmacology and Therapeutics at
Cornell University Graduate School of Medical Sciences, a tenured member of
Sloan Kettering Institute and attending physician at Memorial Hospital, at the
Memorial Sloan-Kettering Cancer Center. From 1996 to 2002, Dr. Golde was
Physician-In-Chief at Memorial Sloan-Kettering Cancer Center. From 1991 to 1996,
Dr. Golde served as Head of the Division of Hematologic Oncology at Memorial
Sloan-Kettering Cancer Center. Prior to 1991, Dr. Golde was a professor of
medicine and Chief of the Division of Hematology and Oncology at UCLA, Director
of the UCLA AIDS Center and Director of the UCLA Clinical Research Center. Dr.
Golde serves on the Board of Directors of Viasys, Inc.
Robert L. Parkinson, Jr., has served as a director of the Company since
February 2002. In August 2002 Mr. Parkinson was appointed as the Dean of Loyola
University Chicago's School of Business Administration and its Graduate School
of Business. Mr. Parkinson worked at Abbott Laboratories from 1976 until 2001.
From 1999-2001, Mr. Parkinson served as President and Chief Operating Officer of
Abbott Laboratories. He was elected Executive Vice President in 1998,
responsible for overseeing Abbott's international operations for pharmaceutical,
hospital and nutritional products as well as the U.S.-based Ross laboratories
division. From 1995-1998, Mr. Parkinson served as president of international
operations and from 1993-1995, he served as president of chemical and
agricultural products. Mr. Parkinson was named vice president of European
operations in 1990 and had previously served as vice president of marketing and
sales, hospital products. Mr. Parkinson is currently Chairman of the Board of
GeneProt Inc. and serves on the Board of Directors of Northwestern Memorial
Hospital.
The Board of Directors recommends a vote FOR Dr. Golde and Mr.
Parkinson as Class II Directors (Proposal No. 1 on the Proxy Card).
Non-Nominee Class III Directors serving until the 2004 Annual Meeting
David S. Barlow, has served as a director of the Company since June
1999. Since March 2000 Mr. Barlow has served as Chairman of Molecular Insight
Pharmaceuticals, Inc. and as Chief Executive Officer since December 2002. Mr.
Barlow has also served as President of Black Diamond Capital, a private
investment company, since October 1999. From 1995 to September 1999, Mr. Barlow
was President of Pharmaceuticals at Sepracor, Inc. From 1993 to 1995, Mr. Barlow
served as the General Manager of Pharmaceuticals at Sepracor, Inc. Prior to
1993, Mr. Barlow held several senior level positions at Rhone-Poulenc Rorer,
Inc., including Vice President, World Wide Marketing and Business Development at
Armor Pharmaceutical Company, a subsidiary of Rhone-Poulenc Rorer, Inc. Mr.
Barlow serves on the Board of Directors of Pan Pacific Pharmaceuticals, Inc.,
Biostream, Inc., Red Bird LLC and New River Pharmaceuticals. He also serves on
the Board of Trustees of Bates College, McLean Hospital and Newton Country Day
School.
Rolf A. Classon, has served as a director of the Company since January
1997. Since October 2002 Mr. Classon has served as Chief Executive Officer of
Bayer Healthcare. From 1995 to 2002 Mr. Classon served as President of Bayer
Diagnostics. From 1991 to 1995, Mr. Classon was an Executive Vice President in
charge of Bayer Diagnostics' Worldwide Marketing, Sales and Service operations.
From 1990 to 1991, Mr. Classon was President and Chief Operating Officer of
Pharmacia Biosystems A.B. Prior to 1991, Mr. Classon served as President of
Pharmacia Development Company Inc. and Pharmacia A.B.'s Hospital Products
Division.
Robert LeBuhn, has served as a director of the Company since August
1994. Mr. LeBuhn is a private investor and is a director of Cambrex Corporation.
He is a Trustee and Chairman of the Geraldine R. Dodge Foundation, a Trustee of
All Kinds of Minds, a Trustee of Executive Service Corp., and a trustee of the
Aspen Music Festival and School and President of its National Council.
3
Non-Nominee Class I Directors Serving Until the 2005 Annual Meeting
Arthur J. Higgins, has served as the Company's President, Chief
Executive Officer and a director of the Company since May 31, 2001, and Chairman
of the Board since December 3, 2001. Prior to joining the Company, Mr. Higgins
had been with Abbott Laboratories for 14 years and most recently served as
Senior Vice President of Pharmaceutical Operations since 1998. He also held
various other positions at Abbott Laboratories, including Vice President of
Pacific, Asia and Africa Operations and Vice President of International Business
Development. Previously, Mr. Higgins worked for Bristol-Myers and Sandoz in the
U.K. Mr. Higgins graduated from Strathclyde University, Scotland and holds a
B.S. degree in biochemistry.
Dr. Rosina B. Dixon, has served as a director of the Company since
August 1994. Dr. Dixon has been self-employed as a consultant to the
pharmaceutical industry since 1987. Prior to such time she held senior positions
at Ciba-Geigy Pharmaceuticals, a division of Ciba-Geigy Corporation, and
Schering-Plough Corporation. She received her M.D. from Columbia University,
College of Physicians and Surgeons and is certified by the National Board of
Medical Examiners and the American Board of Internal Medicine. She is a member
of the American College of Clinical Pharmacology, American Society for Clinical
Pharmacology and Therapeutics, and the National Association of Corporate
Directors and currently serves as a director of Church & Dwight Co., Inc. and
Cambrex Corporation.
DIRECTORS' COMPENSATION
Directors' Cash Compensation
In September 2002, the Compensation Committee of the Board of Directors
(the "Compensation Committee") determined to issue the non-executive,
independent directors serving on the Company's Board of Directors (the
"Independent Directors") Common Stock pursuant to the Company's 2001 Incentive
Stock Plan which was approved by the Company's stockholders in December 2001
(the "2001 Incentive Stock Plan").
Pursuant to the Compensation Committee's resolutions, the Independent
Directors receive compensation in the form of quarterly grants of common stock
equivalent to (1) $2,500 per quarter; (2) $500 per Board of Director's meeting
attended and (3) $500 for committee meetings attended by the Independent
Directors which are held on a day when no Board of Directors meeting is held.
The number of shares issued is based on the fair market value of Common Stock on
the last trading day of the applicable quarter. The Independent Directors are
entitled to elect to receive up to 50% of the fees payable in cash with the
remainder of the fee to be paid in Common Stock.
The foregoing grants of shares to Independent Directors under the 2001
Incentive Stock Plan shall continue until such time as such grants are modified
or terminated by the Compensation Committee or the Board of Directors.
Employee directors receive no compensation for their service on our
Board of Directors.
4
The Independent Directors earn their fees on a calendar year basis,
however we record their total compensation on fiscal year basis. For further
information regarding Independent Directors' compensation, please see "Directors
Fees" below. During the fiscal year ended June 30, 2003 the Company paid the
following fees earned during the year ended December 31, 2002 in the form of
cash and stock based on each of the director's elections:
Value
Total Cash of Stock # Shares
Board Member Compensation Compensation Compensation Issued
----------- --------------- -------------- --------------- ---------
David Barlow $14,000 $7,000 $7,000 323
Rolf Classon 16,000 - 16,000 743
Rosina Dixon 15,000 7,500 7,500 342
David Golde 13,500 6,750 6,750 303
Robert LeBuhn 15,500 7,750 7,750 355
Robert Parkinson, Jr. 11,944 5,972 5,972 300
Randy Thurman 5,500 - 5,500 171
--------------- -------------- --------------- ---------
Totals $91,444 $34,972 $56,472 2,537
=============== ============== =============== =========
Directors' Stock Options
In September 2002, the Compensation Committee determined that the
Independent Directors will receive annual stock option grants under the
Company's 2001 Incentive Stock Plan. Pursuant to the Compensation Committee's
resolutions, each of the Independent Directors automatically receives an option
to purchase 5,000 shares of Common Stock annually on or about January 2nd (the
"Regular Grant"). Newly elected directors also receive an option to purchase
10,000 shares of Common Stock (the "Initial Election Grant") on the date of each
Independent Director's initial election to the Board. In addition, each
newly-elected Independent Director automatically receives an option to purchase
such Independent Director's pro rata share of the Regular Grant for the year in
which such Independent Director was initially elected to the Board, which equals
the product of 416 multiplied by the number of whole months remaining in the
year until the next Regular Grant (the "Pro Rata Grant").
The options granted as a Regular Grant vest and become exercisable on
the January 1st following the date of grant. The options granted pursuant to a
Pro Rata Grant vest and become exercisable on the January 1st following such
Independent Director's initial election to the Board. The options granted
pursuant to an Initial Election Grant vest and become exercisable as to 5,000
shares one year after the date of grant; and as to 5,000 shares two years after
the date of grant. The per share exercise price of options granted to the
Independent Directors is equal to the fair market value of the Common Stock on
the date of grant.
Directors Fees
The Independent Directors are paid their fees on a calendar year basis,
however we record their total compensation on fiscal year basis. During the
fiscal year ended June 30, 2003 the Company recorded an aggregate of $104,500 in
Independent Directors Fees, a summary of which follows:
Value of
Consideration
-----------------
David S. Barlow $16,500
Rolf A. Classon 19,500
Rosina B. Dixon 17,500
David W. Golde 16,000
Robert LeBuhn 18,000
Robert L. Parkinson 17,000
5
Section 16(a) Beneficial Ownership Reporting Compliance
Ownership of and transactions in the Company's Common Stock by
executive officers and directors of the Company and owners of 10% or more of the
Company's outstanding Common Stock are required to be reported to the Securities
and Exchange Commission pursuant to Section 16(a) of the Securities Exchange Act
of 1934, as amended. Based solely on the Company's review of such reports and
written representations from certain reporting persons, during the fiscal year
ended June 30, 2003 all such reports were filed in a timely manner.
Directors' Stock Ownership Program
In October 2000, the Board of Directors implemented a director's stock
ownership program which requires each of the directors to own beneficially,
outstanding Common Stock of the Company with a market value of at least $100,000
within two years after the director first joins the Company's Board of
Directors. The determination of whether the shares owned beneficially by a
director meet the $100,000 minimum market value requirement will be based on the
highest average trading price of the Common Stock over any consecutive twenty
trading days during the two year period after the director first joins the
Company's Board of Directors or the price paid for the Common Stock by the
director. Shares of Common Stock underlying outstanding options will not be
counted towards satisfaction of this requirement. The Board of Directors may
waive this requirement under certain circumstances. All of the Company's current
directors meet this requirement.
INFORMATION CONCERNING BOARD AND COMMITTEE MEETINGS
AND COMMITTEES OF THE BOARD
Eleven meetings of the Company's Board of Directors were held during
the fiscal year ended June 30, 2003. Each incumbent director attended at least
75% of the total number of meetings of the Board of Directors and committees of
the Board of Directors, of which such director was a member, held during the
fiscal year.
As of June 30, 2003, the standing committees of the Company's Board of
Directors were the Finance and Audit Committee, the Compensation Committee, the
Executive Committee, the Scientific Advisory Committee and the Corporate
Governance Committee.
As of June 30, 2003, the Finance and Audit Committee was comprised of
Robert LeBuhn, chairman, Rolf A. Classon and David S. Barlow. The primary
purpose of the Finance and Audit Committee is to assist the Board of Directors
in fulfilling its responsibility to oversee management's conduct of the
Company's financial reporting process. In furtherance of such purpose, the
Finance and Audit Committee shall be directly responsible for the appointment,
compensation and oversight of the work of the Company's independent auditors as
well as the approval, in advance, of all services provided by the independent
auditors, whether audit services or non-audit services. In addition, the Finance
and Audit Committee shall assist with: (a) the overview of financial reports and
other financial information provided by the Company to any governmental or
regulatory body, the public or other users thereof, (b) the Company's systems of
internal accounting and financial controls, (c) the annual independent audit of
the Company's financial statements, and (d) the Company's legal compliance and
ethics programs, as established by management and the Board of Directors. The
Finance and Audit Committee adopted a written charter during fiscal 2000 and
amended such charter in September 2002. The Finance and Audit Committee held
five meetings during the fiscal year ended June 30, 2003.
As of June 30, 2003, the Compensation Committee was comprised of Rolf
A. Classon, chairman, Dr. Rosina B. Dixon, David S. Barlow, and Robert L.
Parkinson, who joined the Compensation Committee in September 2002. The primary
functions of the Compensation Committee are to administer the Company's
Non-Qualified Stock Option Plan and 2001 Incentive Stock Plan, determine the
compensation of the Company's officers and senior management, and review
compensation policy. There were five meetings of the Compensation Committee
during the fiscal year ended June 30, 2003.
