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VIVUS, INC. |
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VIVUS, INC.NOTICE OF ANNUAL
MEETING OF STOCKHOLDERS
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1. |
To elect six directors to serve until the next Annual Meeting of Stockholders
and until their successors are duly |
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2. |
To ratify the appointment of KPMG LLP as independent auditors of the Company for
the fiscal year ending |
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3. | To transact such other business as may properly come before the meeting or any adjournment thereof. |
The foregoing items of business are more fully described in the Proxy Statement accompanying this Notice. Included with the Proxy Statement is a copy of the Companys Annual Report for the fiscal year ended December 31, 2003, which includes the Companys audited financial statements and information about its operations, markets and products. We encourage you to read it. Only stockholders of record at the close of business on April 16, 2004 are entitled to notice of and to vote at the Annual Meeting. All stockholders are cordially invited to attend the Annual Meeting in person. However, to assure your representation at the Annual Meeting, you are urged to sign and return the enclosed Proxy as promptly as possible in the postage-prepaid envelope enclosed for that purpose. Any stockholder attending the Annual Meeting may vote in person even if the stockholder has returned a Proxy. |
By order of the Board of Directors |
Leland F. Wilson | |
President and Chief Executive Officer |
Mountain View, California YOUR VOTE IS IMPORTANT
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ANNUAL MEETING OF STOCKHOLDERS | ||||||||
PROPOSAL ONE: ELECTION OF DIRECTORS | ||||||||
PROPOSAL TWO: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS | ||||||||
EXECUTIVE COMPENSATION | ||||||||
OTHER MATTERS |
VIVUS, INC.PROXY STATEMENT FOR
THE 2004
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Name of Nominee | Age | Position Held With the Company | First Became a Director | |||||
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Virgil A. Place, M.D | 79 | Chairman of the Board, Chief Scientific Officer and Director | 1991 | |||||
Leland F. Wilson | 59 | President, Chief Executive Officer and Director | 1991 | |||||
Mark B. Logan (1) (2) | 65 | Director | 1999 | |||||
Mario M. Rosati (2) (3) | 57 | Secretary and Director | 1999 | |||||
Linda M. Dairiki Shortliffe, M.D. (1) (2) (3) | 55 | Director | 1999 | |||||
Graham Strachan (1) | 66 | Director | 2001 |
_________________ (1) Member of Audit
Committee Virgil A. Place, M.D. is the founder of VIVUS and has been its Chief Scientific Officer and Chairman of the Board since the Company was formed in April 1991. Before joining VIVUS, Dr. Place was Principal Scientist and held a variety of executive positions including Vice President of Medical and Regulatory Affairs at ALZA Corporation from 1969 to 1993. In addition, Dr. Place served nine years on the ALZA Corporation Board of Directors. He received a B.A. in Chemistry from Indiana University and an M.D. from Johns Hopkins University. He is Board Certified in Internal Medicine, with specialty training at the Mayo Clinic. Leland F. Wilson has been President and a director of VIVUS since the Company was formed in April 1991 and Chief Executive Officer since November 1991. Prior to joining VIVUS, Mr. Wilson was Vice President of Marketing and Corporate Development of Genelabs Technologies, Inc. from 1989 to 1991. Mr. Wilson was Group Product Director, later promoted to Director of Marketing, at LifeScan, a Johnson & Johnson company, from 1986 to 1989. From 1973 to 1986, Mr. Wilson served in several research, marketing and sales positions for Syntex Research and Syntex Laboratories, Inc. Mr. Wilson received a B.S. and an M.S. from Pennsylvania State University. Mark B. Logan has been a director of VIVUS since March 1999. From 1994 until his retirement in May 2001, Mr. Logan was Chairman of the Board, President and Chief Executive Officer of VISX Inc., a medical device company. From January 1992 to October 1994, he was Chairman of the Board and Chief Executive Officer of INSMED Pharmaceuticals, Inc. Previously, Mr. Logan was Senior Vice President & Chief Operating Officer and a member of the Board of Directors of Baush & Lomb, Inc., and has held senior executive positions with Becton, Dickinson and Co. and Wyeth, Inc. Mr. Logan serves as a director of Abgenix, a publicly traded biotechnology company. He is also a director of the University of Virginia Heart Center, and a trustee of the Southern Environmental Law Center. Mr. Logan received a B.A. from Hiram College and a P.M.D. from Harvard Business School. 3 Mario M. Rosati has been a director of VIVUS since March 1999. Mr. Rosati has been with the Palo Alto, California law firm of Wilson Sonsini Goodrich & Rosati, Professional Corporation, since 1971. Mr. Rosati also serves as a director of Aehr Test Systems, Genus, Inc., Sanmina-SCI Corporation and Symyx. Mr. Rosati holds a B.A. from the University of California, Los Angeles and a J.D. from the University of California, Berkeley, Boalt Hall School of Law. Linda M. Dairiki Shortliffe, M.D. has been a director of VIVUS since June 1999. Dr. Shortliffe has been Professor of Urology at Stanford University School of Medicine since 1993 and Chair of the Department of Urology since 1995. She has also been Chief of Pediatric Urology of Lucile Salter Packard Childrens Hospital at Stanford since 1991. She is a Fellow of the American College of Surgeons and the American Academy of Pediatrics and serves as a Trustee to the American Board of Urology. Dr. Shortliffe has authored numerous publications and her works appear in prominent medical journals and books. Dr. Shortliffe received an A.B. from Radcliffe/Harvard College and an M.D. from Stanford University. Graham Strachan has been a director of VIVUS since June 2001. From 1987 to 1999, he was President and CEO of Allelix Biopharmaceuticals Inc., now NPS Allelix Pharmaceuticals Inc., which is engaged in the discovery and development of novel, small molecule drugs and recombinant therapeutic proteins. Between 1982 and 1986, Mr. Strachan held other executive level positions within Allelix, of which he was a co-founder in 1981. He has also been active in community service, particularly in life science organizations, and is currently chair of the Ontario Mental Health Research Foundation and the Canadian Biotechnology Human Resource Council. Mr. Strachan holds a B.Sc. Honours Chemistry degree from the University of Glasgow, is a Qualified Patent Agent in Canada and in the United States, and he completed an Advanced Management Program at the University of Western Ontario in 1972. BOARD OF DIRECTORS MEETINGS AND COMMITTEESBoard MeetingsThe Board of Directors met five times and acted by unanimous written consent three times during fiscal 2003. All directors attended all of the meetings of the Board of Directors during fiscal 2003, and all directors attended at least 75% of the meetings of the committees on which they served during fiscal 2003. Board IndependenceThe Board of Directors has determined that each of its current