Opko Health Inc.
SCHEDULE
14A
(Rule
14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No. )
Filed by the
Registrant x
Filed by a
Party other than the
Registrant o
Check the
appropriate box:
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o Preliminary
Proxy Statement
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o Confidential,
for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
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x Definitive
Proxy Statement
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o Definitive
Additional Materials
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o Soliciting
Material Pursuant to §240.14a-12
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OPKO HEALTH, INC.
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of
Filing Fee (Check the appropriate box):
o Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1)
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Title of
each class of securities to which transaction applies:
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(2)
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Aggregate
number of securities to which transaction applies:
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(3)
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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)
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Proposed
maximum aggregate value of transaction:
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Fee paid
previously with preliminary materials:
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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.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement No.:
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April 29, 2008
Dear Stockholder:
On behalf of the Board of Directors, I cordially invite you to attend the Annual Meeting of
Stockholders of OPKO Health, Inc. to be held at its executive offices, 4400 Biscayne Blvd., Miami,
Florida 33137 on Wednesday, June 11, 2008, beginning at 10:00 a.m. local time.
The attached Notice of Annual Meeting and Proxy Statement describe the matters expected to be
acted upon at the Annual Meeting. At the Annual Meeting, you will have an opportunity to meet
management and ask questions.
Whether or not you plan to attend the Annual Meeting, it is important that you vote your
shares. Regardless of the number of shares you own, please sign and date the enclosed proxy card
and promptly return it to us in the enclosed postage paid envelope. If you sign and return your
proxy card without specifying your choices, your shares will be voted in accordance with the
recommendations of the Board of Directors contained in the Proxy Statement.
We look forward to seeing you on June 11, 2008 and urge you to return your proxy card as soon
as possible.
Sincerely,
Phillip Frost
Chairman and Chief Executive Officer
OPKO HEALTH, INC.
4400 Biscayne Blvd.
Suite 1180
Miami, FL 33137
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 11, 2008
Notice is hereby given that the Annual Meeting of Stockholders (the Annual Meeting) of OPKO
Health, Inc., a Delaware corporation (the Company), will be held at the Companys headquarters at
4400 Biscayne Blvd., Miami, Florida, 33137, on Wednesday, June 11, 2008, beginning at 10:00 a.m.,
local time, for the following purposes:
1. To elect directors for a term of office expiring at the 2009 annual meeting of stockholders
or until their respective successors are duly elected and qualified; and
2. To transact such other business as may properly come before the Annual Meeting or any
adjournments thereof.
Only holders of record of our common stock, par value $0.01 per share, and our Series A
Preferred Stock, par value $0.01 per share, at the close of business on April 23, 2008, will be
entitled to notice of and to vote at the Annual Meeting or any adjournments thereof.
Whether or not you expect to be present, please sign and date the enclosed proxy and return it
in the postage paid, self-addressed envelope provided for your convenience. Management asks that
you do this whether or not you plan to attend the Annual Meeting. Should you attend, you may, if
you wish, withdraw your proxy and vote your shares in person.
By Order of the Board of Directors,
Kate Inman
Secretary
Miami, Florida
April 29, 2008
TABLE OF CONTENTS
OPKO HEALTH, INC.
PROXY STATEMENT FOR THE 2008 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
WEDNESDAY, JUNE 11, 2008
This proxy statement is furnished by the Board of Directors (Board) of OPKO Health, Inc.
(the Company or we, us or our) in connection with the solicitation of proxies to be voted
at the Annual Meeting of Stockholders of the Company that will be held at the Companys
headquarters at 4400 Biscayne Blvd., Miami, Florida 33137, on Wednesday, June 11, 2008, beginning
at 10:00 a.m., local time, and all adjournments thereof (the Annual Meeting), for the purposes
set forth in the accompanying Notice of Annual Meeting.