The Scientific Advisory Committee is comprised of Dr. David W. Golde,
chairman, Dr. Rosina B. Dixon and David S. Barlow. This committee provides
scientific input to the Board of Directors and serves as the liaison between the
Company's senior research and development management and the Board of Directors.
There were no meetings of the Scientific Advisory Committee during the fiscal
year ended June 30, 2003.
6
The Corporate Governance Committee is comprised of Dr. Rosina B. Dixon,
chairperson, Dr. David W. Golde and Robert LeBuhn. This committee reviews and
sets corporate governance policy and will be responsible for director and senior
management succession planning. There were no meetings of the Corporate
Governance Committee during the fiscal year ended June 30, 2003.
Given the relatively small size of the Company's current Board of
Directors, the Company determined that efficiencies were not being realized from
meetings of the Executive Committee and therefore suspended regular meetings of
the Executive Committee in September 1994. There were no meetings of the
Executive Committee during the fiscal year ended June 30, 2003.
The Company has not yet established a policy with respect to the
consideration of stockholder nominees to the Board of Directors.
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
During the fiscal year ended June 30, 2003, the members of the Board of
Directors serving on the Compensation Committee of the Board of Directors were
Rolf A. Classon, chairman, Dr. Rosina B. Dixon, David S. Barlow and Robert L.
Parkinson, none of whom are or have ever been employees of the Company. During
the fiscal year ended June 30, 2003, no executive officer of the Company served
on the compensation committee or board of directors of any other entity which
had an executive officer who also served on the Compensation Committee or Board
of Directors of the Company.
FINANCE AND AUDIT COMMITTEE INDEPENDENCE
During the fiscal year ended June 30, 2003, the members of the Board of
Directors serving on the Finance and Audit Committee of the Board of Directors
were Robert LeBuhn, David S. Barlow and Rolf A. Classon, all of whom are
considered "independent directors" as defined by Rule 4200 (a) (15) of the
National Association of Securities Dealers listing standards.
BUSINESS EXPERIENCE OF EXECUTIVE OFFICERS
Set forth below is certain information regarding the executive officers
of the Company who do not serve on the Board of Directors.
Dr. Ulrich Grau, 54, has served as the Company's Chief Scientific
Officer since March 2002. From January 2000 to March 2001 Dr. Grau served as
President of Research and Development at BASF Pharma. From January 1999 to July
1999 Dr. Grau served as Senior Vice President and R&D integration officer at
Aventis Pharmaceuticals. From November 1997 to January 1999 Dr. Grau served as
Senior Vice President Global Product Realization at Hoechst Marion Roussel.
Kenneth J. Zuerblis, 44, has served as the Company's Chief Financial
Officer since January 1996 and as Vice President, Finance since April 1994.
During May 2000, Mr. Zuerblis was appointed Secretary of the Company. From July
1991 to April 1994, Mr. Zuerblis served as the Company's Controller. From
January 1982 to July 1991, Mr. Zuerblis was employed by KPMG LLP in various
positions, the last being senior manager. He became a certified public
accountant in 1985.
7
SUMMARY COMPENSATION TABLE
The following table provides a summary of cash and non-cash
compensation for each of the last three fiscal years ended June 30, 2003, 2002
and 2001 with respect to the Company's Chief Executive Officer and the other
executive officers serving during the fiscal year ended June 30, 2003 (the
"Named Executive Officers"):
Long-Term
Compensation
Annual Compensation Awards
------------------------------------------------- -------------------------
Restricted
Stock Securities
Name and Other Annual Awards Underlying All Other
Principal Position Year Salary($) Bonus($) Compensation($)(1) ($)(2) Options(#) Compensation($)(3)
------------------------ ----- --------- -------- ------------------ ---------- ----------- ------------------
Arthur J. Higgins 2003 $518,462 $432,000 -- $3,560,000 200,000 $6,000
President, Chief Executive 2002 500,000 750,000 $190,446(4) -- 800,000 5,500
Officer and Chairman 2001 23,077 -- 1,562,500(5) 400,000 --
Ulrich Grau 2003 400,000 185,000 -- -- 50,000 8,019
Chief Scientific Officer 2002 101,538 50,000 -- -- 150,000 --
Kenneth J. Zuerblis 2003 303,235 147,000 -- -- 50,000 6,776
Vice President, Finance, 2002 280,615 136,000 -- -- -- 5,280
Chief Financial Officer 2001 238,500 90,000 -- -- 100,000 6,578
and Corporate Secretary
(1) Excludes perquisites and other personal benefits that in the aggregate do
not exceed the lesser of $50,000 or 10% of the Named Executive Officer's
total annual salary and bonus.
(2) As of June 30, 2003, Mr Higgins held 225,000 shares of restricted Common
Stock, the aggregate value of which on such date was $2,823,750.
(3) Consists of annual Company contributions to a 401(k) plan.
(4) Compensation related to Mr. Higgins' temporary living expenses and amounts
reimbursed during the fiscal year for the payment of taxes relating to the
payment of such temporary living expenses by the Company on behalf of Mr.
Higgins.
(5) Mr. Higgins was issued 25,000 shares of restricted Common Stock on June 29,
2001, which will vest as to 5,000 shares per year commencing May 31, 2002,
provided that Mr. Higgins is employed by the Company on each such vesting
date.
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning the grant of stock
options under the Company's stock option plans to the Named Executive Officers
during the fiscal year ended June 30, 2003:
Individual Grants
----------------------------------------------------
% of Total Potential Realizable Value at
Number of Options Assumed Annual Rates of Stock
Securities Granted to Exercise Price Appreciation for Option
Underlying Employees or Base Term(2)
Options in Fiscal Price(1) Expiration --------------------------------
Name Granted Year ($/Share) Date 0%($) 5%($) 10%($)
---- ---------- ------ --------- --------- ------ ---------- -----------
Arthur J. Higgins 200,000(3) 17.66% $17.80 12/3/2012 0 $2,238,865 $5,673,723
Ulrich Grau 50,000(4) 4.41% $23.66 8/13/2012 0 743,985 $1,895,397
Kenneth J. Zuerblis 50,000(5) 4.41% $22.05 7/1/2012 0 693,356 $1,757,101
(1) All options were granted at an exercise price that equaled or
exceeded the fair market value of the Common Stock on the date of
grant, as determined by the last sale price as reported on the Nasdaq
National Market.
8
(2) The amounts set forth in the three columns represent hypothetical
gains that might be achieved by the optionees if the respective
options are exercised at the end of their terms. These gains are
based on assumed rates of stock price appreciation of 0%, 5% and 10%
compounded annually from the dates the respective options were
granted. The 0% appreciation column is included because the options
were granted with exercise prices which equaled or exceeded the
market price of the underlying Common Stock on the date of grant, and
thus will have no value unless the Company's stock price increases
above the exercise prices.
(3) In December 2002, Mr. Higgins was granted an option to purchase
200,000 shares of the Company's Common Stock for an exercise price of
$17.80 per share. These options will vest on December 3, 2003.
(4) In August 2002, Dr. Grau was granted an option to purchase 50,000
shares of the Company's Common Stock for an exercise price of $23.66
per share. These options vest over a four year period at a rate of
12,500 shares per year. The vesting and exercisability of such shares
will accelerate if (i) Dr. Grau's employment is terminated without
"cause" (as defined in Dr. Grau's employment agreement) in connection
with a "change in control" (as defined in Dr. Grau's employment
agreement), or (ii) Dr. Grau terminates his employment for "good
reason" (as defined in Dr. Grau's employment agreement) in connection
with a change in control.
(5) In July 2002, Mr. Zuerblis was granted an option to purchase 50,000
shares of the Company's Common Stock for an exercise price of $22.05
per share. These options vest over a five year period at a rate of
10,000 shares per year. The vesting and exercisability of such shares
will accelerate if (i) Mr. Zuerblis' employment is terminated without
"cause" (as defined in Mr. Zuerblis' change in control agreement) in
connection with a "change in control" (as defined in Mr. Zuerblis'
change in control agreement), or (ii) Mr. Zuerblis terminates his
employment for "good reason" (as defined in Mr. Zuerblis' change in
control agreement) in connection with a change in control.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth the information with respect to the
Named Executive Officers concerning the exercise of options during the fiscal
year ended June 30, 2003 and unexercised options held as of June 30, 2003.
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options
Acquired Options at FY-End (#) at FY-End ($)(1)
On Value ---------------------------- --------------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
------------------------ ------------ --------- ----------- ------------- ----------- -------------
Arthur J. Higgins -- -- 500,000 900,000 -- --
Ulrich Grau -- -- 20,000 180,000 -- --
Kenneth J. Zuerblis -- -- 107,750 134,250 $456,250 --
(1) Based upon a market value of $12.55 as determined by the last sale
price as reported on the Nasdaq National Market on June 30, 2003. If
the exercise price is equal to or greater than such last sale price,
the option is deemed to have no value.
EMPLOYMENT AND TERMINATION AGREEMENTS
The Company has entered into an employment agreement with its President
and Chief Executive Officer, Arthur J. Higgins. Under the employment agreement
Mr. Higgins received an initial base salary of $500,000 per year and has
participated in Enzon's bonus plan for management commencing with the fiscal
year ending June 30, 2002. The employment agreement may be terminated by either
party with twelve months written notice, but not before May 31, 2005. Under the
terms of Mr. Higgins' employment agreement, he is entitled to a bonus of between
0 and 200% of his base salary with a target of 100% of his base salary. Under
the terms of the agreement, Mr. Higgins was guaranteed a minimum cash bonus in
the amount of $750,000 for the fiscal year ended June 30, 2002.
On May 31, 2001 pursuant to the employment agreement, Mr. Higgins was
granted an option under Enzon's Non-Qualified Plan, to purchase 400,000 shares
of Enzon's Common Stock at the per share exercise price of $70.00, the last
reported sale price of a share of the Company's Common Stock on the date of
grant. The option vested as to 200,000 shares on May 31, 2001; however, the
option did not become exercisable as to these shares until November 30, 2001.
The remaining shares vest and become exercisable as to 50,000 shares on each of
the first, second, third and fourth anniversaries of the date of grant.
9
Pursuant to the employment agreement, Mr. Higgins was granted an
additional option to purchase 400,000 shares of Enzon's Common Stock at the per
share exercise price of $57.67, the last reported sale price of a share of
Common Stock on December 3, 2001, the date the Board of Directors elected to
have him begin serving as Chairman of the Board of Directors. Such option will
vest and become exercisable as to 100,000 shares on the first, second, third and
fourth anniversaries of such date. Notwithstanding the foregoing, all unvested
options granted to Mr. Higgins pursuant to his employment agreement shall
immediately vest and become exercisable if (i) the last reported sale price of a
share of Enzon's Common Stock is at least $100.00 as reported on the Nasdaq
National Market for at least twenty consecutive trading days, provided that, Mr.
Higgins is then employed by Enzon on a full-time basis as its President and
Chief Executive Officer, (ii) Mr. Higgins' employment is terminated without
"cause" (as defined in Mr. Higgins' employment agreement) in connection with a
"change in control" (as defined in Mr. Higgins' employment agreement), or (iii)
Mr. Higgins terminates his employment for "good reason" (as defined in Mr.
Higgins' employment agreement) in connection with a change in control.
Pursuant to the employment agreement, Mr. Higgins also received 25,000
shares of restricted Common Stock, which shall vest as to 5,000 shares per year
commencing on the first anniversary of the commencement of his employment (May
31, 2001). The shares of restricted Common Stock will vest immediately upon (i)
the Company terminating Mr. Higgins' employment without cause, (ii) Mr. Higgins
terminating his employment for good reason, or (iii) Mr. Higgins' death or
"disability" (as defined in Mr. Higgins' employment agreement).