directors, including all directors standing for re-election, except for Virgil A. Place, the Chairman of the Board and Chief Scientific Officer, and Leland F. Wilson, the President and Chief Executive Officer, is independent within the meaning of the Nasdaq Stock Market, Inc. director independence standards, as currently in effect and as they may be changed from time to time. Board CommitteesThe Board of Directors has Audit, Compensation and Nominating and Governance Committees. Each of these committees has adopted a written charter, all three of which can be found on our website at www.vivus.com. All members of the committees are appointed by the Board of Directors, and are non-employee directors. The following describes each committee, its current membership, the number of meetings held during fiscal year 2003 and its function: Audit Committee The Audit Committee consists of directors Logan, Shortliffe and Strachan, each of whom is independent within the meaning of the Nasdaq Stock Market, Inc. director independence standards, as currently in effect and as they may be changed from time to time. The Board of Directors has determined that Mr. Logan is an audit committee financial expert as defined in SEC rules. The Audit Committee held four meetings during fiscal year 2003. It has held two meetings since the end of fiscal year 2003. Mr. Logan serves as Chairman of the Audit Committee. The Audit Committee is responsible for: 4
overseeing the accounting, financial reporting and audit processes; The Audit Committee works closely with management and the Companys independent auditors. The Audit Committee also meets with our independent auditors in an executive session, without the presence of our management, on a quarterly basis, following completion of their quarterly reviews and annual audit and prior to the Companys earnings announcements, to review the results of their work. The Audit Committee also meets with our independent auditors to approve the annual scope of the audit services to be performed. The Audit Committee Report is included herein on page 14. Compensation Committee The Compensation Committee consists of directors Rosati, Logan and Shortliffe. The Compensation Committee held four meetings during fiscal year 2003. None of the members of the Compensation Committee is currently one of the Companys executive officers or employees. No member of the Compensation Committee serves as a member of the Board of Directors or Compensation Committee of any entity that has one or more officers serving as a member of the Companys Board of Directors or Compensation Committee. It has held two meetings since the end of fiscal year 2003. The Compensation Committee is responsible for:
reviewing and approving the compensation and benefits for the Companys officers and directors; The Compensation Committee Report is included herein on page 15. Nominating and Governance Committee In January 2004, the Board of Directors constituted a Nominating and Governance Committee and adopted a Nominating and Governance Committee charter. The Nominating and Governance Committee consists of directors Rosati and Shortliffe, each of whom is independent within the meaning of the Nasdaq Stock Market, Inc. director independence standards, as currently in effect and as they may be changed from time to time. Because the Nominating and Governance Committee was recently constituted, it did not hold any meetings during fiscal year 2003. It has held one meeting since the end of fiscal year 2003. The Nominating and Governance Committee is responsible for:
considering and periodically reporting on matters related to the identification, selection and qualification of The Nominating and Governance Committee will consider properly submitted stockholder recommendations for candidates for membership on the Board of Directors as described below. In evaluating such recommendations, the Nominating and Governance Committee will seek to achieve a balance of knowledge, experience and capability on the Board of Directors and to address the membership criteria. Any stockholder recommendations proposed for consideration by the Nominating and Governance Committee should include the candidates name and qualifications for membership on the Board of Directors and should be addressed to our Chief Financial Officer at VIVUS, Inc. 1172 Castro Street, Mountain View, CA 94040. In addition, procedures for stockholder direct nomination of directors are discussed above under Deadline for Receipt of Stockholder Proposals and are discussed in detail in our bylaws, which can be provided to you upon written request. 5 Although the Company does not have a formal policy regarding attendance by members of the Board of Directors at its annual meetings of stockholders, directors are encouraged to attend annual meetings of stockholders. Two directors attended the Companys 2003 Annual Meeting of Stockholders. The Nominating and Governance Committee will consider, during the upcoming year, adopting a formal policy on director attendance at annual meetings of stockholders. Although the Company does not have a formal policy regarding communications with the Board of Directors, stockholders may communicate with the Board of Directors by submitting an email to ir@vivus.com or by writing to us at VIVUS, Inc., Attention: Chief Financial Officer, 1172 Castro Street, Mountain View, CA 94040. Stockholders who would like their submission directed to a member of the Board of Directors may so specify, and the communication will be forwarded, as appropriate. The Nominating and Governance Committee will use a variety of criteria to evaluate the qualifications and skills necessary for members of our Board of Directors. Under these criteria, members of the Board of Directors should have the highest professional and personal ethics and values. They should have broad experience at the policy-making level in business, health care, education, or government. They should be committed to enhancing stockholder value and to provide insight and practical wisdom based on experience. Their service on other boards of public companies should be limited to a number that permits them, given their individual circumstances, to perform responsibly, all director duties. Each director must represent the interests of VIVUS stockholders. The Nominating and Governance Committee will utilize a variety of methods for identifying and evaluating nominees for director. The Nominating and Governance Committee intends to regularly assess the appropriate size of the Board of Directors, and whether any vacancies on the Board of Directors are expected due to retirement or otherwise. In the event that vacancies are anticipated, or otherwise arise, the Nominating and Governance Committee plans to consider various potential candidates for director. Candidates may come to the attention of the Nominating and Governance Committee through current members of the Board of Directors, professional search firms, stockholders or other persons. These candidates will be evaluated at regular or special meetings of the Nominating and Governance Committee, and may be considered at any point during the year. The Nominating and Governance Committee will consider properly submitted stockholder recommendations for candidates for the Board of Directors. In