Our Board has fixed the close of business on April 23, 2008, as the record date for the
determination of stockholders entitled to notice of and to vote at the Annual Meeting or any
adjournments thereof. As of that date, there were issued and outstanding 183,154,099 shares of our
common stock, par value $0.01 per share, and 876,954 shares of our Series A Preferred Stock, par
value $0.01 per share. The holders of our common stock and Series A Preferred Stock are each
entitled to one vote for each outstanding share on all matters submitted to our stockholders. The
presence, in person or by proxy, of holders of a majority of our outstanding common and preferred
stock constitutes a quorum at the Annual Meeting. Shares of our stock represented by
proxies that reflect abstentions and broker non-votes (i.e., stock represented at the
Annual Meeting by proxies held by brokers or nominees as to which (i) the brokers or nominees have
not received instructions from the beneficial owners or persons entitled to vote and (ii) the
broker or nominee does not have the discretionary voting power on a particular matter) will be
counted for the purpose of determining the existence of a quorum at the Annual Meeting, but will
not be counted as a vote cast for or against any given matter.
Any stockholder giving a proxy will have the right to revoke it at any time prior to the time
it is voted. A proxy may be revoked by: (i) written notice to us at or prior to the Annual
Meeting, attention: Secretary; (ii) execution of a subsequent proxy; or (iii) attendance and voting
in person at the Annual Meeting. Attendance at the Annual Meeting will not automatically revoke
the proxy. All shares of our stock represented by effective proxies will be voted at the Annual
Meeting or at any adjournment thereof. Unless otherwise specified in the proxy, shares of our
stock represented by proxies will be voted: (i) FOR the election of the Boards nominees for
directors; and (ii) in the discretion of the proxy holders with respect to such other matters as
may properly come before the Annual Meeting.
Our executive offices are located at 4400 Biscayne Blvd., Suite 1180, Miami, Florida 33137.
Mailing to stockholders of record on April 23, 2008 of the Notice of Annual Meeting, this proxy
statement, the accompanying form of proxy and our Annual Report to Stockholders for our fiscal year
ended December 31, 2007 (fiscal 2007) will commence on or before May 11, 2008.
1
Security Ownership of Certain Beneficial Owners
The following table contains information regarding the beneficial ownership of our common
stock as of April 23, 2008, held by (i) each stockholder known by us to beneficially own more than
5% of our common stock; (ii) our directors and nominees; (iii) our Named Executive Officers in 2007
as defined in the paragraph preceding the Summary Compensation Table and our current executive
officers; and (iv) all current directors and executive officers as a group. Except where noted,
all holders listed below have sole voting power and investment power over the shares beneficially
owned by them. Unless otherwise noted, the address of each person listed below is 4400 Biscayne
Blvd., Suite 1180, Miami, FL 33137.
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Percentage of |
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Amount and Nature |
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Outstanding |
Name and Address of |
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Beneficial |
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Shares of Common |
Beneficial Owner |
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Ownership(1) |
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Stock** |
Frost Gamma Investments Trust |
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85,485,138 |
(2) |
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43.3 |
% |
The Frost Group, LLC |
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20,286,705 |
(3) |
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11.0 |
% |
Johnson & Johnson Development Corporation
One Johnson & Johnson Plaza
New Brunswick, NJ 08933 |
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15,635,449 |
(4) |
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8.4 |
% |
Phillip Frost, M.D.
CEO & Chairman of the Board |
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85,485,138 |
(5) |
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43.3 |
% |
Jane H. Hsiao, Ph.D., MBA
Vice Chairman of the Board &
Chief Technical Officer |
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21,779,311 |
(6) |
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11.7 |
% |
Steven D. Rubin
Executive Vice President
Administration and Director |
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5,330,608 |
(7) |
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2.9 |
% |
Rao Uppaluri, Ph.D.
Chief Financial Officer |
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4,977,939 |
(8) |
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2.7 |
% |
Naveed K. Shams, M.D., Ph.D.
Senior Vice President Research and
Development and Chief Medical Officer |
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0 |
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* |
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Adam Logal
Chief Accounting Officer |
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121,627 |
(9) |
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* |
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Michael Reich, Director |
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927,869 |
(10) |
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* |
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Robert Baron, Director |
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308,000 |
(11) |
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* |
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John A. Paganelli, Director |
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272,700 |
(12) |
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* |
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Richard A. Lerner, M.D., Director |
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20,000 |
(13) |
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* |
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Pascal J.