In the event Mr. Higgins' employment is terminated by Enzon without
cause or by Mr. Higgins for good reason, prior to May 31, 2004, Mr. Higgins will
be entitled to: (i) cash payments equal to his base salary from the date of
termination until May 31, 2005; (ii) a cash payment equal to the aggregate
target bonus, which would have been payable to Mr. Higgins (based on his salary
at the time of his termination) for each fiscal year until the fiscal year
ending June 30, 2005; (iii) reimbursement for any medical and dental coverage
available to Mr. Higgins and any family member for a period of up to eighteen
months commencing on the date of termination; (iv) a cash payment equal to any
unpaid base salary through the date of termination, (v) all shares of restricted
Common Stock shall vest; and (vi) all options that have not vested at the time
of termination will terminate; provided, however, a prorated portion of the
tranche of unvested options that were scheduled to vest on the anniversary of
the applicable grant date immediately following the date of such termination
shall vest. In the event Mr. Higgins' employment is terminated by Enzon without
cause or by Mr. Higgins for good reason subsequent to May 31, 2004, Mr. Higgins
will be entitled to receive a cash payment equal to his annual base salary, his
target bonus and the pro rata amount of the target bonus for the fiscal year in
which he was terminated and items (iii), (iv), (v) and (vi) above will apply.
Mr. Higgins' employment agreement also requires him to maintain the
confidentiality of Enzon information and assign inventions developed during the
term of the agreement and for a six-month period following termination of
employment with Enzon. Mr. Higgins is precluded from competing with Enzon during
the term of his employment agreement and for two years after his employment is
terminated.
The Company entered into a three year employment agreement with Dr.
Ulrich Grau with an automatic renewal for an additional twenty-four months. This
agreement provides for a base salary of $400,000 per year and participation in
Enzon's bonus plan for management commencing with the fiscal year ended June 30,
2002. Dr. Grau was granted an option under Enzon's Non-Qualified Plan to
purchase 150,000 shares of Enzon's Common Stock at a per share exercise price of
$45.98. With regard to 100,000 shares subject to this option, this option vests
and becomes exercisable as to 25,000 shares on the first, second, third and
fourth anniversaries of the date of grant. The remaining 50,000 shares will vest
on the fifth anniversary of the grant and shall immediately vest and become
exercisable on the date of which the audited financial statements of the Company
report net annual revenues of not less than fifty million dollars from the
commercial sale of the product(s) used for organ rejection or autoimmune
diseases pursuant to a royalty agreement between the Company and Vivo
Healthcare, provided Dr. Grau is then employed by the Company on a full-time
basis as Chief Scientific Officer.
10
In the event Dr. Grau's employment is terminated by Enzon without cause
or by Dr. Grau for good reason (as defined in Dr. Grau's employment agreement),
Dr. Grau will be entitled to (i) cash payments equal to his annual base salary,
(ii) a cash payment equal to the target bonus which would be payable for the
fiscal year which commences immediately following the date of termination, (iii)
reimbursement for any medical and dental coverage available to Dr. Grau and any
family member a period of up to eighteen months commencing on the date of
termination, (iv) a cash payment equal to any unpaid base salary through the
date of termination, (v) a cash payment equal to a pro rata amount of the target
bonus for the fiscal year during which termination occurs, (vi) all options that
have not vested at the time of termination will terminate, however, with respect
to the option to purchase 100,000 shares, a prorated portion of the tranche of
unvested options which were schedule to vest on the anniversary of the
commencement date immediately following the date of such termination shall vest.
The option to purchase 50,000 shares which becomes exercisable on the fifth
anniversary date of the commencement date subject to acceleration upon the
achievement of an annual net annual revenue milestone, as described above, shall
vest as to a pro-rated portion of such shares as of the date of termination.
Dr. Grau's employment agreement also requires him to maintain the
confidentiality of Enzon information during the term of his agreement. Dr. Grau
is precluded from competing with Enzon during the term of his employment
agreement and for two years after his employment is terminated.
The Company has an agreement with Mr. Zuerblis which provides for
payment of three years of Mr. Zuerblis' compensation and benefits (as defined in
such agreement) following a change in control of the Company (as defined in such
agreement) including the provision for such payment in the event Mr. Zuerblis'
employment with the Company is terminated under certain circumstances. Following
such change in control, any unvested options, except for the 100,000 options
granted to Mr. Zuerblis in July 2000 which are not subject to this agreement,
held by Mr. Zuerblis would vest and become exercisable if his employment with
the Company is terminated under certain circumstances or Mr. Zuerblis quits for
good reason. The term of this agreement is for three years. Prior to a change in
control of the Company, the agreement automatically renews on each successive
anniversary for an additional three years, unless the Company gives Mr. Zuerblis
60 days notice prior to the anniversary date that it does not plan to renew such
agreement.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
During the fiscal year ended June 30, 2003, the Compensation Committee
of the Board of Directors consisted of four non-employee directors. The
Compensation Committee determines all compensation paid or awarded to the
Company's officers, including the Named Executive Officers in the Summary
Compensation Table.
Compensation Philosophy
The philosophy of the Company's compensation programs is to enhance the
Company's performance and stockholder value by aligning the financial interests
of the Company's senior managers with those of its stockholders, while keeping
the overall compensation package competitive. The compensation package for
officers includes a number of components. The package is designed to align
individual compensation with the short-term and long-term performance of the
Company and is based on the following principles:
o Pay for achievement of business and strategic objectives,
measured based upon the Company's financial and operating
performance and individual strategic, management and
development goals.
o Pay competitively, with compensation set at levels that will
attract and retain key employees. The Company regularly
reviews compensation surveys of companies in the
biopharmaceutical industry and sets compensation levels based
on the results of these reviews.
o Align compensation with interests of stockholders through
equity.
The compensation package for each of the Named Executive Officers as
well as other officers who are members of the Company's executive staff consists
of four elements: (1) base salary, (2) performance-based incentive, (3) stock
incentive programs, and (4) various other benefits. More specific information on
each of these elements follows.
11
Base Salary
The Compensation Committee aims to set base salaries at levels that are
competitive with those paid to senior executives with comparable qualifications,
experience and responsibilities at other companies in the pharmaceutical and
biotechnology industries, including those companies making up the Nasdaq
Biotechnology Index line of the stock performance graph that appears in this
proxy statement. The Compensation Committee believes that this is necessary to
attract and retain the executive talent required to lead the Company, since the
Company competes with a large number of companies in the biopharmaceutical
industry, including large pharmaceutical companies, for executive talent.
Salaries are reviewed annually and in connection with promotions. Industry, peer
group and national survey results are considered in making salary determinations
to align the Company's pay practices with other companies in the pharmaceutical
and biotechnology industries. In addition to survey results, individual job
performance is also considered in setting salaries. The Chief Executive Officer
reviews members of the executive staff and makes recommendations to the
Compensation Committee on salary, including salary increases, based on his
judgment of the individual's performance. The Compensation Committee reviews
these recommendations independently and approves, with any modifications it
considers appropriate, the annual salary and salary increases.
Annual Incentive Compensation
The Company maintains an incentive program that provides an opportunity
for officers and employees to earn an incentive based upon the performance of
both the Company and the individual (the "Performance Incentive Program"). The
incentive potential is stated as a percentage of the officer's and employee's
base salary and varies by position. Financial and individual performance goals
are set at the start of the fiscal year and are based on business criteria
specified in this program. Actual incentives are calculated at the end of the
fiscal year based on goal performance. All executive staff had the same
corporate goals. Other goals and weightings for each participant varied,
depending on the participant's position and areas of responsibility and the
participant's effect on the Company's performance.
Stock Incentive Programs
The Compensation Committee believes that stock incentive programs such
as stock options directly link the amounts earned by officers with the amount of
appreciation realized by the Company's stockholders. Restricted stock and stock
options also serve as a critical retention incentive. Stock incentive program
have always been viewed as a major means to attract and retain highly qualified
executives and key personnel and have always been a major component of the
compensation package, consistent with practices throughout the pharmaceutical
and biotechnology industries. The Company's stock incentive programs are
structured to encourage key employees to continue in the employ of the Company
and motivate performance that will meet the long-term expectations of
stockholders. In determining the size of any option or restricted stock award,
the Compensation Committee considers the individual's past performance and
potential, the position held by the individual and the individual's annual base
salary compensation.
The Compensation Committee generally considers and makes option or
restricted stock grants to officers and all other employees once a year. Options
or restricted stock may also be granted at other times during the year in
connection with promotions or for new hires. Option grants to executive staff
members are made under the Stock Option Plans with the exercise price equal to
the last reported sale price of the Company's Common Stock on the date of grant
and expire up to ten years after the date of the grant. Vesting on most options
and restricted stock grants occurs over a four to five year period, which is
designed to encourage retention.
Other Benefits
Executive staff members participate in various medical, dental, life,
disability and benefit programs that are generally made available to all
salaried employees.
12
CEO Compensation
The base salary and bonus of the Chief Executive Officer is determined
by the Compensation Committee in accordance with the Performance Incentive
Program discussed above. The Committee has taken into consideration Mr. Higgins
extensive prior experience as a senior executive in a major multinational
pharmaceutical company and the compensation paid to chief executive officers
with similar credentials as Mr. Higgins.
Mr. Higgins is eligible for a bonus of between 0 and 200% of his base
salary with a target of 100% of his base salary. The bonus paid to Mr. Higgins
in 2003 represents approximately 80% of his base salary and was based on his
successful transition of the company from a royalty based biopharmaceutical
company to a fully integrated pharmaceutical company through the acquisition of
the ABELCET product line and DEPOCYT, and the reacquisition of ONCASPAR. Mr.
Higgins received an option to purchase 200,000 shares of Common Stock at an
exercise price of $17.80 on December 3, 2002. This option will vest on December
3, 2003. Mr. Higgins was also issued 200,000 shares of restricted Common Stock
on December 3, 2002. The grant was designed as a retention incentive to
encourage Mr. Higgins' continued employment and tie his performance to increased
long term stockholder value. 60,000 of the shares will vest on December 3, 2005,
60,000 shares will vest on December 3, 2006 and 80,000 shares will vest on
December 3, 2007. The last reported sale price of Enzon's Common Stock on
December 3, 2002 was $17.80 per share. The shares of restricted Common Stock
will vest immediately upon (i) the Company terminating Mr. Higgins' employment
without "cause" (as defined in Mr. Higgins' employment agreement), (ii) Mr.
Higgins terminating his employment for "good reason" (as defined in Mr. Higgins'
employment agreement), or (iii) Mr. Higgins' death or "disability" (as defined
in Mr. Higgins' employment agreement).
THE COMPENSATION COMMITTEE
Rolf A. Classon, Chairman
David S. Barlow
Dr. Rosina B. Dixon
Robert L. Parkinson, Jr.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company entered into an assignment agreement and a royalty
agreement in October 2002 with Vivo Healthcare Corporation ("Vivo"). Dr. Grau is
a 37.5% stockholder of Vivo. The material business terms of the assignment
agreement and royalty agreement were negotiated prior to the time Dr. Grau
joined the Company. Pursuant to the assignment agreement Vivo entered into with
the Company, Vivo assigned to the Company its entire right, title and interest
in, to and under all of the assets of Vivo used or useful in connection with the
development of a polymerized version of mycophenolate ("p-MPA technology"). In
consideration for the agreement the Company has agreed to pay Vivo a milestone
payment of $750,000 when an IND for a product containing the P-MPA Technology is
approved and royalties, if any, on sales of this product by the Company. The
development of the product to the IND stage is at the sole discretion of the
Company. Vivo and each of Vivo's stockholder's, including Dr. Grau, have agreed
to not compete with the Company in marketing the p-MPA technology or products
which include the p-MPA technology, either directly or indirectly, for a period
up to five (5) years following the execution date of the assignment agreement.
The Company is not obligated to develop, commercialize or otherwise exploit the
p-MPA technology, provided that if the Company does not expend at least one
million dollars ($1,000,000) on the development or commercialization of the
p-MPA technology during the two (2) years following the execution date of the
assignment agreement, (i) the five (5) year non-compete period shall be reduced
to two (2) years following the execution date of the assignment agreement, and
(ii) Vivo shall have the right to cause the Company to reassign the p-MPA
technology to Vivo. Pursuant to the royalty agreement with Vivo, the Company is
required to pay Vivo a royalty percentage based on the aggregate net sales by
the Company or its licensees of products which embody the p-MPA technology at
the rate of (i) three percent (3%) up to the first $25 million of such net sales
by the Company (or aggregate royalties the Company receives on such net sales by
its licensees); (ii) two percent (2%) for the next $25 million of such net sales
by the Company (or aggregate royalties the Company receives on such net sales by
its licensees); (iii) one percent (1%) for the next $50 million of such net
sales by the Company (or aggregate royalties the Company receives on such net
sales by its licensees); and (iv) one-half of one percent (0.5%) of such net
sales by the Company thereafter (or aggregate royalties the Company receives on
such net sales by its licensees). If Vivo breaches any of its material
obligations under the royalty agreement then the Company has the right to
terminate such agreement upon thirty (30) days written notice to Vivo. The
royalty agreement also terminates upon the reassignment of the p-MPA technology
to Vivo pursuant to the assignment agreement. Subject to possible early
terminations as described above, the royalty agreement will terminate the later
of (i) ten (10) years after the execution of the royalty agreement or (ii) such
time when the Company does not hold any valid and enforceable patents relating
to the p-MPA technology.