evaluating such recommendations, the Nominating and Governance Committee uses the qualifications standards discussed above and seeks to achieve a balance of knowledge, experience and skill on the Board of Directors. Code of EthicsThe Board of Directors has adopted a Code of Ethics which is applicable to all employees of the Company, including its principal executive officer and senior financial officer. The Code of Ethics may be found on our website at www.vivus.com or a copy can be provided upon request made by email to ir@vivus.com or by writing to us at VIVUS, Inc., Attention: Chief Financial Officer, 1172 Castro Street, Mountain View, CA 94040. VIVUS will disclose any amendment to the Code of Ethics or waiver of a provision of the Code of Ethics, including the name of the person to whom the waiver was granted, on our website on the Investor Relations page. Compensation of DirectorsOur non-employee directors, or Outside Directors, receive $25,000 per annum, paid in equal quarterly installments, as well as reimbursement for expenses incurred in connection with attending board and committee meetings. Under the Companys 2001 Stock Option Plan, or the 2001 Plan, each Outside Director is automatically granted a non-qualified option to purchase 32,000 shares of Common Stock upon the date on which such person first becomes a director with an exercise price equal to the fair market value of the Companys Common Stock as of the date of grant, also called the Initial Option. Thereafter, each Outside Director is automatically granted a non-qualified option to purchase 8,000 shares under the 2001 Plan on the date of each Annual Meeting of Stockholders, or the Subsequent Option, provided such director is re-elected and provided he or she has served as a director for at least six months as of such date. Initial Options granted under the 2001 Plan vest as to one-fourth (1/4th) of the shares on each anniversary date of grant over a period of four years so long as the optionee remains a director of the Company. Subsequent Options begin to vest at the rate of 12.5% per month following the date of grant so long as the optionee remains a director of the Company. Non-employee directors are also eligible to receive additional stock option grants. In January 2004, the Board of Directors granted each Outside Director a non-qualified stock option to purchase an additional 2,000 shares of the Companys Common Stock with an exercise price equal to the fair market value of the Companys Common Stock on the date of grant that vest monthly over a period of one year starting in January 2004. 6 Options granted under the 2001 Plan to Outside Directors have a term of ten years unless terminated sooner upon termination of the optionees status as a director or otherwise pursuant to the 2001 Plan. Such options are transferable by the optionee only in certain limited circumstances and each option is exercisable during the lifetime of the director only by such director or a permitted transferee. The 2001 Plan is designed to work automatically, without administration, with respect to the granting of options to Outside Directors; however, to the extent administration is necessary, the 2001 Plan has been structured so that options granted to Outside Directors who administer the Companys other employee benefit plans shall qualify as transactions exempt from Section 16(b) of the Securities and Exchange Act pursuant to Rule 16b-3 promulgated thereunder. Vote RequiredThe six nominees receiving the highest number of affirmative votes of the shares present or represented and entitled to be voted for them shall be elected as directors, whether or not such affirmative votes constitute a majority of the shares voted. Votes withheld from any director are counted for purposes of determining the presence or absence of a quorum for the transaction of business, but they have no other legal effect under Delaware law. THE COMPANYS
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR 7 PROPOSAL NO. 2:RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORSProposalThe Board of Directors has selected KPMG LLP to audit the Companys financial statements for the fiscal year ending December 31, 2004. The decision of the Board of Directors to appoint KPMG LLP was based on the recommendation of the Audit Committee. Before making its recommendation to the Board of Directors, the Audit Committee carefully considered that firms qualifications as independent auditors. This included a review of the qualifications of the engagement team, the quality control procedures the firm has established, any issues raised by the most recent quality control review of the firm and its reputation for integrity and competence in auditing. The Audit Committees review also included matters required to be considered under the SECs Rules on Auditor Independence, including the nature and extent of non-audit services, to ensure that they will not impair the independence of the accountants. The Audit Committee expressed its satisfaction with KPMG LLP in all of these respects. KPMG LLP audited the Companys financial statements as of December 31, 2003. Required VoteStockholder ratification of the selection of KPMG LLP as the Companys independent auditors for fiscal year 2004 is not required by the Companys bylaws, or other applicable legal requirement. However, as a matter of good corporate practice, the Board is seeking stockholder ratification of its appointment of the Companys independent auditors. In the event that the stockholders do not approve the selection of KPMG LLP, the appointment of the independent auditors may be reconsidered by the Board of Directors. Even if the selection is ratified, the Board at its discretion and at the direction of the Audit Committee may direct the appointment of a different independent accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders. KPMG LLP was first appointed in fiscal year 2002, and has audited the Companys financial statements for fiscal years 2002 and 2003. Representatives of KPMG LLP are expected to be present at the Annual Meeting, will have the opportunity to make a statement if they so desire, and are expected to be available to respond to appropriate questions. THE COMPANYS BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP, AS THE COMPANYS INDEPENDENT AUDITORS FOR FISCAL YEAR ENDING DECEMBER 31, 2004. FEES BILLED BY KPMG LLP DURING FISCAL 2003 AND 2002 The approximate aggregate fees billed to VIVUS during fiscal years 2003 and 2002 for professional services by KPMG LLP are set forth below: |
2003 | 2002 | |||||||
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Audit Fees (1) | $ | 185,900 | $ | 132,500 | ||||
Audit-Related Fees (2) | | | ||||||
Tax Fees (3) | | | ||||||
All Other Fees (4) | 2,925 | 1,800 | ||||||
Total Fees | $ | 188,825 | $ | 134,300 | ||||
(1) | Audit Fees: This category consists of fees for the audit of the Companys annual financial statements, review of the financial statements included in the Companys quarterly reports on Form 10-Q and services that are normally provided by the independent auditors in connection with regulatory filings or engagements for those fiscal years. This category also includes advice on audit and accounting matters that arose during, or as a result of, the audit or the review of interim financial statements and the preparation of an annual management letter on internal control matters. |