Goldschmidt, M.D., Director |
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0 |
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* |
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Richard C. Pfenniger, Jr., Director |
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50,000 |
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* |
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Thomas E. Beier, Director |
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100,000 |
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* |
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All Executive Officers and Directors as
a group (13 persons) |
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119,521,392 |
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58.8 |
% |
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* |
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Less than 1% |
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** |
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Percentages based upon 183,154,099 shares of our common stock issued and outstanding at April
23, 2008. |
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(1) |
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All shares beneficially owned represent shares of common stock unless otherwise
indicated. |
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(2) |
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Includes warrants to purchase 9,241,589 shares of common
stock and options to acquire 250,000 shares of common stock held by
Dr. Frost. Also includes
15,490,547 shares of common stock and warrants to purchase 4,796,158 shares of common stock
held by The Frost Group, LLC, of which Frost Gamma Investments Trust is a principal member.
Frost Gamma Investments Trust disclaims beneficial ownership of the common stock and warrants
held by The Frost Group, LLC, except to the extent of its pecuniary interest therein. |
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(3) |
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Includes warrants to purchase 4,796,158 shares of common stock. |
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(4) |
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Includes warrants to purchase 2,418,164 shares of common stock and options to
purchase 243,685 shares of common stock. |
2
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(5) |
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Includes 41,100,953 shares of common stock and warrants to purchase 9,241,589 shares
of common stock held by Frost Gamma Investments Trust. It also includes options to purchase
250,000 shares of common stock by Dr. Frost. Dr. Frost is the trustee and Frost Gamma,
Limited Partnership is the sole and exclusive beneficiary of Frost Gamma Investments Trust.
Dr. Frost is one of two limited partners of Frost Gamma, Limited Partnership. The general
partner of Frost Gamma, Limited Partnership is Frost Gamma Inc. and the sole stockholder of
Frost Gamma, Inc. is Frost-Nevada Corporation. Dr. Frost is also the sole stockholder of
Frost-Nevada Corporation. The number of shares included above also includes 15,490,547 shares
of common stock and warrants to purchase 4,796,158 shares of common stock owned directly by
The Frost Group, LLC. Frost Gamma Investments Trust is a principal member of The Frost Group,
LLC. Dr. Frost and the Frost Gamma Investments Trust disclaim beneficial ownership of these
shares of common stock and warrants to purchase common stock, except to the extent of any
pecuniary interest therein. |
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(6) |
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Includes warrants to purchase 2,936,580 shares of common stock and options to
purchase 162,500 shares of common stock. It also includes 1,000,000
shares of common stock held by each of The Chiin Hsiung Hsiao Family
Trust A and The Chiin Hsiung Hsiao Family Trust B, for
which Dr. Hsiao serves as the sole trustee of both. Dr. Hsiao is a member of the Frost Group, LLC, which
holds 15,490,546 shares of common stock and warrants to purchase 4,796,158 shares of common
stock. Dr. Hsiao disclaims beneficial ownership of the shares of common stock and warrants
held by The Frost Group, LLC, except to the extent of any pecuniary interest therein. |
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(7) |
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Includes warrants to purchase 1,036,440 shares of common stock and options to
purchase 125,000 shares of common stock. Mr. Rubin is a member of the Frost Group, LLC, which
holds 15,490,546 shares of common stock and warrants to purchase 4,796,158 shares of common
stock. Mr. Rubin disclaims beneficial ownership of the shares of common stock and warrants
held by The Frost Group, LLC, except to the extent of any pecuniary interest therein. |
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(8) |
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Includes warrants to purchase 950,070 shares of common stock and options to purchase
100,000 shares of common stock. It also includes 150,000 shares held
directly by Dr. Uppaluris wife. Dr. Uppaluri is a member of the Frost Group, LLC, which holds
15,490,546 shares of common stock and warrants to purchase 4,796,158 shares of common stock.
Dr. Uppaluri disclaims beneficial ownership of the shares of common stock and warrants held by
The Frost Group, LLC, except to the extent of any pecuniary interest therein. Dr. Uppaluri also disclaims ownership of 150,000 shares held by his wife. |
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(9) |
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Includes options to purchase 121,627 shares of common stock. |
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(10) |
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Includes options to acquire 198,296 shares of common stock. Also includes 194,604
shares of common stock held by Edonjes LLC, of which Mr. Reichs children are the beneficial
owners. Mr. Reich disclaims beneficial interest of the shares of common stock held by Edonjes
LLC, except to the extent of any pecuniary interest therein. |
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(11) |
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Includes options to acquire 70,000 shares of common stock. |
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(12) |
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Includes options to acquire 70,000 shares of common stock. |
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(13) |
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Includes options to acquire 20,000 shares of common stock. |
3
PROPOSAL ONE:
ELECTION OF DIRECTORS
Nominees for Election of Directors
Pursuant to the power granted to our Board of Directors under Article III of our Amended and
Restated Bylaws, the Board has fixed the number of directors constituting the entire Board at ten.