13
REPORT OF THE FINANCE AND AUDIT COMMITTEE OF
THE BOARD OF DIRECTORS
The Company's Finance and Audit Committee consists of three independent
members of the Board of Directors as defined in Rule 4200(a)(15) of the National
Association of Securities Dealers' listing standards. The Board of Directors
adopted a written charter for the Finance and Audit Committee on June 7, 2000
and the Finance and Audit Committee reviewed and revised such charter on
September 11, 2002.
The primary purpose of the Finance and Audit Committee is to assist the
Board of Directors in fulfilling its responsibility to oversee management's
conduct of the Company's financial reporting process. In furtherance of such
purpose, the Finance and Audit Committee shall be directly responsible for the
appointment, compensation and oversight of the work of the Company's independent
auditors as well as the approval, in advance, of all services provided by the
independent auditors, whether audit services or non-audit services. In addition,
the Finance and Audit Committee shall assist with: (a) the overview of financial
reports and other financial information provided by the Company to any
governmental or regulatory body, the public or other users thereof, (b) the
Company's systems of internal accounting and financial controls, (c) the annual
independent audit of the Company's financial statements, and (d) the Company's
legal compliance and ethics programs, as established by management and the Board
of Directors.
The Finance and Audit Committee has reviewed and discussed the audited
financial statements for the fiscal year ended June 30, 2003 with management.
Furthermore, the Finance and Audit Committee has discussed with the Company's
independent auditors, KPMG LLP, the matters required to be discussed by SAS 61.
Also, the Finance and Audit Committee has received the written disclosures and
letter from KPMG required by Independence Standards Board Standard No. 1 and has
discussed with KPMG such auditing firm's independence. Based on these reviews
and discussions the Finance and Audit Committee recommended that the audited
financial statements be included in the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 2003, the last fiscal year for filing such annual
report with the U.S. Securities and Exchange Commission.
THE FINANCE AND AUDIT COMMITTEE
Robert LeBuhn, Chairman
David S. Barlow
Rolf A. Classon
14
STOCKHOLDER RETURN PERFORMANCE GRAPH
The graph below summarizes the total cumulative return experienced by
the Company's stockholders from June 30, 1998 through June 30, 2003, compared to
the Nasdaq National Market-US Index and the Company's Peer Group index, the
Nasdaq Biotechnology Index. The changes for the periods shown in the graph and
table below are based on the assumption that $100 had been invested in the
Company's Common Stock and in each index below on June 30, 1998.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG ENZON PHARMACEUTICALS, INC., THE NASDAQ NATIONAL
MARKET INDEX AND PEER GROUPS
Cumulative Total Return
--------- ---------- ----------- ---------- ----------- ------------
6/98 6/99 6/00 6/01 6/02 6/03
---- ---- ---- ---- ---- ----
ENZON PHARMACEUTICALS, INC. 100.00 324.51 666.67 980.39 394.04 196.86
NASDAQ STOCK MARKET (U.S.) 100.00 143.67 212.43 115.46 78.65 87.33
NASDAQ BIOTECHNOLOGY 100.00 175.94 455.23 392.39 214.11 291.91
[Graph showing total cumulative stockholder return
from June 30,1998 to June 30, 2003 compared to Nasdaq
Stock Market U.S. Index and Nasdaq Biotechnology
Index.]
15
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of October 24,
2003 concerning stock ownership of all persons known by the Company to own
beneficially 5% or more of the outstanding shares of the Company's voting stock,
each director, each executive officer named in the Summary Compensation Table
and all executive officers and directors of the Company as a group:
Percentage of
Directors, Officers or Number of Voting Stock
5% Stockholders(1) Shares(2) Outstanding(3)
-------------------------- ----------- -------------
Arthur J. Higgins 1,038,083(4) 2.3%
Dr. Ulrich Grau 32,881(5) *
Rolf A. Classon 67,666(6) *
David S. Barlow 58,613(7) *
Dr. Rosina B. Dixon 154,150(8) *
Dr. David W. Golde 109,223(9) *
Robert LeBuhn 98,952(10) *
Robert L. Parkinson, Jr. 18,633(11) *
Kenneth J. Zuerblis 139,830(12) *
Orbimed Advisors, Inc. 4,443,000(13) 10.2%
767 Third Avenue
New York, NY 10017
All Executive Officers and Directors 1,718,031(14) 3.8%
as a group (nine persons)
* Less than one percent.
(1) The address of all current executive officers and directors listed
above is in the care of the Company.
(2) All shares listed are Common Stock. Except as discussed below, none
of these shares are subject to rights to acquire beneficial
ownership, as specified in Rule 13d-3(d)(1) under the Securities
Exchange Act of 1934, as amended, and the beneficial owner has sole
voting and investment power, subject to community property laws where
applicable.
(3) Gives effect to 43,520,896 shares of Common Stock which were issued
and outstanding as of October 24, 2003. Each share of Common Stock is
entitled to one vote. The percentage of voting stock outstanding for
each stockholder is calculated by dividing (i) the number of shares
of Common Stock deemed to be beneficially held by such stockholder as
of October 24, 2003 by (ii) the sum of (A) the number of shares of
Common Stock outstanding as of October 24, 2003 plus (B) the number
of shares of Common Stock issuable upon exercise of options held by
such stockholder which were exercisable as of October 24, 2003 or
which will become exercisable within 60 days after October 24, 2003.
(4) Includes (i) 800,000 shares subject to options which were exercisable
as of October 24, 2003 or which will become exercisable within 60
days after October 24, 2003, (ii) 200,000 shares of restricted common
stock which vest as to 60,000 shares on December 3, 2005, 60,000
shares on December 3, 2006, and 80,000 shares on December 3, 2007,
(iii) 25,000 shares of restricted Common Stock which vest as to 5,000
shares per year commencing May 31, 2002 and (iv) 583 shares held
through Mr. Higgins' 401K account.
(5) Includes 32,500 shares subject to options which were exercisable as
of October 24, 2003 or which will become exercisable within 60 days
after October 24, 2003 and 381 shares held through Dr. Grau's 401K
account.
(6) Includes 60,000 shares subject to options which were exercisable as
of October 24, 2003 or which will become exercisable within 60 days
after October 24, 2003.
(7) Includes 49,996 shares subject to options which were exercisable as
of October 24, 2003 or which will become exercisable within 60 days
after October 24, 2003.
(8) Includes 126,664 shares subject to options which were exercisable as
of October 24, 2003 or which will become exercisable within 60 days
after October 24, 2003, 500 shares held by Dr. Dixon's husband and
100 shares held by Dr. Dixon's son. Dr. Dixon disclaims beneficial
ownership as to shares held by her husband and son.
16
(9) Includes 65,320 shares subject to options which were exercisable as
of October 24, 2003 or which will become exercisable within 60 days
after October 24, 2003, 35,500 shares held by a trust for Dr. Golde's
benefit, 2,600 shares held by a separate trust for Dr. Golde's
daughter, 1,000 shares beneficially owned by Dr. Golde's wife and
4,200 shares owned by Dr. Golde's sons. Dr. Golde disclaims
beneficial ownership as to shares held by his sons.
(10) Includes 86,664 shares subject to options which were exercisable as
of October 24, 2003 or which will become exercisable within 60 days
after October 24, 2003.
(11) Includes 13,333 shares subject to options which were exercisable as
of October 24, 2003 or which will become exercisable within 60 days
after October 24, 2003.
(12) Includes 132,000 shares subject to options which were exercisable as
of October 24, 2003 or which will become exercisable within 60 days
after October 24, 2003, 600 shares owned by Mr. Zuerblis' IRA and
4,630 shares held through Mr. Zuerblis' 401k account.
(13) Information concerning stock ownership was obtained from Schedule 13F
filed with the Securities and Exchange Commission for the period
ended June 30, 2003.
(14) Includes all shares owned beneficially by the directors and executive
officers named in the Summary Compensation Table.
17
PROPOSAL NO. 2 - APPROVAL OF
AMENDMENT TO THE 2001 INCENTIVE STOCK PLAN
General
The Board believes that in order to attract and retain qualified
executives, employees and board members it is essential to offer significant
potential rewards based upon the Company's success through the issuance of stock
options and restricted stock grants. The 2001 Incentive Stock Plan which was
approved by our stockholders in December 2001 provides for the grant of stock
options and other stock-based awards to employees, officers, consultants,
independent contractors and directors providing services to Enzon and its
subsidiaries as determined by the Board of Directors or by a committee of
directors designated by the Board of Directors to administer the 2001 Incentive
Stock Plan. The amendment to the Plan increasing the shares of Common Stock
authorized for issuance presented herein to the stockholders for their approval
is designed to assist the Company in accomplishing this goal. Of the 2,000,000
shares currently authorized for issuance under the 2001 Stock Incentive Plan
shares and the 7,900,000 shares currently authorized for issuance under the
Company's Non Qualified Stock Option Plan, at October 24, 2003, 369,622 shares
in the aggregate remained available for future grants.
Since December 2001, the number of persons eligible to participate
under the 2001 Incentive Stock Plan has increased from 110 to 322 persons,
creating a greater need for our stock options and restricted stock grants. The
current shares available under the 2001 Incentive Stock Plan have declined to a
point whereby we will soon not be able to offer future awards without additional
shares. Therefore, an amendment to the 2001 Incentive Stock Plan proposed herein
provides for the increase in the number of shares of common stock available
thereunder by 4,000,000 to an aggregate of 6,000,000 shares. The second proposed
amendment to the 2001 Incentive Stock Plan limits the maximum number of shares
of restricted stock and restricted stock units that may be granted thereunder to
50% of the total number of shares available for issuance under the 2001
Incentive Stock Plan.
The following summary of the 2001 Incentive Stock Plan, as it is
proposed to be amended, is qualified in its entirety by reference to the full
text of the 2001 Incentive Stock Plan, as it is proposed to be amended, which is
attached to this Proxy Statement as Exhibit A.
On December 17, 2002, Enzon filed a registration statement on Form S-8
covering the securities to be issued under the 2001 Incentive Stock Plan and if
this Proposal No. 2 is approved by the stockholders, Enzon intends to file a
Form S-8 covering the additional securities to be issued under the 2001
Incentive Stock Plan.
Summary of the 2001 Incentive Stock Plan
Purpose. The purpose of the 2001 Incentive Stock Plan is to promote the
interests of Enzon and its stockholders by aiding Enzon in attracting and
retaining employees, officers, consultants, independent contractors and
non-employee directors capable of contributing to the future success of Enzon,
to offer such persons incentives to put forth maximum efforts for the success of
Enzon's business and to afford such persons an opportunity to acquire a
proprietary interest in Enzon. The Compensation Committee believes that stock
based compensation directly links the amount earned by employees with the amount
of appreciation realized by the Company's stockholders.
Administration. The Compensation Committee has been designated by the
Board of Directors to administer the 2001 Incentive Stock Plan. The Compensation
Committee will have full power and authority to determine when and to whom
awards will be granted and the type, amount, form of payment and other terms and
conditions of each award, consistent with the provisions of the 2001 Incentive
Stock Plan. Subject to the provisions of the 2001 Incentive Stock Plan, the
Compensation Committee may amend or waive the terms and conditions of an
outstanding award. The Compensation Committee will have full authority to
interpret the 2001 Incentive Stock Plan and establish rules and regulations for
the administration of the 2001 Incentive Stock Plan. The Compensation Committee
may delegate to one or more directors or officers, or a committee of directors
or officers, or the Board of Directors may exercise, the Compensation
Committee's powers and duties under the 2001 Incentive Stock Plan.
18
Eligibility. Any employee, officer, consultant, independent contractor
or director providing services to Enzon and its subsidiaries will be eligible to
be selected by the Compensation Committee to receive awards under the 2001
Incentive Stock Plan. As of October 24, 2003, there were approximately 322
persons who were eligible as a class to be selected by the Compensation
Committee to receive awards under the 2001 Incentive Stock Plan.