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(2) | Audit-Related Fees: There were no audit related fees billed by KPMG LLP during these periods. |
(3) | Tax Fees: There were no tax fees billed by KPMG LLP during these periods. |
(4) | All Other Fees: This category consists of fees incurred for work related to information provided to VIVUS concerning United States Generally Accepted Accounting Principles for use in our arbitration against Janssen Pharmaceutica, which is no longer pending. The Audit Committee considered and determined that the accountants provision of non-audit services is compatible with the accountants independence. |
The Audit Committee has established a policy governing our use of KPMG LLP for non-audit services. Under the policy, management may use KPMG LLP for non-audit services that are permitted under SEC rules and regulations, provided that management obtain the Audit Committees approval before such services are rendered. In fiscal year 2003, all fees identified above under the caption All Other Fees that were billed by KPMG LLP were approved by the Audit Committee. 9 EXECUTIVE OFFICERSThe following table and the biographical information that follows it sets forth information as of the Record Date regarding the executive officers of the Company: |
Name | Age | Position | |||||||
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Virgil A. Place, M.D | 79 | Chairman of the Board, Chief Scientific Officer and Director | |||||||
Leland F. Wilson | 59 | President, Chief Executive Officer and Director | |||||||
John Dietrich, Ph.D | 57 | Vice President, Research and Development | |||||||
Neil Gesundheit, M.D | 51 | Vice President, Clinical Research | |||||||
Guy P. Marsh | 50 | Vice President, U.S. Operations | |||||||
James R. Nickel, M.D. | 55 | Vice President, Clinical Medicine | |||||||
Terry M. Nida | 55 | Vice President, Corporate Development and International Marketing | |||||||
Larry J. Strauss | 52 | Vice President, Finance and Chief Financial Officer | |||||||
Peter Y. Tam | 40 | Vice President, Strategic Planning and Corporate Development | |||||||
Carol Zoltowski, V.M.D | 54 | Vice President, Regulatory Affairs |
The biographical information of Mr. Wilson and Dr. Place is set forth above at Proposal No. 1, Election of Directors. John Dietrich, Ph.D. has been Vice President of Research and Development for VIVUS since October 2000. Prior to that time, he held a similar position at Cellegy Pharmaceuticals. From 1991 until 1999, Dr. Dietrich was Vice President of R&D at Allelix Biopharmaceuticals in Toronto, Canada, where he was responsible for all preclinical and clinical departments and managed a staff of 125 people. Dr. Dietrich received a B.S. from the University of Dayton and a Ph.D. in Pharmacology from the University of North Carolina and was an Assistant Professor at the University of Illinois School of Medicine. Neil Gesundheit, M.D., M.P.H. has been Vice President, Clinical Research for VIVUS since January 1994. In August 1999, Dr. Gesundheit transitioned to part-time status to assume the position of Associate Dean for Medical Education at the Stanford University School of Medicine. Dr. Gesundheit previously served as Vice President, Clinical and Regulatory Affairs at VIVUS from January 1994 to September 1997 and as Chief Medical Officer from August 1998 to August 1999. From 1989 to 1993, Dr. Gesundheit was Associate Director of Clinical Research at Genentech, Inc. He holds an A.B. degree from Harvard College, an M.D. from the University of California, San Francisco, and an M.P.H. from the University of California, Berkeley. Dr. Gesundheit is Board Certified in Internal Medicine and in the subspecialty of endocrinology and metabolism. Guy P. Marsh has been Vice President of U.S. Operations for VIVUS since July 2000. Mr. Marsh joined VIVUS in May 1998 in the position of Senior Director, U.S. Operations, and assumed the responsibilities of General Manager, Operations in April 1999. Prior to joining VIVUS, Mr. Marsh served as Vice President Technical Operations for Copley Pharmaceutical, Inc. from April 1994 to April 1998. Also during this period, Mr. Marsh served as a liaison between Copley Pharmaceutical and Copleys majority stockholder, Hoechst-Celanese Corporation. From November 1987 to April 1994, Mr. Marsh served in various manufacturing, sales and business management roles for Hoechst-Roussel Pharmaceuticals, Inc. Mr. Marsh received a B.S. in Engineering from New Jersey Institute of Technology, holds a New Jersey State Professional Engineering License, and received an MBA from Seton Hall University. James R. Nickel, M.D. has been Vice President, Clinical Medicine for VIVUS since November 2003. From 1999 to 2003, Dr. Nickel served as the Corporate Medical Director and Chief Medical Officer at Alpha Therapeutic Corporation, a wholly-owned subsidiary of Mitsubishi Pharma Corporation. From 1988 to 1999, Dr. Nickel served as a Medical Director for Bayer Corporation. Dr. Nickel received a B.S in chemistry at Stanford University and his medical degree at UCLA School of Medicine. He completed his residency in Pathology at John Hopkins Hospital. Terry M. Nida has been Vice President, Corporate Development and International Marketing for VIVUS since August 1998. From November 1995 to August 1998, Mr. Nida was Vice President, Europe, and effective March 28, 1996 was appointed as an executive officer. Prior to joining VIVUS, Mr. Nida was Vice President, Sales, Marketing and Business Development at Carrington Laboratories, with responsibility for all sales, marketing and business development activities. Mr. Nida was Senior Director, Worldwide Sales, Marketing and Business Development for Centocor, Inc. from 1993 to 1994, and Director of Sales and Marketing in Europe for Centocor, Inc. from 1990 to 1993. He received a B.A and M.A. from Wichita State University. 10 Larry J. Strauss has been Vice President, Finance and Chief Financial Officer for VIVUS since September 2003. Prior to joining VIVUS, Mr. Strauss served as Vice President of Finance and Site Manager for Baxter Healthcare Corporations Fremont, California facility. From 1999 to 2002, Mr. Strauss served as Chief Financial Officer of Fusion Medical Technologies, Inc. (Baxter acquired Fusion in 2002). Mr. Strauss was Vice President of Operations for CargioGenesis Corporation from 1997 to 1999 and Corporate Controller from 1996 to 1997. From 1991 to 1995, Mr. Strauss was Director of Finance for Telik, Inc. Earlier in his career, Mr. Strauss served as Vice President, Finance and Chief Financial Officer of XOMA Corporation. Mr. Strauss earned a B.S. degree, cum laude, in Mathematics from Claremont Mens College (Claremont McKenna College) and an M.S. degree in Industrial Engineering and Operational Research from the University of California, Berkeley. Peter Y. Tam has been Vice President of Strategic Planning and Corporate Development at VIVUS since November 2002. Mr. Tam joined VIVUS in 1993 as Manager of Clinical Research, and in 1999 he assumed the responsibilities of Director of Clinical and Corporate Development. Prior to joining VIVUS, Mr. Tam held various research and clinical