All ten directors are to be elected at the Annual Meeting, each to hold office until the 2009
annual meeting of stockholders and until his successor is duly elected and qualified. Each
stockholder of record on April 23, 2008 is entitled to cast one vote for each share of our common
stock and Series A Preferred Stock held of record, either in favor of or against the election of
each nominee, or to abstain from voting on any or all nominees. All shares of our common stock and
Series A Preferred Stock vote together as a single class. Although management does not anticipate
that any nominee will be unable or unwilling to serve as director, in the event of such an
occurrence, proxies may be voted in the discretion of the persons named in the proxy for a
substitute designated by the Board, unless the Board decides to reduce the number of directors
constituting the Board. Each nominee shall be elected if the votes cast in favor of a nominee by
the holders of shares of our common and Series A Preferred Stock present or represented and
entitled to vote at the Annual Meeting at which a quorum is present, exceed the votes cast against
a nominee.
The following sets forth information provided by the nominees as of April 14, 2008, all of
whom are currently serving as directors of the Company and all of whom have consented to serve if
reelected by our stockholders.
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Year First |
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Elected/ |
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Nominated |
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Name of Nominee |
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Age |
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Director |
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Positions and Offices with the Company |
Phillip Frost, M.D.
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71 |
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2007 |
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Chairman of the Board and Chief Executive Officer |
Jane H. Hsiao, Ph.D.
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60 |
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2007 |
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Vice Chairman of the Board and Chief Technical Officer |
Steven D. Rubin
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47 |
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2007 |
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Director and Executive Vice President-Administration |
Robert A. Baron
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68 |
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2003 |
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Director |
Thomas E. Beier
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62 |
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2008 |
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Director |
Pascal J. Goldschmidt, M.D.
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54 |
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2007 |
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Director |
Richard A. Lerner, M.D.
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69 |
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2007 |
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Director |
John A. Paganelli
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73 |
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2003 |
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Director |
Richard C. Pfenniger, Jr.
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52 |
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2008 |
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Director |
Michael Reich
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65 |
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2007 |
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Director |
Phillip
Frost, M.D. Dr. Frost became the CEO and Chairman of the
Company upon the
consummation of the merger of Acuity Pharmaceuticals Inc., Froptix
Corporation and the Company (formerly
eXegenics, Inc.) in March 2007 (referred to as the Acquisition). Dr. Frost was named the Vice
Chairman of the Board of Teva Pharmaceutical Industries, Limited (NAS:TEVA), or Teva, in January
2006 when Teva acquired IVAX Corporation, or IVAX. Dr. Frost had served as Chairman of the Board
of Directors and Chief Executive Officer of IVAX Corporation since 1987. He was Chairman of the
Department of Dermatology at Mt. Sinai Medical Center of Greater Miami, Miami Beach, Florida from
1972 to 1986. Dr. Frost was Chairman of the Board of Directors of Key Pharmaceuticals, Inc. from
1972 until the acquisition of Key Pharmaceuticals by Schering Plough Corporation in 1986. Dr.
Frost was named Chairman of the Board of Ladenburg Thalmann Financial Services Inc. (AMEX:LTS), an
investment banking, asset management, and securities brokerage firm providing services through its
principal operating subsidiary, Ladenburg Thalmann & Co. Inc., in July 2006 and has been a director
of Ladenburg Thalmann since March 2005. Dr. Frost also serves as Chairman of the Board of
Directors of Ideation Acquisition Corp. (AMEX:IDI.U), a special purpose acquisition company formed
for the purpose of acquiring businesses in digital media, and Modigene Inc. (OTCBB:MODG), a
development stage biopharmaceutical company. He serves on the Board of Regents of the Smithsonian
Institution, as a member of the Board of Trustees of the University of Miami, as a Trustee of each
of the Scripps Research Institutes, the Miami Jewish Home for the Aged, and the Mount Sinai Medical
Center and is Co-Vice Chairman of the Board of Governors of the American Stock Exchange. Dr. Frost
is also a director of Continucare Corporation (AMEX:CNU), a provider of outpatient healthcare and
home healthcare services, and Northrop Grumman Corp. (NYSE:NOC), a global defense and aerospace
company.