Number of Shares. As it is proposed to be amended, the 2001 Incentive
Stock Plan would provide for the issuance of up to 6,000,000 shares of Common
Stock, subject to adjustment in the event of a stock dividend or other
distribution, recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination, issuance
of warrants or other rights to purchase shares of Common Stock or other
securities of Enzon to all holders of Common Stock pro rata whether as a
dividend or otherwise or other similar changes in the corporate structure or
stock of Enzon. Currently, the maximum number of shares available for issuance
under the 2001 Incentive Stock Plan is 2,000,000. Shares of Common Stock subject
to awards under the 2001 Incentive Stock Plan which are not used or are
forfeited because the terms and conditions of the awards are not met, or because
the award terminates without delivery of any shares, may again be used for
awards (other than Incentive Stock Options) under the 2001 Incentive Stock Plan.
Shares of Common Stock used by a participant as full or partial payment to Enzon
of the purchase price relating to an award, or in connection with the
satisfaction of tax obligations relating to an award, will also be available for
awards under the 2001 Incentive Stock Plan. The shares of Common Stock issued
under the 2001 Incentive Stock Plan may be authorized but unissued shares or
shares acquired on the open market or otherwise. The last reported sale price of
Enzon's Common Stock as reported by the Nasdaq National Market on October 24,
2003, was $10.86.
No participant may be granted stock options and any other award, the
value of which is based solely on an increase in the price of the Common Stock,
of more than 1,000,000 shares in the aggregate in any calendar year.
Types of Awards and Certain Terms and Conditions. The types of awards
that may be granted under the 2001 Incentive Stock Plan are stock options, stock
appreciation rights, restricted stock, restricted stock units, performance
awards, dividend equivalents, other stock grants, other stock-based awards and
any combination thereof. The 2001 Incentive Stock Plan provides that all awards
are to be evidenced by written agreements containing the terms and conditions of
the awards. The Compensation Committee may not amend or discontinue any
outstanding award without the consent of the holder of the award if such action
would adversely affect the rights of the holder. Except as provided by the 2001
Incentive Stock Plan, awards (other than Other Stock Grants, as defined in the
2001 Incentive Stock Plan) will not be transferable other than (1) to family
members (as determined by the Compensation Committee), (2) by will or (3) by the
laws of descent and distribution. During the lifetime of a participant, an award
may be exercised only by the participant to whom such award is granted or a
permitted assignee. Awards may be granted for no cash consideration or for any
cash or other consideration as may be determined by the Compensation Committee
or required by law. Generally, the consideration to be received by Enzon for the
grant of awards under the 2001 Incentive Stock Plan will be the participant's
past, present or expected future contributions to Enzon.
Stock Options. Incentive stock options meeting the requirements of
Section 422 of the Internal Revenue Code ("Incentive Stock Options") and
non-qualified options may be granted under the 2001 Incentive Stock Plan. The
Compensation Committee will determine the exercise price of any option granted
under the 2001 Incentive Stock Plan, provided however that the exercise price of
options will not be less than the fair market value of the Common Stock on the
date of grant. The term of the option will be determined by the Compensation
Committee, but shall in no event exceed 10 years from the date on which such
option was granted. Stock options will be exercisable at such times as the
Compensation Committee determines. Stock options may be exercised in whole or in
part by payment in full of the exercise price in cash or such other form of
consideration as the Compensation Committee may specify, including delivery of
shares of Common Stock having a fair market value on the date of exercise equal
to the exercise price. The Compensation Committee may grant reload options when
a participant pays the exercise price or tax withholding upon exercise of an
option by using shares of Common Stock. The reload option would be for that
number of shares surrendered or withheld.
Stock Appreciation Rights. The Compensation Committee may grant stock
appreciation rights exercisable at such times and subject to such conditions or
restrictions as the Compensation Committee may determine. Upon exercise of a
stock appreciation right by a holder, the holder is entitled to receive the
excess of the fair market value of one share of Common Stock on the date of
exercise over the fair market value of one share of Common Stock on the date of
grant. The payment may be made in cash or shares of Common Stock, or other form
of payment, as determined by the Compensation Committee.
19
Restricted Stock and Restricted Stock Units. The Compensation Committee
may grant shares of restricted stock and restricted stock units subject to such
restrictions and terms and conditions as the Compensation Committee may impose.
Shares of restricted stock granted under the 2001 Incentive Stock Plan will be
evidenced by stock certificates, which will be held by Enzon, and the
Compensation Committee may, in its discretion, grant voting and dividend rights
with respect to such shares. No shares of stock will be issued at the time of
award of restricted stock units. A restricted stock unit will have a value equal
to the fair market value of one share of Common Stock and may include, if so
determined by the Compensation Committee, the value of any dividends or other
rights or property received by stockholders after the date of grant of the
restricted stock unit. The Compensation Committee has the right to waive any
vesting requirements or to accelerate the vesting of restricted stock or
restricted stock units. As it is proposed to be amended, the maximum number of
shares of restricted stock and restricted stock units that the Compensation
Committee will be permitted to grant under the 2001 Incentive Stock Plan is 50%
of the total number of shares available for issuance pursuant to all awards
under the 2001 Incentive Stock Plan. Currently, there is no such limit on the
portion of the awards under the 2001 Incentive Stock Plan that can be granted as
shares of restricted stock or restricted stock units.
Dividend Equivalents. The Compensation Committee may grant dividend
equivalents under which a holder shall be entitled to receive payments, in cash,
Common Stock, other securities or other property, equivalent to the amount of
cash dividend paid by Enzon to holders of Common Stock with respect to a number
of shares of Common Stock determined by the Compensation Committee. The
Compensation Committee will determine the terms and conditions of such dividend
equivalents.
Performance Awards. A performance award will entitle the holder to
receive payments upon the achievement of specified performance goals. The
Compensation Committee will determine the terms and conditions of a performance
award, including the performance goals to be achieved during the performance
period, the length of the performance period and the amount and form of payment
of the performance award. A performance award may be denominated or payable in
cash, shares of stock or other securities, or other awards or property.
Other Stock Grants. The Compensation Committee may otherwise grant
shares of Common Stock as are deemed by the Compensation Committee to be
consistent with the purpose of the 2001 Incentive Stock Plan. The Compensation
Committee will determine the terms and conditions of such other stock grant.
Other Stock-Based Awards. The Compensation Committee may grant other
awards denominated or payable in, valued by reference to, or otherwise based on
or related to shares of Common Stock as are deemed by the Compensation Committee
to be consistent with the purpose of the 2001 Incentive Stock Plan. The
Compensation Committee will determine the terms and conditions of such other
stock-based award, including the consideration to be paid for shares of Common
Stock or other securities delivered pursuant to a purchase right granted under
such award. The value of such consideration shall be the fair market value of
such shares or other securities as of the date such purchase right is granted.
Duration, Termination and Amendment. Unless earlier discontinued or
terminated by the Board of Directors, no awards may be granted under the 2001
Incentive Stock Plan ten years after the effective date of the 2001 Incentive
Stock Plan. The 2001 Incentive Stock Plan permits the Board of Directors to
amend, alter, suspend, discontinue or terminate the 2001 Incentive Stock Plan at
any time, except that prior stockholder approval will be required for any
amendment to the 2001 Incentive Stock Plan that requires stockholder approval
under the rules or regulations of the Nasdaq Stock Market or any securities
exchange that are applicable to Enzon.
20
Federal Tax Consequences
The following is a summary of the principal federal income tax
consequences generally applicable to awards under the 2001 Incentive Stock Plan.
Stock Options and Stock Appreciation Rights. The grant of an option or
stock appreciation right is not expected to result in any taxable income for the
recipient. The holder of an Incentive Stock Option generally will have no
taxable income upon exercising the Incentive Stock Option (except that a
liability may arise pursuant to the alternative minimum tax), and Enzon will not
be entitled to a tax deduction when an Incentive Stock Option is exercised. Upon
exercising a non-qualified stock option, the optionee must recognize ordinary
income equal to the excess of the fair market value of the shares of Common
Stock acquired on the date of exercise over the exercise price, and Enzon will
be entitled at that time to a tax deduction for the same amount. Upon exercising
a stock appreciation right, the amount of any cash received and the fair market
value on the exercise date of any shares of Common Stock received are taxable to
the recipient as ordinary income and deductible by Enzon. The tax consequence to
an optionee upon a disposition of shares acquired through the exercise of an
option will depend on how long the shares have been held and whether such shares
were acquired by exercising an Incentive Stock Option or by exercising a
non-qualified stock option or stock appreciation right. Generally, there will be
no tax consequence to Enzon in connection with disposition of shares acquired
under an option, except that Enzon may be entitled to a tax deduction in the
case of a disposition of shares acquired under an Incentive Stock Option before
the applicable Incentive Stock Option holding periods set forth in the Internal
Revenue Code have been satisfied.
Other Awards. With respect to other awards granted under the 2001
Incentive Stock Plan that are payable either in cash or shares of Common Stock
that are either transferable or not subject to substantial risk of forfeiture,
the holder of such an award will recognize ordinary income at the time of
receipt of such award, in an amount equal to the excess of (a) the cash or the
fair market value of the shares of Common Stock received (determined as of the
date of such receipt) over (b) the amount (if any) paid for such shares of
Common Stock by the holder of the award, and Enzon will be entitled at that time
to a deduction for the same amount. With respect to an award that is payable in
shares of Common Stock that are restricted as to transferability and subject to
substantial risk of forfeiture, unless a special election is made pursuant to
the Internal Revenue Code, the holder of the award must recognize ordinary
income at the time the restrictions lapse equal to the excess of (i) the fair
market value of the shares of Common Stock received (determined as of the first
time the shares become transferable or not subject to substantial risk of
forfeiture, whichever occurs earlier) over (ii) the amount (if any) paid for
such shares of Common Stock by the holder, and Enzon will be entitled at that
time to a tax deduction for the same amount.
Satisfaction of Tax Obligations. Under the 2001 Incentive Stock Plan,
the Compensation Committee may permit participants receiving or exercising
awards, subject to the discretion of the Compensation Committee and upon such
terms and conditions as it may impose, to surrender shares of Common Stock
(either shares received upon the receipt or exercise of the award or shares
previously owned by the participant) to Enzon to satisfy federal and state tax
obligations. In addition, pursuant to its general authority outside of the 2001
Incentive Stock Plan, the Compensation Committee may grant, subject to its
discretion, a cash bonus to a participant in order to provide funds to pay all
or a portion of federal and state taxes due as a result of the exercise or
receipt of (or lapse of restrictions relating to) an award. The amount of any
such bonus will be taxable to the participant as ordinary income, and Enzon will
have a corresponding deduction equal to such amount (subject to the usual rules
concerning reasonable compensation).
Section 162(m) Requirements. The 2001 Incentive Stock Plan has been
designed to meet the requirements of Section 162(m) of the Internal Revenue Code
regarding the deductibility of executive compensation.
21
The following table provides additional information on the Company's
equity-based compensation plans as of June 30, 2003 (in thousands except per
share data):
Number of securities
Weighted-average remaining available for
Number of securities exercise price of future issuance under
to be issued upon exercise outstanding equity, compensation plans
of outstanding options, options, warrants (excluding securities
Plan Category warrants and rights and rights reflected in column a)
(a) (b) (c)
--------------------------- --------------------------- ------------------- ---------------------------
Equity compensation
plans approved by security
holders 3,938 $35.02 751
Equity compensation
plans not approved by
security holders - - -
--------------------------- ------------------- ---------------------------
Total 3,938 $35.02 751
=========================== =================== ===========================
2001 INCENTIVE STOCK PLAN BENEFITS GRANTED IN FISCAL 2003
The following table contains information concerning the grant of stock
options and restricted stock under the Company's 2001 Incentive Stock Plan to
the persons and groups named below during the fiscal year ended June 30, 2003:
Number of Shares of
Restricted Stock and Shares
Name and Position Underlying Options Granted
------------------ --------------------------
Arthur J. Higgins, Chief Executive Officer 400,000
Ulrich Grau, Chief Scientific Officer 50,000
Kenneth J. Zuerblis, Chief Financial Officer 50,000
Executive Officers as a Group 500,000
Non-Employee Directors as a Group 30,000
All Employees Other than Executive Officers 608,975
The Board of Directors recommends a vote FOR the amendments to the 2001
Incentive Stock Plan as proposed (Proposal No. 2 on the proxy card). The
affirmative vote of a majority of the shares represented in person or by proxy
at the meeting and entitled to vote on the proposal will be required for
approval.
PROPOSAL NO. 3 RATIFICATION OF AUDITORS
The Finance and Audit Committee of the Board of Directors, pursuant to
authority granted by the Board of Directors, has approved the retention of KPMG
LLP ("KPMG"), independent certified public accountants, to audit the
consolidated financial statements of the Company for the fiscal year ending June
30, 2004. KPMG served as auditor of the consolidated financial statements of the
Company for the fiscal years ended June 30, 2003, 2002, and 2001.