development positions at Genentech from 1991 through 1993 and XOMA Corporation from 1987 to 1991. Mr. Tam received a B.S. in Chemistry from University of California Berkeley in 1986 and his M.B.A. at Santa Clara University in 2000. Carol Zoltowski, V.M.D. has been Vice President, Regulatory Affairs for VIVUS since October 2001. Prior to joining VIVUS, Dr. Zoltowski was a consultant to pharmaceutical and biologic biotechnology companies in both Southern and Northern California. From January 1997 to March 1999, Dr. Zoltowski served as Senior Director and Head of Regulatory Affairs at Shaman Pharmaceuticals, Inc. Before joining Shaman Pharmaceuticals, Dr. Zoltowski was responsible for regulatory affairs at Roche Bioscience, Inflammatory Disease Business Unit. From 1991 until 1994, Dr. Zoltowski held positions in various areas of research and development, business development, and regulatory affairs at Syntex in Palo Alto, California. She is licensed to practice veterinary medicine in California. Dr. Zoltowski received a B.A. in Biology from Seton Hill College and a V.M.D. from the University of Pennsylvania, School of Veterinary Medicine. Executive Officer CompensationThe following table sets forth the compensation paid by the Company for services in all capacities during the fiscal years ended December 31, 2003, 2002, and 2001 to the Chief Executive Officer and the four other most highly compensated executive officers: Summary Compensation Table |
Long-Term | |||||||||||||||||
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Compensation | |||||||||||||||||
Annual Compensation | Securities | All Other | |||||||||||||||
Fiscal | Underlying | Compensation | |||||||||||||||
Name and Principal Position | Year | Salary($)(1) | Bonus($) | Options(#) | ($) | ||||||||||||
Leland F. Wilson | 2003 | 437,413 | 106,493 | 100,000 | | ||||||||||||
President and Chief Executive Officer | 2002 | 420,622 | 100,465 | 100,000 | | ||||||||||||
2001 | 396,900 | 93,023 | 100,000 | | |||||||||||||
Terry M. Nida | 2003 | 238,921 | 25,845 | 26,250 | | ||||||||||||
Vice President, Corporate Development | 2002 | 231,145 | 24,614 | 26,250 | 40,721 | (2) | |||||||||||
and International Marketing | 2001 | 218,792 | 34,186 | 35,000 | 70,995 | (2) | |||||||||||
John Dietrich, Ph.D | 2003 | 232,682 | 25,178 | 26,250 | | ||||||||||||
Vice President, Research and Development | 2002 | 222,615 | 23,979 | 26,250 | | ||||||||||||
2001 | 213,150 | 1,477 | (3) | 7,000 | (3) | | |||||||||||
Guy P. Marsh | 2003 | 218,319 | 35,101 | 35,000 | | ||||||||||||
Vice President, U.S. Operations | 2002 | 207,949 | 33,252 | 35,000 | | ||||||||||||
2001 | 194,400 | 30,375 | 35,000 | | |||||||||||||
Carol Zoltowski | 2003 | 184,221 | 19,934 | 26,250 | | ||||||||||||
Vice President Regulatory | 2002 | 177,180 | 4,922 | (4) | 6,653 | (4) | | ||||||||||
Officer | 2001 | 43,750 | | 22,400 | |
_________________ |
(1) | As of January 1, 2004, the annual base salaries of Mr. Wilson, Mr. Nida, Dr. Dietrich, Mr. Marsh and Dr. Zoltowski were increased to $455,044, $246,089, $237,416, $229,329 and $191,647, respectively. |
(2) | Amounts received for housing and automobile allowance. |
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(3) | Dr. Dietrich commenced employment with VIVUS, Inc. on October 2, 2000. Amounts are prorated based on the number of days worked in the year to which the payments and options relate. |
(4) | Dr. Zoltowski commenced employment with VIVUS, Inc. on October 1, 2001. Amounts are prorated based on the number of days worked in the year to which the payments and options relate. |
Employment Agreements. There are no employment agreements between the Company and any of its executive officers, except that Leland F. Wilson is entitled to severance pay of four months salary in the event of termination of employment without cause. Change of Control Agreements. We have entered into Change of Control Agreements with Leland F. Wilson, Neil Gesundheit, Terry M. Nida, Larry J. Strauss, James R. Nickel, Guy P. Marsh, Peter Y. Tam, John W. Dietrich and Carol Zoltowski (collectively, referred to as the Executive Officers) containing the same terms and conditions. Upon the involuntary termination of an Executive Officers employment without cause in connection with the acquisition of the Company or a change in the management of the Company (collectively referred to herein as a Change of Control), the Executive Officer is entitled to receive the following benefits: |
(1) | Monthly severance payments for twenty-four (24) months following the effective date of termination equal to the monthly salary that the Executive Officer was receiving immediately prior to the change of control; |
(2) | Monthly severance payments equal to one-twelfth (1/12) of the Executive Officers target bonus for the fiscal year in which the termination occurs; |
(3) | Pro-rated amount of the Executive Officers target bonus for the fiscal year in which the termination occurs, calculated based on the number of months during such fiscal year that the Company employed the Executive Officer; |
(4) | Continuation of benefits through the end of the severance period that is identical to those the Executive Officer was entitled to immediately prior to the Change of Control; |
(5) | Outplacement services not to exceed twenty thousand dollars ($20,000.00); and |
(6) | All unvested stock options granted and outstanding will automatically accelerate in full and become immediately vested and exercisable upon the closing of a Change of Control event. |
Option Grants in Last Fiscal YearThe following table sets forth information concerning stock options granted during the fiscal year ended December 31, 2003 to each of the executive officers named in the Summary Compensation Table. Potential realizable values (i) are net of exercise price before taxes, (ii) assume that the Common Stock appreciates at the annual rate shown (compounded annually) from the date of grant until the expiration of the ten-year option term, and (iii) assume that the option is exercised at the exercise price and sold on the last day of its term at the appreciated price. These numbers are calculated based on SEC rules and do not reflect our estimate of future stock price growth. Actual gains, if any, on stock option exercises will depend on the future performance of our Common Stock. 12 |
Option Grants in Fiscal 2003 | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Individual Grants | ||||||||||||||||||||
% of Total | ||||||||||||||||||||
Number of | Options | Potential Realizable Value | ||||||||||||||||||
Underlying | Granted to | At Assumed Annual Rates of | ||||||||||||||||||
Securities | Employees | Exercise | Stock Price Appreciation for | |||||||||||||||||
Options | in Fiscal | Price Per | Expiration | Option Term | ||||||||||||||||
Name | Granted(1) | Year(2) | Share ($)(3) | Date | 5% | 10% | ||||||||||||||
Leland F. Wilson | 100,000 | 15.56% | 4.0000 | 01/21/13 | $ | 251,557.85 | $ | 637,496.99 | ||||||||||||
Terry M. Nida | 26,250 | 4.09% | 4.0000 | 01/21/13 | $ | 66,033.93 | $ | 167,342.95 | ||||||||||||
John Dietrich, Ph.D | 26,250 | 4.09% | 4.0000 | 01/21/13 | $ | 66,033.93 | $ | 167,342.96 | ||||||||||||
Guy P. Marsh | 35,000 | 5.45% | 4.0000 | 01/21/13 | $ | 88,045.25 | $ | 223,123.94 | ||||||||||||