Jane H. Hsiao, Ph.D., MBA. Dr. Hsiao has served as Vice-Chairman and Chief Technical Officer
of the Company since May 2007. Dr. Hsiao served as the Vice Chairman-Technical Affairs of IVAX
from 1995 to
4
January 2006, when Teva acquired IVAX. Dr. Hsiao served as IVAXs Chief Technical Officer
since 1996, and as Chairman, Chief Executive Officer and President of IVAX Animal Health, IVAXs
veterinary products subsidiary, since 1998. From 1992 until 1995, Dr. Hsiao served as IVAXs Chief
Regulatory Officer and Assistant to the Chairman. Dr. Hsiao has served as Chairman of the Board of
Safestitch Medical, Inc. (OTCBB:SFES), a medical device company, since September 2007. Dr. Hsiao
is also a director of Modigene, Inc. (OTCBB:MODG), a development stage biopharmaceutical company.
Steven D. Rubin. Mr. Rubin has served as Executive Vice President Administration since May
2007 and a director of the Company since February 2007. Mr. Rubin served as the Senior Vice
President, General Counsel and Secretary of IVAX from August 2001 until September 2006. Prior to
joining IVAX, Mr. Rubin was Senior Vice President, General Counsel and Secretary with
privately-held Telergy, Inc., a provider of business telecommunications and diverse optical network
solutions, from early 2000 to August 2001. In addition, he was with the Miami law firm of Stearns
Weaver Miller Weissler Alhadeff & Sitterson from 1986 to 2000, in the Corporate and Securities
Department. Mr. Rubin had been a shareholder of that firm since 1991 and a director since 1998.
Mr. Rubin currently serves on the Board of Directors of Dreams, Inc. (AMEX:DRJ), a vertically
integrated sports licensing and products company, Safestitch Medical, Inc. (OTCBB:SFES), a medical
device company, Ideation Acquisition Corp. (AMEX:IDI.U), a special purpose acquisition company
formed for the purpose of acquiring businesses in digital media,
Modigene, Inc. (OTCBB:MODG), a
development stage biopharmaceutical company, and Longfoot Communications Corp. (OTCBB:LGFC), a
public shell company seeking to identify a merger or business combination candidate.
Robert A. Baron. Mr. Baron has served as a director of the Company since 2003. Mr. Baron is
currently a director of Hemobiotech, Inc. (OTCBB:HMBT), a development stage biopharmaceutical
company, Andover Medical, Inc. (OTCBB:ADOV), a durable medical equipment distributor, and
Nanosensors, Inc. (OTCBB:NNSR), an internet gaming business. Prior to that he was president of
Cash City, Inc., a payday advance and check cashing business, from 1999 to 2003. From 1997 to
1999, Mr. Baron was the president of East coast operations for CSS/TSC, Inc., a distributor of
blank t-shirts, fleece and accessories and a subsidiary of Tultex, Inc.
Thomas E. Beier. Mr. Beier has served as a director of the Company since January 2008.
Previously, he was Senior Vice President of Finance and Chief Financial Officer of IVAX Corporation
from October 1997 until August 2007, and from December 1996 until October 1997, he served as Vice
President-Finance for IVAX. Before joining IVAX, Mr. Beier served as Executive Vice President and
Chief Financial Officer of Intercontinental Bank. Mr. Beier currently is a director of Ideation
Acquisition Corp. (AMEX:IDI.U), a special purpose acquisition company formed for the purpose of
acquiring businesses in digital media.
Pascal J. Goldschmidt, M.D. Dr. Goldschmidt has served as a director of the Company since
September 2007. Since April 2006, Dr. Goldschmidt has served as Senior Vice President for Medical
Affairs and Dean of the University of Miami Leonard M. Miller School of Medicine. Previously Dr.
Goldschmidt was a faculty member with the Department of Medicine at Duke University Medical Center,
where he served as Chairman from 2003 to 2006 and as Chief of the Division of Cardiology from 2000
to 2003. Dr. Goldschmidt is a member of the Board of Directors of Pediatrix Medical Group, Inc.