Representatives of KPMG are expected to be present at the Annual Meeting and
will have the opportunity to make a statement should they desire to do so. Such
representatives are also expected to be available to respond to questions.
22
Audit Fees
The aggregate fees billed by KPMG in connection with its audit of the
Company's annual financial statements for the fiscal year ended June 30, 2003
and its review of the financial statements included in the Company's Form 10-Qs
during the fiscal year ended June 30, 2003 was $237,000.
Financial Information Systems Design and Implementation Fees
KPMG did not render professional services related to financial
information systems design and implementation for the fiscal year ended June 30,
2003.
All Other Fees
KPMG billed the Company fees totaling $171,000 for all other services
performed during the fiscal year ended June 30, 2003 which included professional
services rendered in connection with accounting consultations and the audit of
the Company's benefit plan, tax compliance and certain tax advisory services.
The Finance and Audit Committee has considered whether the provision of all
other services by KPMG is compatible with maintaining KPMG's independence and
concluded that KPMG is "independent".
The Board of Directors recommends a vote FOR ratification of the
selection of KPMG, independent certified public accountants, to audit the
consolidated financial statements of the Company for the fiscal year ending June
30, 2004 (Proposal No. 3 on the Proxy Card).
ANNUAL REPORT TO STOCKHOLDERS
The Company's Annual Report to Stockholders for the fiscal year ended
June 30, 2003 accompanies this Proxy Statement.
STOCKHOLDERS' PROPOSALS
In order for a stockholder to have a proposal included in the proxy
statement for the 2004 annual stockholders' meeting, the proposal must comply
with both the procedures identified by Rule 14a-8 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and be received in writing by the
Company's Secretary on or before 5:00 P.M. Eastern Standard Time on July 6,
2004. Such a proposal will be considered at the 2004 annual stockholders'
meeting.
Pursuant to the advance notice requirements in Article II Section 2.15
of the Company's By-laws, to be considered at the 2004 annual stockholder
meeting, a stockholder's proposal must be delivered to or mailed and received by
the Secretary of the Company not later than one hundred twenty (120) days prior
to such meeting. Therefore, in the event a stockholder does not meet the July 6,
2004 deadline under Rule 14a-8 under the Exchange Act, the stockholder can still
give notice of a proposal to be presented at the 2004 annual stockholders'
meeting until August 4, 2004, however, such proposal will not be included in the
Company's proxy materials relating to such meeting. The Company's Bylaws further
require the stockholder to provide to the Secretary of the Company, among other
things, the name and address of the stockholder who intends to make the
nominations or propose the business, the name and address of the person or
persons to be nominated, a description of the business to be proposed and a
representation that the stockholder is a holder of record of stock of the
Company entitled to vote at such meeting. The chairman of the meeting may refuse
to acknowledge the nomination of any person or the proposal of any business not
made in compliance with the foregoing procedure.
Any proposal received after August 4, 2004 will be considered untimely
within Rule 14a-4(c) under the Exchange Act and the persons named in the proxy
for such meeting may exercise their discretionary voting power with respect to
such proposal.
23
GENERAL
The cost of soliciting proxies will be borne by the Company. In
addition to mailing, proxies may be solicited by personal interview, telephone
and telegraph and by directors, officers and regular employees of the Company,
without special compensation therefor. The Company expects to reimburse banks,
brokers and other persons for their reasonable out-of-pocket expenses in
handling proxy materials for beneficial owners of the Company's Common Stock.
Unless contrary instructions are indicated on the proxy card, all
shares of Common Stock represented by valid proxies received pursuant to this
solicitation (and not revoked before they are voted) will be voted FOR the
election of the nominees for directors named herein and FOR Proposal No. 2 and
Proposal No. 3.
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before it is voted. Proxies may be revoked by
filing with the Secretary of the Company written notice of revocation bearing a
later date than the proxy, by duly executing a subsequent proxy relating to the
same shares of Common Stock or by attending the Annual Meeting and voting in
person. Attendance at the Annual Meeting will not in and of itself constitute
revocation of a proxy unless the stockholder votes his or her shares of Common
Stock in person at the Annual Meeting. Any notice revoking a proxy should be
sent to the Secretary of the Company, Kenneth J. Zuerblis, at Enzon
Pharmaceuticals, Inc., 685 Route 202/206, Bridgewater, New Jersey 08807.
The Board of Directors knows of no business other than that set forth
above to be transacted at the meeting, but if other matters requiring a vote of
the stockholders arise, the persons designated as proxies will vote the shares
of Common Stock represented by the proxies in accordance with their judgment on
such matters. If a stockholder specifies a different choice on the proxy, his or
her shares of Common Stock will be voted in accordance with the specification so
made.
Please complete, sign and date the enclosed proxy card, which is
revocable as described herein, and mail it promptly in the enclosed postage-paid
envelope.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WE URGE YOU TO FILL
IN, SIGN AND RETURN THE ACCOMPANYING PROXY CARD, NO MATTER HOW LARGE OR SMALL
YOUR HOLDINGS MAY BE.
By order of the Board of Directors,
/s/ Kenneth J. Zuerblis
--------------------------
Kenneth J. Zuerblis
Corporate Secretary
Bridgewater, New Jersey
October 28, 2003
24
Exhibit A
ENZON PHARMACEUTICALS, INC.
2001 Stock Incentive Plan *
Section 1. Purpose
The purpose of the Plan is to promote the interests of the Company and
its shareholders by aiding the Company in attracting and retaining employees,
officers, consultants, independent contractors and Non-Employee Directors
capable of contributing to the future success of the Company, to offer such
persons incentives to put forth maximum efforts for the success of the Company's
business and to afford such persons an opportunity to acquire a proprietary
interest in the Company.
Section 2. Definitions
As used in the Plan, the following terms shall have the meanings set
forth below:
1 "Affiliate" shall mean (i) any entity that, directly or
indirectly through one or more intermediaries, is controlled
by the Company and (ii) any entity in which the Company has a
significant equity interest, in each case as determined by the
Committee.
2 "Award" shall mean any Option, Stock Appreciation Right,
Restricted Stock, Restricted Stock Unit, Performance Award,
Dividend Equivalent, Other Stock Grant or Other Stock-Based
Award granted under the Plan.
3 "Award Agreement" shall mean any written agreement, contract
or other instrument or document evidencing any Award granted
under the Plan. Each Award Agreement shall be subject to the
applicable terms and conditions of the Plan and any other
terms and conditions (not inconsistent with the Plan)
determined by the Committee.
4 "Board" shall mean the Board of Directors of the Company.
5 "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and any regulations promulgated
thereunder.
6 "Committee" shall mean a committee of Directors designated by
the Board to administer the Plan. The Committee shall be
comprised of not less than such number of Directors as shall
be required to permit Awards granted under the Plan by the
Committee to qualify under Rule 16b-3, and each member of the
Committee shall be a "Non-Employee Director" within the
meaning of Rule 16b-3 and an "outside director" within the
meaning of Section 162(m) of the Code. The Company expects to
have the Plan administered in accordance with the requirements
for the award of "qualified performance-based compensation"
within the meaning of Section 162(m) of the Code.
7 "Company" shall mean Enzon Pharmaceuticals, Inc., a Delaware
corporation, and any successor corporation.
8 "Director" shall mean a member of the Board, including
Non-Employee Directors.
9 "Dividend Equivalent" shall mean any right granted under
Section 6(E) of the Plan.
--------------------------
* As proposed to be amended.
10 "Eligible Person" shall mean any employee, officer,
consultant, independent contractor or Director (including any
Non-Employee Director) providing services to the Company or
any Affiliate whom the Committee determines to be an Eligible
Person.
11 "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
12 "Fair Market Value" shall mean, with respect to any property
(including, without limitation, any Shares or other
securities), the fair market value of such property determined
by such methods or procedures as shall be established from
time to time by the Committee. Notwithstanding the foregoing,
unless otherwise determined by the Committee, the Fair Market
Value of a Share as of a given date shall be, if the Shares
are then traded on the Nasdaq National Market, the last
reported sale price of one Share as reported on the Nasdaq
National Market on such date or, if the Nasdaq National Market
is not open for trading on such date, on the most recent
preceding date when it is open for trading.
13 "Family Members" shall be those persons related to a
Participant as determined by the Committee.
14 "Incentive Stock Option" shall mean an option granted under
Section 6A of the Plan that is intended to meet the
requirements of Section 422 of the Code or any successor
provision.
15 "Non-Employee Director" shall have the meaning ascribed in
Rule 16b-3 promulgated under the Exchange Act or any successor
provision.
16 "Non-Qualified Stock Option" shall mean an option granted
under Section 6A of the Plan that is not intended to be an
Incentive Stock Option.
17 "Option" shall mean an Incentive Stock Option or a
Non-Qualified Stock Option.
18 "Other Stock Grant" shall mean any right granted under Section
6F of the Plan.
19 "Other Stock-Based Award" shall mean any right granted under
Section 6G of the Plan.
20 "Participant" shall mean an Eligible Person designated to be
granted an Award under the Plan.
21 "Performance Award" shall mean any right granted under Section
6D of the Plan.
22 "Person" shall mean any individual, corporation, partnership,
association or trust.
23 "Plan" shall mean the Enzon Pharmaceuticals, Inc. 2001
Incentive Stock Plan, as amended from time to time, the
provisions of which are set forth herein.
24 "Plan Year" shall mean a consecutive 12-month period ending on
December 31 of each year.
25 "Reload Option" shall mean any Option granted under Section
6A(5) of the Plan.
26 "Restricted Stock" shall mean any Shares granted under Section
6C of the Plan.
27 "Restricted Stock Unit" shall mean any unit granted under
Section 6C of the Plan evidencing the right to receive a Share
(or a cash payment equal to the Fair Market Value of a Share)
at some future date.
28 "Rule 16b-3" shall mean Rule 16b-3 promulgated by the
Securities and Exchange Commission under the Exchange Act, or
any successor rule or regulation.
29 "Share" or "Shares" shall mean shares of common stock, $0.01
par value per share, of the Company or such other securities
or property as may become subject to Awards pursuant to an
adjustment made under Section 4C of the Plan.
30 "Stock Appreciation Right" shall mean any right granted under
Section 6B of the Plan.
Section 3. Administration
A. Power and Authority of the Committee. The Plan shall be administered
by the Committee. Subject to the express provisions of the Plan and to
applicable law, the Committee shall have full power and authority to: (i)
designate Participants; (ii) determine the type or types of Awards to be granted
to each Participant under the Plan; (iii) determine the number of Shares to be
covered by (or the method by which payments, or other rights are to be
calculated in connection with) each Award; (iv) determine the terms and
conditions of any Award or Award Agreement; (v) amend the terms and conditions
of any Award or Award Agreement and accelerate the exercisability of any Award
or the lapse of restrictions relating to any Award; (vi) determine whether, to
what extent and under what circumstances Awards may be exercised in cash,
Shares, promissory notes, other securities, other Awards or other property, or
canceled, forfeited or suspended; (vii) determine whether, to what extent and
under what circumstances cash, Shares, promissory notes, other securities, other
Awards, other property and other amounts payable with respect to an Award under
the Plan shall be deferred either automatically or at the election of the holder
thereof or the Committee; (viii) interpret and administer the Plan and any
instrument or agreement, including an Award Agreement, relating to the Plan;
(ix) establish, amend, suspend or waive such rules and regulations and appoint
such agents as it shall deem appropriate for the proper administration of the
Plan; and (x) make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of the Plan.
Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations and other decisions under or with respect to the
Plan or any Award shall be within the sole discretion of the Committee, may be
made at any time and shall be final, conclusive and binding upon any
Participant, any holder or beneficiary of any Award and any employee of the
Company or any Affiliate.
B. Delegation. The Committee may delegate its powers and duties under
the Plan to one or more Directors or officers of the Company, or to a committee
of Directors or officers, subject to such terms, conditions and limitations as
the Committee may establish in its sole discretion, provided, however, that the
Committee shall not delegate its powers and duties under the Plan (i) with
regard to officers or directors of the Company or any Affiliate who are subject
to Section 16 of the Exchange Act or (ii) in such a manner as would cause the
Plan not to comply with the requirements of Section 162(m) of the Code.
C. Power and Authority of the Board. Notwithstanding anything to the
contrary contained herein, the Board may, at any time and from time to time,
without any further action of the Committee, exercise the powers and duties of
the Committee under the Plan.