Carol Zoltowski | 26,250 | 4.09% | 4.0000 | 01/21/13 | $ | 66,033.94 | $ | 167,342.96 |
(1) | The stock options granted in 2003 are generally exercisable starting one year after the date of grant, with 25% of the shares covered thereby becoming exercisable at that time and with an additional 1/48th of the total number of option shares becoming exercisable at the end of each month thereafter, with full vesting occurring on the fourth anniversary of the date of grant. |
(2) | The Company granted options to 642,526 shares of Common Stock to employees in fiscal 2003, including options granted to the individuals named in the Summary Compensation Table above. |
(3) | Options are granted at an exercise price equal to the fair market value of the Companys Common Stock, as determined by reference to the closing price reported by the Nasdaq National Market on the date of grant. |
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Option ValuesThe following table sets forth certain information for each of the executive officers named in the Summary Compensation Table relating to the number and value of securities underlying exercisable and unexercisable options held at December 31, 2003. None of these individuals exercised options in 2003, except for Leland F. Wilson who exercised options for 83,333 shares of the Companys Common Stock in December 2003. |
Number of Securities | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Underlying Unexercised | Value of Unexercised | |||||||||||||
Options at | In-the-money Options at | |||||||||||||
December 31, 2003(#) | December 31, 2003 ($)(1) | |||||||||||||
Name | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||
Leland F. Wilson | 1,019,373 | 180,625 | 455,224.14 | 0.00 | ||||||||||
Terry M. Nida | 331,119 | 50,131 | 145,795.30 | 0.00 | ||||||||||
John Dietrich, Ph.D | 96,848 | 62,652 | 0.00 | 0.00 | ||||||||||
Carol Zoltowski | 19,394 | 43,419 | 4,712.50 | 3,987.50 | ||||||||||
Guy P. Marsh | 115,052 | 67,448 | 0.00 | 0.00 |
(1) | Value of unexercised in-the-money options are based on a value of $3.79 per share, the last reported sale price of our Common Stock on the Nasdaq National Market on December 31, 2003, minus the per share exercise price, multiplied by the number of shares underlying the option. |
13 REPORT OF THE AUDIT COMMITTEEThe following is the report of the Audit Committee of the Board of Directors. The Audit Committee has reviewed and discussed our audited financial statements for the fiscal year ended December 31, 2003 with our management. In addition, the Audit Committee has discussed with KPMG LLP, the Companys independent auditors, the matters required to be discussed by Statement on Auditing Standards No. 61 (Communications with Audit Committee). The Audit Committee also has received the written disclosures and the letter from KPMG LLP as required by the Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees) and the Audit Committee has discussed the independence of KPMG LLP with that firm. Based on the Audit Committees review of the matters noted above and its discussions with our independent auditors and our management, the Audit Committee recommended to the Board of Directors that the financial statements be included in our Annual Report on Form 10-K. This Audit Committee report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts, and such information shall be entitled to the benefits provided in Item 306(c) and (d) of Regulation S-K and Item 7(e)(3)(v) of Schedule 14A. |
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS |
Mark B. Logan Graham Strachan Linda M. Dairiki Shortliffe, M.D. |
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS |
Mario M. Rosati Mark B. Logan Linda M. Daikiri Shortliffe, M.D. |
Compensation Committee Interlocks and Insider ParticipationThe Committee is responsible for determining salaries, incentives and other forms of compensation for directors, officers and other employees of the Company. The Committee also administers various incentive compensation and benefit plans. Mr. Wilson, President and Chief Executive Officer, and Larry Strauss, Vice President of Finance and Chief Financial Officer, generally participate in discussions and decisions regarding salaries and incentive compensation for all employees and consultants to the Company, except that Mr. Wilson and Mr. Strauss are excluded from discussions regarding their respective salaries and incentive compensation. Corporate Performance GraphThe following graph shows a comparison of total stockholder return for holders of the Companys Common Stock from April 7, 1994, the date of the Companys initial public offering, through December 31, 2003 compared with the Nasdaq Stock Market and Nasdaq Pharmaceutical Stocks. Total stockholder return assumes $100 invested at the beginning of the period in Common Stock of the Company, the stock represented in the Nasdaq Pharmaceutical Stocks and the stock represented in the Nasdaq Stock Market, respectively. This graph is presented pursuant to SEC rules. The Company believes that while total stockholder return can be an important indicator of corporate performance, the stock prices of medical technology stocks like VIVUS are subject to a number of market-related factors other than company performance, such as competitive announcements, mergers and acquisitions in the industry, the general state of the economy, and the performance of other medical technology stocks. 16
|
NASDAQ | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
NASDAQ Stock | Pharmaceutical | |||||||||||
VIVUS, INC. | Market U.S. | U.S. & foreign | ||||||||||
4/7/1994 | 100.000 | 100.000 | 100.000 | |||||||||
4/29/1994 | 103.390 | 97.136 | 95.947 | |||||||||
5/31/1994 | 94.915 | 97.373 | 94.650 | |||||||||
6/30/1994 | 94.915 | 93.820 | 87.257 | |||||||||
7/29/1994 | 93.220 | 95.751 | 89.897 | |||||||||
8/31/1994 | 93.220 | 101.850 | 99.652 | |||||||||
9/30/1994 | 88.136 | 101.591 | 98.276 | |||||||||
10/31/1994 | 89.831 | 103.577 | 945.918 | |||||||||
11/30/1994 | 89.831 | 100.144 | 95.337 | |||||||||
12/30/1994 | 103.390 | 100.428 | 92.247 | |||||||||
1/31/1995 | 89.831 | 100.997 | 97.633 | |||||||||
2/28/1995 | 101.695 | 106.335 | 101.322 | |||||||||
3/31/1995 | 116.949 | 109.475 | 99.873 | |||||||||
4/28/1995 | 88.136 | 112.919 | 102.679 | |||||||||
5/31/1995 | 77.153 | 115.837 | 103.973 | |||||||||
6/30/1995 | 101.695 | 125.205 | 116.155 | |||||||||
7/31/1995 | 103.390 | 134.399 | 126.156 | |||||||||
8/31/1995 | 162.712 | 137.122 | 141.077 | |||||||||
9/29/1995 | 139.837 | 140.287 | 145.136 | |||||||||
10/31/1995 | 137.288 | 139.479 | 139.651 | |||||||||
11/30/1995 | 176.271 | 142.736 | 146.663 | |||||||||
12/29/1995 | 211.864 | 141.989 | 169.192 | |||||||||
1/31/1996 | 191.105 | 142.696 | 183.997 | |||||||||
2/29/1996 | 170.346 | 148.138 | 180.261 | |||||||||
3/29/1996 | 210.169 | 148.635 | 176.187 | |||||||||
4/30/1996 | 205.085 | 160.945 | 185.357 | |||||||||
5/31/1996 | 200.854 | 168.328 | 191.464 | |||||||||
6/28/1996 | 222.034 | 160.728 | 170.663 | |||||||||
7/31/1996 | 247.458 | 146.432 | 152.085 | |||||||||
8/30/1996 | 237.288 | 154.653 | 163.170 | |||||||||
9/30/1996 | 257.627 | 166.464 | 174.846 | |||||||||
10/31/1996 | 227.119 | 164.621 | 167.064 | |||||||||
11/29/1996 | 233.058 | 174.827 | 164.246 | |||||||||