Section 4. Shares Available for Awards
A. Shares Available. Subject to adjustment as provided in Section 4C of
the Plan, the aggregate number of Shares that may be issued under all Awards
under the Plan shall be 6,000,000; provided that, any Shares with respect to
which Awards may be issued, but are not issued, under the Plan in any Plan Year
shall be carried forward and shall be available to be covered by Awards issued
in any subsequent Plan Year in which Awards may be issued under the Plan. Shares
to be issued under the Plan may be either authorized but unissued Shares or
Shares acquired in the open market or otherwise. Any Shares that are used by a
Participant as full or partial payment to the Company of the purchase price
relating to an Award, or in connection with the satisfaction of tax obligations
relating to an Award, shall again be available for granting Awards (other than
Incentive Stock Options) under the Plan. In addition, if any Shares covered by
an Award or to which an Award relates are not purchased or are forfeited, or if
an Award otherwise terminates without delivery of any Shares, then the number of
Shares counted against the aggregate number of Shares available under the Plan
with respect to such Award, to the extent of any such forfeiture or termination,
shall again be available for granting Awards under the Plan. Notwithstanding the
foregoing, the number of Shares available for granting Incentive Stock Options
under the Plan shall not exceed 6,000,000 shares, subject to adjustment as
provided in the Plan and subject to the provisions of Section 422 or 424 of the
Code or any successor provision.
B. Accounting for Awards. For purposes of this Section 4, if an Award
entitles the holder thereof to receive or purchase Shares, the number of Shares
covered by such Award or to which such Award relates shall be counted on the
date of grant of such Award against the aggregate number of Shares available for
granting Awards under the Plan.
C. Adjustments. In the event that the Committee shall determine that
any dividend or other distribution (whether in the form of cash, Shares, other
securities or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
issuance of warrants or other rights to purchase Shares or other securities of
the Company to all holders of common stock pro rata whether as a dividend or
otherwise or other similar corporate transaction or event affects the Shares
such that an adjustment is determined by the Committee to be appropriate in
order to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, then the Committee shall, in such
manner as it may deem equitable, adjust any or all of (i) the number and type of
Shares (or other securities or other property) that thereafter may be made the
subject of Awards, (ii) the number and type of Shares (or other securities or
other property) subject to outstanding Awards and (iii) the purchase or exercise
price with respect to any Award; provided, however, that the number of Shares
covered by any Award or to which such Award relates shall always be a whole
number.
D. Award Limitations Under the Plan. No Eligible Person may be granted
any Award or Awards under the Plan, the value of which Award or Awards is based
solely on an increase in the value of the Shares after the date of grant of such
Award or Awards, for more than 1,000,000 Shares (subject to adjustment as
provided for in Section 4(c) of the Plan), in the aggregate in any calendar
year. The foregoing annual limitation specifically includes the grant of any
Award or Awards representing "qualified performance-based compensation" within
the meaning of Section 162(m) of the Code.
Section 5. Eligibility.
Any Eligible Person shall be eligible to be designated a Participant.
In determining which Eligible Persons shall receive an Award and the terms of
any Award, the Committee may take into account the nature of the services
rendered by the respective Eligible Persons, their present and potential
contributions to the success of the Company or such other factors as the
Committee, in its discretion, shall deem relevant. Notwithstanding the
foregoing, an Incentive Stock Option may only be granted to full or part-time
employees (which term as used herein includes, without limitation, officers and
Directors who are also employees), and an Incentive Stock Option shall not be
granted to an employee of an Affiliate unless such Affiliate is also a
"subsidiary corporation" of the Company within the meaning of Section 424(f) of
the Code or any successor provision.
Section 6. Awards
A. Options. The Committee is hereby authorized to grant Options
to Eligible Persons with the following terms and conditions
and with such additional terms and conditions not inconsistent
with the provisions of the Plan as the Committee shall
determine:
1. Exercise Price. The purchase price per Share
purchasable under an Option shall be determined by
the Committee; provided, however, that such purchase
price shall not be less than 100% of the Fair Market
Value of a Share on the date of grant of such Option.
2. Option Term. The term of each Option shall be fixed
by the Committee, but, shall in no event exceed 10
years from the date on which such Option is granted.
3. Time and Method of Exercise. The Committee shall
determine the time or times at which an Option may be
exercised in whole or in part and the method or
methods by which, and the form or forms (including,
without limitation, cash, Shares, promissory notes,
other securities, other Awards or other property, or
any combination thereof, having a Fair Market Value
on the exercise date equal to the applicable exercise
price) in which, payment of the exercise price with
respect thereto may be made or deemed to have been
made.
4. Incentive Stock Options. Notwithstanding anything in
the Plan to the contrary, the following additional
provisions shall apply to the grant of stock options
which are intended to qualify as Incentive Stock
Options:
(a) The aggregate Fair Market Value (determined
as of the time the option is granted) of the
Shares with respect to which Incentive Stock
Options are exercisable for the first time
by any Participant during any calendar year
(under this Plan and all other plans of the
Company and its Affiliates) shall not exceed
$100,000.
(b) All Incentive Stock Options must be granted
within ten years from the earlier of the
date on which this Plan was adopted by the
Board or the date this Plan was approved by
the shareholders of the Company.
(c) Unless sooner exercised, all Incentive Stock
Options shall expire and no longer be
exercisable no later than 10 years after the
date of grant; provided, however, that in
the case of a grant of an Incentive Stock
Option to a Participant who, at the time
such Option is granted, owns (within the
meaning of Section 422 of the Code) stock
possessing more than 10% of the total
combined voting power of all classes of
stock of the Company or of its Affiliate,
such Incentive Stock Option shall expire and
no longer be exercisable no later than 5
years from the date of grant.
(d) The purchase price per Share for an
Incentive Stock Option shall be not less
than 100% of the Fair Market Value of a
Share on the date of grant of the Incentive
Stock Option; provided, however, that, in
the case of the grant of an Incentive Stock
Option to a Participant who, at the time
such Option is granted, owns (within the
meaning of Section 422 of the Code) stock
possessing more than 10% of the total
combined voting power of all classes of
stock of the Company or of its Affiliate,
the purchase price per Share purchasable
under an Incentive Stock Option shall be not
less than 110% of the Fair Market Value of a
Share on the date of grant of the Inventive
Stock Option.
(e) Any Incentive Stock Option authorized under
the Plan shall contain such other provisions
as the Committee shall deem advisable, but
shall in all events be consistent with and
contain all provisions required in order to
qualify the Option as an Incentive Stock
Option.
5. Reload Options. The Committee may grant Reload
Options, separately or together with another Option,
pursuant to which, subject to the terms and
conditions established by the Committee, the
Participant would be granted a new Option when the
payment of the exercise price of a previously granted
option is made by the delivery of Shares owned by the
Participant pursuant to Section 6A(3) hereof or the
relevant provisions of another plan of the Company,
and/or when Shares are tendered or withheld as
payment of the amount to be withheld under applicable
income tax laws in connection with the exercise of an
Option, which new Option would be an Option to
purchase the number of Shares not exceeding the sum
of (A) the number of Shares so provided as
consideration upon the exercise of the previously
granted option to which such Reload Option relates
and (B) the number of Shares, if any, tendered or
withheld as payment of the amount to be withheld
under applicable tax laws in connection with the
exercise of the option to which such Reload Option
relates pursuant to the relevant provisions of the
plan or agreement relating to such option. Reload
Options may be granted with respect to Options
previously granted under the Plan or any other stock
option plan of the Company or may be granted in
connection with any Option granted under the Plan or
any other stock option plan of the Company at the
time of such grant. Such Reload Options shall have a
per share exercise price equal to the Fair Market
Value of one Share as of the date of grant of the new
Option. Any Reload Option shall be subject to
availability of sufficient Shares for grant under the
Plan. Shares surrendered as part or all of the
exercise price of the Option to which it relates that
have been owned by the optionee less than six months
will not be counted for purposes of determining the
number of Shares that may be purchased pursuant to a
Reload Option.
B. Stock Appreciation Rights. The Committee is hereby authorized
to grant Stock Appreciation Rights to Eligible Persons subject
to the terms of the Plan and any applicable Award Agreement. A
Stock Appreciation Right granted under the Plan shall confer
on the holder thereof a right to receive upon exercise thereof
the excess of (i) the Fair Market Value of one Share on the
date of exercise (or, if the Committee shall so determine, at
any time during a specified period before or after the date of
exercise) over (ii) the grant price of the Stock Appreciation
Right as specified by the Committee, which price shall not be
less than 100% of the Fair Market Value of one Share on the
date of grant of the Stock Appreciation Right. Subject to the
terms of the Plan and any applicable Award Agreement, the
grant price, term, methods of exercise, dates of exercise,
methods of settlement and any other terms and conditions of
any Stock Appreciation Right shall be as determined by the
Committee. The Committee may impose such conditions or
restrictions on the exercise of any Stock Appreciation Right
as it may deem appropriate.
C. Restricted Stock and Restricted Stock Units. The Committee is
hereby authorized to grant Restricted Stock and Restricted
Stock Units to Eligible Persons with the following terms and
conditions and with such additional terms and conditions not
inconsistent with the provisions of the Plan as the Committee
shall determine:
1. Restrictions. Shares of Restricted Stock and
Restricted Stock Units shall be subject to such
restrictions as the Committee may impose (including,
without limitation, a waiver by the Participant of
the right to vote or to receive any dividend or other
right or property with respect thereto), which
restrictions may lapse separately or in combination
at such time or times, in such installments or
otherwise as the Committee may deem appropriate.
2. Stock Certificates. Any Restricted Stock granted
under the Plan shall be registered in the name of the
Participant and shall bear an appropriate legend
referring to the terms, conditions and restrictions
applicable to such Restricted Stock.
3. Forfeiture. Except as otherwise determined by the
Committee, upon a Participant's termination of
employment (as determined under criteria established
by the Committee) during the applicable restriction
period, all Shares of Restricted Stock and Restricted
Stock Units held by the Participant at such time
shall be forfeited and reacquired by the Company;
provided, however, that the Committee may, when it
finds that a waiver would be in the best interest of
the Company, waive in whole or in part any or all
remaining restrictions with respect to Shares of
Restricted Stock or Restricted Stock Units.
4. Aggregate Limit. The maximum number of shares of
Restricted Stock and Restricted Stock Units that the
Committee may grant under the Plan shall not exceed
50% of the total number of shares issuable pursuant
to all Awards under the Plan
D. Performance Awards. The Committee is hereby authorized to
grant Performance Awards to Eligible Persons subject to the
terms of the Plan and any applicable Award Agreement. A
Performance Award granted under the Plan (i) may be
denominated or payable in cash, Shares (including, without
limitation, Restricted Stock and Restricted Stock Units),
other securities, other Awards or other property and (ii)
shall confer on the holder thereof the right to receive
payments, in whole or in part, upon the achievement of such
performance goals during such performance periods as the
Committee shall establish. Subject to the terms of the Plan
and any applicable Award Agreement, the performance goals to
be achieved during any performance period, the length of any
performance period, the amount of any Performance Award
granted, the amount of any payment or transfer to be made
pursuant to any Performance Award and any other terms and
conditions of any Performance Award shall be determined by the
Committee.
E. Dividend Equivalents. The Committee is hereby authorized to
grant Dividend Equivalents to Eligible Persons under which the
Participant shall be entitled to receive payments (in cash,
Shares, other securities, other Awards or other property as
determined in the discretion of the Committee) equivalent to
the amount of cash dividends paid by the Company to holders of
Shares with respect to a number of Shares determined by the
Committee. Subject to the terms of the Plan and any applicable
Award Agreement, such Dividend Equivalents may have such terms
and conditions as the Committee shall determine.
F. Other Stock Grants. The Committee is hereby authorized,
subject to the terms of the Plan and any applicable Award
Agreements, to grant to Eligible Persons Shares without
restrictions thereon as are deemed by the Committee to be
consistent with the purpose of the Plan.
G. Other Stock-Based Awards. The Committee is hereby authorized
to grant to Eligible Persons, subject to the terms of the Plan
and any applicable Award Agreements, such other Awards that
are denominated or payable in, valued in whole or in part by
reference to, or otherwise based on or related to, Shares
(including, without limitation, securities convertible into
Shares), as are deemed by the Committee to be consistent with
the purpose of the Plan. Shares or other securities delivered
pursuant to a purchase right granted under this Section 6(G)
shall be purchased for such consideration, which may be paid
by such method or methods and in such form or forms
(including, without limitation, cash, Shares, promissory
notes, other securities, other Awards or other property or any
combination thereof), as the Committee shall determine, the
value of which consideration, as established by the Committee,
shall not be less than 100% of the Fair Market Value of such
Shares or other securities as of the date such purchase right
is granted.
H. General
1. Consideration for Awards. Awards shall be granted for
no cash consideration or for any cash or other
consideration as may be determined by the Committee
or required by applicable law.
2. Awards May Be Granted Separately or Together. Awards
may, in the discretion of the Committee, be granted
either alone or in addition to, in tandem with or in
substitution, for any other Award or any award
granted under any plan of the Company or any
Affiliate other than the Plan. Awards granted in
addition to or in tandem with other Awards or in
addition to or in tandem with awards granted under
any such other plan of the Company or any Affiliate
may be granted either at the same time as or at a
different time from the grant of such other Awards or
awards.
3. Forms of Payment under Awards. Subject to the terms
of the Plan and of any applicable Award Agreement,
payments or transfers to be made by the Company or an
Affiliate upon the grant, exercise or payment of an
Award may be made in such form or forms as the
Committee shall determine (including, without
limitation, cash, Shares, promissory notes, other
securities, other Awards or other property or any
combination thereof), and may be made in a single
payment or transfer, in installments or on a deferred
basis, in each case in accordance with rules and
procedures established by the Committee. Such rules
and procedures may include, without limitation,
provisions for the payment or crediting of reasonable
interest on installment or deferred payments or the
grant or crediting of Dividend Equivalents with
respect to installment or deferred payments.
4. Limits on Transfer of Awards. No Award (other than
Other Stock Grants) and no right under any such Award
shall be transferable by a Participant otherwise than
by will or by the laws of descent and distribution
and the Company shall not be required to recognize
any attempted assignment of such rights by any
Participant; provided, however, that, if so
determined by the Committee, a Participant may, in
the manner established by the Committee, (a)
designate a beneficiary or beneficiaries to exercise
the rights of the Participant and receive any
property distributable with respect to any Award upon
the death of the Participant and (b) transfer Awards,
except in the case of an Incentive Stock Option, to
Family Members pursuant to terms determined by the
Committee. Except as otherwise provided in this Plan
or in any applicable Award Agreement or amendment
thereto (other than an Award Agreement relating to an
Incentive Stock Option), pursuant to terms determined
by the Committee, each Award or right under any Award
shall be exercisable during the Participant's
lifetime only by the Participant or, if permissible
under applicable law, by the Participant's guardian
or legal representative. Except as otherwise provided
in this Plan or in any applicable Award Agreement or
amendment thereto (other than an Award Agreement
relating to an Incentive Stock Option), no Award or
right under any such Award may be pledged, alienated,
attached or otherwise encumbered, and any purported
pledge, alienation, attachment or encumbrance thereof
shall be void and unenforceable against the Company
or any Affiliate.
5. Term of Awards. The term of each Award shall be for
such period as may be determined by the Committee;
provided, however, that in the case of an Incentive
Stock Option such Option shall not be exercisable
after the expiration of 10 years from the date such
Option is granted.
6. Restrictions; Securities Exchange Listing. All Shares
or other securities delivered under the Plan pursuant
to any Award or the exercise thereof shall be subject
to such restrictions as the Committee may deem
advisable under the Plan, applicable federal or state
securities laws and regulatory requirements, and the
Committee may cause appropriate entries to be made or
legends to be placed on the certificates for such
Shares or other securities to reflect such
restrictions. If the Shares or other securities of
the Company are traded on a securities exchange, the
Company shall not be required to deliver any Shares
or other securities covered by an Award unless and
until such Shares or other securities have been
admitted for trading on such securities exchange.
Section 7. Amendment and Termination; Adjustments
A. Amendments to the Plan. The Board may amend, alter, suspend,
discontinue or terminate the Plan at any time; provided, however, that,
notwithstanding any other provision of the Plan or any Award Agreement, without
the approval of the shareholders of the Company, no such amendment, alteration,
suspension, discontinuation or termination shall be made that, absent such
approval would violate the rules or regulations of the Nasdaq National Market or
any other securities exchange that is applicable to the Company.
B. Amendments to Awards. The Committee may waive any conditions of or
rights of the Company under any outstanding Award, prospectively or
retroactively. Except as otherwise provided herein or in an Award Agreement, the
Committee may not amend, alter, suspend, discontinue or terminate any
outstanding Award, prospectively or retroactively, if such action would
adversely affect the rights of the holder of such Award, without the consent of
the Participant or holder or beneficiary thereof.
C. Correction of Defects, Omissions and Inconsistencies. The Committee
may correct any defect, supply any omission or reconcile any inconsistency in
the Plan or any Award in the manner and to the extent it shall deem desirable to
carry the Plan into effect.
Section 8. Income Tax Withholding
In order to comply with all applicable national, federal, state or
local income tax laws or regulations, the Company may take such action as it
deems appropriate to ensure that all applicable national, federal, state or
local payroll, withholding, income or other taxes, which are the sole and
absolute responsibility of a Participant, are withheld or collected from such
Participant. In order to assist a Participant in paying all or a portion of the
national, federal, state and local taxes to be withheld or collected upon
exercise or receipt of (or the lapse of restrictions relating to) an Award, the
Committee, in its discretion and subject to such additional terms and conditions
as it may adopt, may permit the Participant to satisfy such tax obligation by
(i) electing to have the Company withhold a portion of the Shares otherwise to
be delivered upon exercise or receipt of (or the lapse of restrictions relating
to) such Award with a Fair Market Value equal to the amount of such taxes or
(ii) delivering to the Company Shares other than Shares issuable upon exercise
or receipt of (or the lapse of restrictions relating to) such Award with a Fair
Market Value equal to the amount of such taxes. The election, if any, must be
made on or before the date that the amount of tax to be withheld is determined.
Section 9. General Provisions
A. No Rights to Awards. No Eligible Person, Participant or other Person
shall have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Eligible Persons, Participants or
holders or beneficiaries of Awards under the Plan. The terms and conditions of
Awards need not be the same with respect to any Participant or with respect to
different Participants.
B. Plan Provisions Control. In the event that any provision of an Award
Agreement conflicts with or is inconsistent in any respect with the terms of the
Plan as set forth herein or subsequently amended, the terms of the Plan shall
control.
C. No Rights of Shareholders. Except with respect to Shares of
Restricted Stock as to which the Participant has been granted the right to vote,
neither a Participant nor the Participant's legal representative shall be, or
have any of the rights and privileges of, a stockholder of the Company with
respect to any Shares issuable to such Participant upon the exercise or payment
of any Award, in whole or in part, unless and until such Shares have been issued
in the name of such Participant or such Participant's legal representative
without restrictions thereto.
D. No Limit on Other Compensation Arrangements. Nothing contained in
the Plan shall prevent the Company or any Affiliate from adopting or continuing
in effect other or additional compensation arrangements, and such arrangements
may be either generally applicable or applicable only in specific cases.
E. No Right to Employment. The grant of an Award shall not be construed
as giving a Participant the right to be retained in the employ of the Company or
any Affiliate, nor will it affect in any way the right of the Company or an
Affiliate to terminate such employment at any time, with or without cause. In
addition, the Company or an Affiliate may at any time dismiss a Participant from
employment free from any liability or any claim under the Plan or any Award,
unless otherwise expressly provided in the Plan or in any Award Agreement.
Nothing in this Plan shall confer on any person any legal or equitable right
against the Company or any Affiliate, directly or indirectly, or give rise to
any cause of action at law or in equity against the Company or an Affiliate. The
Awards granted hereunder shall not form any part of the wages or salary of any
Eligible Person for purposes of severance pay or termination indemnities,
irrespective of the reason for termination of employment. Under no circumstances
shall any person ceasing to be an employee of the Company or any Affiliate be
entitled to any compensation for any loss of any right or benefit under the Plan
which such employee might otherwise have enjoyed but for termination of
employment, whether such compensation is claimed by way of damages for wrongful
or unfair dismissal, breach of contract or otherwise. By participating in the
Plan, each Participant shall be deemed to have accepted all the conditions of
the Plan and the terms and conditions of any rules and regulations adopted by
the Committee and shall be fully bound thereby.
F. Governing Law. The validity, construction and effect of the Plan or
any Award, and any rules and regulations relating to the Plan or any Award,
shall be determined in accordance with the internal laws, and not the law of
conflicts, of the State of Delaware.
G. Severability. If any provision of the Plan or any Award is or
becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction
or would disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be so construed or deemed amended without, in
the determination of the Committee, materially altering the purpose or intent of
the Plan or the Award, such provision shall be stricken as to such jurisdiction
or Award, and the remainder of the Plan or any such Award shall remain in full
force and effect.
H. No Trust or Fund Created. Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and a Participant or
any other Person. To the extent that any Person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any unsecured general creditor of the
Company or any Affiliate.
I. Other Benefits. No compensation or benefit awarded to or realized by
any Participant under the Plan shall be included for the purpose of computing
such Participant's compensation under any compensation-based retirement,
disability, or similar plan of the Company unless required by law or otherwise
provided by such other plan.
J. No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash shall be paid in lieu of any fractional Shares or whether such
fractional Shares or any rights thereto shall be canceled, terminated or
otherwise eliminated.
K. Headings. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.
Section 10. Effective Date of the Plan.
The Plan shall be effective on December 4, 2001 subject to approval by
the shareholders of the Company on such date.
Section 11. Term of the Plan.
No Award shall be granted under the Plan ten years after the effective
date or any earlier date of discontinuation or termination established pursuant
to Section 7A of the Plan. However, unless otherwise expressly provided in the
Plan or in an applicable Award Agreement, any Award theretofore granted may
extend beyond such date, and the authority of the Committee provided for
hereunder with respect to the Plan and any Awards, and the authority of the
Board to amend the Plan, shall extend beyond the termination of the Plan.
Proxy Card
ENZON PHARMACEUTICALS, INC.
Annual Meeting of Stockholders December 2, 2003
This Proxy Is Solicited on Behalf of the Board of Directors
Arthur J. Higgins and Kenneth J. Zuerblis and each of them, as
proxies, with full power of substitution in each of them, are hereby authorized
to represent and to vote, as designated below and on the reverse side, on all
proposals and in the discretion of the proxies on such other matters as may
properly come before the annual meeting of stockholders of Enzon
Pharmaceuticals, Inc. (the "Company") to be held on December 2, 2003 or any
adjournment(s), postponement(s), or other delay(s) thereof (the "Annual
Meeting"), all shares of stock of the Company to which the undersigned is
entitled to vote at the Annual Meeting.
UNLESS OTHERWISE DIRECTED, THIS PROXY WILL BE VOTED "FOR"
PROPOSALS 1, 2 and 3 AND WILL BE VOTED IN THE DISCRETION OF THE PROXIES ON SUCH
OTHER MATTERS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING. THE BOARD OF
DIRECTORS HAS PROPOSED AND RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" PROPOSALS 1,
2 and 3.
(1) Election of the following nominees as Class II Directors to serve in
such capacities until their successors are duly elected and qualified:
Dr. David W. Golde Robert L. Parkinson, Jr.
(Authority to vote for any nominee(s) may be withheld by lining through the
name(s) of any such nominee(s).)
/ / FOR all nominees / / WITHHOLD authority for all
(2) To approve amendments to the Company's 2001 Incentive Stock Plan to
increase the number of shares of Common Stock available for issuance
under the 2001 Incentive Stock Plan from 2,000,000 to 6,000,000, and to
limit the maximum number of shares of restricted stock and restricted
stock units that may be granted under the 2001 Incentive Stock Plan to
50% of the total number of shares available for issuance under the 2001
Incentive Stock Plan.
/ / FOR / / AGAINST / / ABSTAIN
(3) Ratification of the selection of KPMG LLP to audit the consolidated
financial statements of the Company for the fiscal year ending June 30,
2004.
/ / FOR / / AGAINST / / ABSTAIN
/ / Please check this box if you expect to attend the Annual Meeting in person.
(Please sign exactly as name appears
to the left, date and return. If
shares are held by joint tenants,
both should sign. When signing as
attorney, executor, administrator,
trustees or guardian, please give
full title as such. If a
corporation, please sign in full
corporate name by president or other
authorized officer. If a
partnership, please sign in
partnership name by authorized
person.)
Date:
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Sign Here
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Signature (if held jointly)
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Capacity (Title or Authority,
i.e. Executor, Trustee)
PLEASE SIGN, DATE AND MAIL
YOUR PROXY TODAY.