12/31/1996 | 245.763 | 174.680 | 169.403 | |||||||||
1/31/1997 | 413.559 | 187.071 | 183.885 | |||||||||
2/28/1997 | 374.576 | 176.721 | 184.791 | |||||||||
3/31/1997 | 271.186 | 165.192 | 160.782 | |||||||||
4/30/1997 | 250.427 | 170.337 | 151.184 | |||||||||
5/30/1997 | 277.125 | 189.640 | 173.684 | |||||||||
6/30/1997 | 322.888 | 195.490 | 173.007 | |||||||||
7/31/1997 | 405.085 | 216.088 | 177.731 | |||||||||
8/29/1997 | 362.712 | 215.753 | 175.636 | |||||||||
9/30/1997 | 508.475 | 228.569 | 194.120 | |||||||||
10/31/1997 | 357.627 | 216.659 | 184.473 | |||||||||
11/28/1997 | 303.390 | 217.805 | 178.734 | |||||||||
12/31/1997 | 144.068 | 214.006 | 1745.569 | |||||||||
1/31/1998 | 200.854 | 220.770 | 172.791 | |||||||||
2/28/1998 | 157.627 | 241.553 | 178.647 | |||||||||
3/31/1998 | 159.322 | 250.498 | 191.701 | |||||||||
4/30/1998 | 144.068 | 254.717 | 187.000 | |||||||||
5/31/1998 | 125.424 | 240.551 | 180.187 | |||||||||
6/30/1998 | 81.776 | 257.375 | 176.795 | |||||||||
7/31/1998 | 89.831 | 254.324 | 178.207 | |||||||||
8/31/1998 | 40.678 | 203.867 | 136.622 | |||||||||
9/30/1998 | 47.037 | 232.130 | 166.931 | |||||||||
10/31/1998 | 38.563 | 242.346 | 178.123 | |||||||||
11/30/1998 | 41.098 | 266.980 | 186.815 | |||||||||
12/31/1998 | 35.173 | 301.640 | 221.591 | |||||||||
1/31/1999 | 35.173 | 345.388 | 242.621 | |||||||||
2/28/1999 | 35.173 | 314.459 | 226.622 | |||||||||
3/31/1999 | 54.237 | 338.206 | 242.976 | |||||||||
4/30/1999 | 64.407 | 348.946 | 224.515 | |||||||||
5/31/1999 | 58.047 | 339.140 | 238.946 | |||||||||
6/30/1999 | 35.593 | 369.596 | 248.021 | |||||||||
7/31/1999 | 44.068 | 362.923 | 278.274 | |||||||||
8/31/1999 | 44.068 | 378.214 | 301.645 | |||||||||
9/30/1999 | 40.678 | 378.645 | 285.236 | |||||||||
10/29/1999 | 31.783 | 408.970 | 288.941 | |||||||||
11/30/1999 | 30.508 | 458.539 | 325.687 | |||||||||
12/31/1999 | 42.793 | 559.325 | 417.818 | |||||||||
1/31/2000 | 61.871 | 538.768 | 479.432 | |||||||||
2/29/2000 | 77.966 | 641.498 | 674.813 | |||||||||
3/31/2000 | 112.285 | 628.406 | 512.556 | |||||||||
4/28/2000 | 67.797 | 528.522 | 452.046 | |||||||||
5/31/2000 | 78.820 | 464.771 | 441.240 | |||||||||
6/30/2000 | 94.075 | 546.377 | 569.565 | |||||||||
7/31/2000 | 65.261 | 517.829 | 529.286 | |||||||||
8/31/2000 | 70.346 | 579.029 | 634.064 | |||||||||
9/29/2000 | 57.627 | 503.792 | 625.410 | |||||||||
10/31/2000 | 44.068 | 462.387 | 565.633 | |||||||||
11/30/2000 | 27.539 | 356.245 | 499.657 | |||||||||
12/29/2000 | 29.234 | 337.329 | 521.168 | |||||||||
1/31/2001 | 51.661 | 378.182 | 499.096 | |||||||||
2/28/2001 | 47.458 | 292.758 | 474.004 | |||||||||
3/30/2001 | 57.763 | 251.747 | 385.937 | |||||||||
4/30/2001 | 52.881 | 289.292 | 434.193 | |||||||||
5/31/2001 | 60.339 | 288.974 | 469.337 | |||||||||
6/29/2001 | 42.034 | 296.866 | 479.439 | |||||||||
7/31/2001 | 44.068 | 278.005 | 441.109 | |||||||||
8/31/2001 | 54.237 | 247.737 | 442.570 | |||||||||
9/28/2001 | 40.949 | 205.987 | 386.527 | |||||||||
10/31/2001 | 42.034 | 232.430 | 425.824 | |||||||||
11/30/2001 | 54.102 | 265.519 | 465.901 | |||||||||
12/31/2001 | 66.034 | 267.750 | 444.169 | |||||||||
1/31/2002 | 93.966 | 265.721 | 401.284 | |||||||||
2/28/2002 | 95.593 | 238.086 | 389.055 | |||||||||
3/31/2002 | 120.136 | 253.701 | 397.325 | |||||||||
4/30/2002 | 84.475 | 232.628 | 351.253 | |||||||||
5/31/2002 | 105.627 | 222.367 | 322.053 | |||||||||
6/30/2002 | 91.797 | 202.227 | 281.741 | |||||||||
7/31/2002 | 60.339 | 183.762 | 284.270 | |||||||||
8/31/2002 | 57.627 | 181.814 | 277.478 | |||||||||
9/30/2002 | 58.576 | 162.262 | 259.675 | |||||||||
10/31/2002 | 44.475 | 184.429 | 283.753 | |||||||||
11/30/2002 | 60.339 | 204.989 | 299.870 | |||||||||
12/31/2002 | 50.576 | 185.114 | 287.015 | |||||||||
1/31/2003 | 45.559 | 183.113 | 290.530 | |||||||||
2/28/2003 | 46.237 | 185.686 | 292.019 | |||||||||
3/31/2003 | 46.102 | 186.222 | 310.694 | |||||||||
4/30/2003 | 60.475 | 203.147 | 343.020 | |||||||||
5/31/2003 | 67.797 | 220.987 | 383.002 | |||||||||
6/30/2003 | 68.475 | 224.531 | 389.680 | |||||||||
5/31/2003 | 67.797 | 220.987 | 383.002 | |||||||||
6/30/2003 | 68.475 | 224.531 | 389.680 | |||||||||
7/31/2003 | 53.695 | 240.004 | 418.984 | |||||||||
8/31/2003 | 53.966 | 250.464 | 416.808 | |||||||||
7/31/2003 | 53.695 | 240.004 | 418.984 | |||||||||
8/31/2003 | 53.966 | 250.464 | 416.808 | |||||||||
9/30/2003 | 47.458 | 247.206 | 411.502 | |||||||||
10/31/2003 | 50.576 | 267.100 | 406.568 | |||||||||
9/30/2003 | 47.458 | 247.206 | 411.502 | |||||||||
10/31/2003 | 50.576 | 267.100 | 406.568 | |||||||||
11/30/2003 | 48.949 | 271.059 | 403.789 | |||||||||
12/31/2003 | 51.390 | 276.764 | 420.644 |
17 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTThe following table sets forth certain information known to the Company with respect to beneficial ownership of the Companys Common Stock as of April 1, 2004 by (i) each person or entity who is known by the Company to own beneficially more than 5% of the Companys Common Stock; (ii) each director of the Company; (iii) each of the executive officers named in the Summary Compensation Table on page 11 hereof; and (iv) all directors and executive officers as a group. Except as otherwise noted, the stockholders named in the table have sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned by them, subject to applicable community property laws. |
Five Percent Stockholders, | Beneficially Owned Stock (1) | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Directors and Executive Officers | Number of Shares | Acquirable (2) | Percent | |||||||||
Royce & Associates LLC | 3,922,300 | | 10.3 | % | ||||||||
Virgil A. Place, M.D. (3) | 561,895 | 70,803 | 1.66 | % | ||||||||
Leland F. Wilson (4) | 683,253 | 1,066,664 | 4.48 | % | ||||||||
Mark B. Logan | | 66,000 | * | |||||||||
Mario M. Rosati | | 66,000 | * | |||||||||
Linda M. Dairiki Shortliffe, M.D | | 66,000 | * | |||||||||
Graham Strachan | | 34,000 | * | |||||||||
Terry M. Nida | 48,330 | 343,214 | 1.02 | % | ||||||||
John Dietrich, Ph.D | 11,166 | 119,475 | * | |||||||||
Guy P. Marsh | 3,701 | 134,582 | * | |||||||||
Carol Zoltowski | | 31,952 | * | |||||||||
All directors and executive officers as a | ||||||||||||
group (14 persons) | 1,470,675 | 2,291,401 | 9.34 | % |
_________________ |
* | Less than 1% |
(1) | Applicable percentage ownership is based on 37,995,600 shares of Common Stock as of April 1, 2004. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission. In computing the number of shares beneficially owned by a person and the percentage of ownership of that person, shares of Common Stock subject to options held by that person that are currently exercisable or exercisable within 60 days of April 1, 2004 are deemed outstanding. Those shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other person. The persons named in this table have sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned by them, subject to community property laws where applicable and except as indicated in the other footnotes to this table. |
(2) | Includes options to purchase shares of Common Stock currently exercisable or exercisable within 60 days after April 1, 2004, which are deemed outstanding for computing the percentage ownership of the person holding such options, but are not deemed outstanding for computing the percentage of any other person. |
(3) | Includes 31,600 shares of Common Stock held by Dr. Place as Custodian for V. Aristophanes Kamehameha A.H. Place under the Hawaii Uniform Transfers to Minors Act, of which Dr. Place is the beneficial owner. |
(4) | Includes 25,000 shares of Common Stock held by the Leland F. Wilson Living Trust. |
18 Compliance with Section 16(a) of the Securities Exchange Act of 1934Section 16(a) of the Securities Exchange Act of 1934 requires the Companys executive officers and directors, and persons who own more than ten percent (10%) of a registered class of the Companys equity securities, to file certain reports of ownership with the Securities and Exchange Commission, or the SEC. Such officers, directors and stockholders are also required by SEC rules to provide the Company with copies of all Section 16(a) forms that they file. Based solely on its review of copies of such forms received by the Company or on written representations from certain reporting persons submitted to the Company during the year ended December 31, 2003, the Company believes that during the period from January 1, 2003 to December 31, 2003, its executive officers, directors and ten percent (10%) stockholders complied with all Section 16(a) requirements, except that each of Leland F. Wilson, John Dietrich, Guy Marsh, Terry Nida, Peter Tam, Carol Zoltowski, Richard Walliser and Virgil Place did not timely file a Form 4 in connection with the grant of stock options by the Compensation Committee at its meeting on January 20, 2003. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSChange of Control Agreements with Executive OfficersIn July 1998, the Board of Directors approved a form of Change of Control Agreement for all senior executives. The Change of Control Agreement recognizes that there may be periods where another company or another entity considers the possibility of acquiring the Company or that a change in the management of the Company may otherwise occur (collectively known as a Change of Control), with or without the approval of the Companys Board of Directors. The Change of Control Agreement recognizes that such an event may cause a distraction to employees, which may in turn cause employees to consider alternative employment opportunities. The Board determined that it was in the best interest of the Company to give such employees an incentive to continue their employment during periods where the threat or occurrence of a Change of Control may exist. The Change of Control Agreements are discussed in more detail in the section under Executive Officer Compensation on page 12 of this Proxy Statement. Assignment of certain Intellectual Property to the CompanyThe Companys founding scientist, Chairman of the Board and Chief Scientific Officer, Virgil A. Place, M.D., invented the Companys transurethral system for erection (MUSE) while serving as ALZA Corporations Executive Director of Medical and Regulatory Affairs. Dr. Place formed VIVUS in April 1991 to further develop the MUSE technology. In August 1991, Dr. Place entered into a letter agreement with ALZA Corporation, or ALZA, covering the MUSE technology. This was superseded by an Assignment Agreement between ALZA and the Company that was executed on December 31, 1993. The Assignment Agreement provides for the assignment by ALZA of patent applications related to the MUSE technology. In consideration of the rights granted to the Company under the Assignment Agreement, the Company issued shares of Common Stock to ALZA and is required to pay certain royalties on the sale of any products for the transurethral treatment of erectile dysfunction. To maintain exclusive rights beyond December 31, 1999, the Company issued an additional 200,000 shares of Common Stock to ALZA in May 1996. Indemnification AgreementsThe Company has entered into indemnification agreements with each of its directors and executive officers. These agreements require the Company to indemnify such individuals, to the fullest extent permitted by Delaware law, for certain liabilities to which they may become subject as a result of their affiliation with the Company. Other TransactionsMario M. Rosati, a Director and the Secretary, is also a member of Wilson Sonsini Goodrich & Rosati, Professional Corporation, which serves as outside corporate counsel for the Company. 19 OTHER MATTERSThe Company knows of no other matters to be submitted to the meeting. If any other matters properly come before the meeting, it is the intention of the persons named in the enclosed proxy card to vote the shares they represent as the Board may recommend. It is important that your stock be represented at the meeting, regardless of the number of shares that you hold. You are, therefore, urged to execute and return the accompanying proxy in the enclosed envelope at your earliest convenience. |
The Board of Directors |
Mountain View, California 20 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORSVIVUS, INC.2004 ANNUAL MEETING OF STOCKHOLDERS JUNE 14, 2004The undersigned stockholder of VIVUS, Inc., a Delaware corporation, hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement, each dated April 28, 2004, and the 2003 Annual Report to Stockholders and hereby appoints Leland F. Wilson and Larry J. Strauss, and each of them, proxies and attorneys-in-fact, with full power to each of substitution, on behalf and in the name of the undersigned, to represent the undersigned at the 2004 Annual Meeting of Stockholders of VIVUS, Inc. to be held on June 14, 2004, at 10:00 a.m. local time, at VIVUS, Inc., 1172 Castro St., Mountain View, CA 94040 and at any adjournments thereof, and to vote all shares of Common Stock that the undersigned would be entitled to vote if then and there personally present, on the matters set forth below. THIS PROXY WILL BE VOTED, AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED, WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS INDEPENDENT AUDITORS FOR FISCAL YEAR ENDING DECEMBER 31, 2004, AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. |
1. The Board of Directors recommends a vote FOR the listed nominees.
For | Withhold | |||||
01 | Virgil A. Place, M.D. | o | o | |||
02 | Leland F. Wilson | o | o | |||
03 | Mark B. Logan | o | o | |||
03 | Linda M. Shortliffe, M.D. | o | o | |||
04 | Mario M. Rosati | o | o | |||
05 | Graham Strachan | o | o |
The Board of Directors recommends a vote FOR the following proposals.
2. | Proposal to ratify the appointment of KMPG LLP as the | o For o Against o Abstain | |||
independent auditors of VIVUS, Inc. for fiscal 2004; | |||||
3. | To transact such other business, in their discretion, as may | o For o Against o Abstain | |||
properly come before the Meeting or any adjournments thereof. |
Either of such attorneys or substitutes shall have and may exercise all of the powers of said attorneys-in-fact hereunder. NOTE: This Proxy should be marked, dated and signed by the stockholder(s) exactly as his, her or its name appears hereon, and returned promptly in the enclosed envelope. Persons signing in a fiduciary capacity should so indicate. If shares are held by joint tenants or as community property, both should sign.
Signature 1 - Please keep signature within the box | Signature 2 - Please keep signature within the box | Date (mm/dd/yyyy) | |||