Richard A. Lerner, M.D. Dr. Lerner has served as a director of the Company since March 2007.
Dr. Lerner has been President of The Scripps Research Institute, a private, non-profit biomedical
research organization, since 1986. Dr. Lerner is a member of numerous scientific associations,
including the National Academy of Science and the Royal Swedish Academy of Sciences. Dr. Lerner
serves as director of Kraft Foods, Inc. (NYSE:KFT). He is also on the Board of Directors for
Xencor and Intra-Collular Therapies, two privately held biotechnology companies, and serves on the
Siemens Advisory Board for Molecular Medicine of Siemens AG.
John A. Paganelli. Mr. Paganelli served as the Companys Interim Chief Executive Officer and
secretary from June 29, 2005 through March 27, 2007, and Chairman of our Board of Directors from
December 2003 through March 27, 2007. Mr. Paganelli served as President and Chief Executive
Officer of Transamerica Life Insurance Company of New York from 1992 to 1997. Since 1987, Mr.
Paganelli has been a partner in RFG Associates, a financial planning organization. Mr. Paganelli
is also the Managing Partner of Pharos Systems Partners, LLC, an investment company, and he is
Chairman of the Board of Pharos Systems International. He was Vice President and Executive Vice
President of PEG Capital Management, an investment advisory organization, from 1987 until 2000.
From 1980 to January 2003, Mr. Paganelli was an officer and director-shareholder of Mike Barnard
Chevrolet, Inc., an automobile dealership.
5
Richard C. Pfenniger, Jr. Mr. Pfenniger has served as a director of the Company since January
2008. Mr. Pfenniger has served as Chief Executive Officer and President for Continucare
Corporation (AMEX:CNU), a provider of primary care physician and practice management services,
since October 2003, and as Chairman of the Board of Directors of Continucare since September 2002.
Previously, Mr. Pfenniger served as the Chief Executive Officer and Vice Chairman of Whitman
Education Group, Inc. from 1997 through June 2003. Prior to joining Whitman, he served as the
Chief Operating Officer of IVAX from 1994 to 1997, and, from 1989 to 1994, he served as the Senior
Vice President-Legal Affairs and General Counsel of IVAX Corporation. Mr. Pfenniger currently
serves as a director of GP Strategies Corporation, a corporate education and training company
(NYSE:GPX), and SafeStitch Medical, Inc., a medical device company (OTCBB:SFES).
Michael Reich. Mr. Reich has served as a director of the Company since March 27, 2007. Mr.
Reich is a proprietor of a commercial property development company. He is also President of an
intellectual property concern which owns trademarks and brandnames. Previously, Mr. Reich was
Chief Executive Officer of Cosrich, Inc., a manufacturer of cosmetics and toiletries. Mr. Reich
served on the board of Acuity Pharmaceuticals, Inc. from 2003 until closing of the Acquisition on
March 27, 2007. Michael Reich is the uncle of Samuel Reich, the Companys Executive Vice
President, Ophthalmics.
OUR BOARD RECOMMENDS A VOTE FOR THE ELECTION OF ALL NOMINEES NAMED ABOVE.
Identification of Executive Officers
Set forth below is the name and age as of April 14, 2008 of each of our current executive
officers, together with certain biographical information for each of them (other than Phillip
Frost, Jane H. Hsiao, and Steven Rubin, for whom biographical information is included above under
Nominees for Election of Directors):
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Name of Executive Officer |
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Age |
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Position and Offices with the Company |
Rao Uppaluri, Ph.D.
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58 |
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Senior Vice President and Chief Financial Officer |
Naveed K. Shams, M.D., Ph.D.
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51 |
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Senior Vice President Research and Development
and Chief Medical Officer |
Rao Uppaluri, Ph.D. Dr. Uppaluri has served as our Senior Vice President and Chief Financial
Officer since May 2007 and was a director from February 9, 2007 through March 27, 2007. Dr.
Uppaluri served as the Vice President, Strategic Planning and
Treasurer of IVAX from 1997
until December 2006. Before joining IVAX, from 1987 to August 1996, Dr. Uppaluri was Senior Vice
President, Senior Financial Officer and Chief Investment Officer with Intercontinental Bank, a
publicly traded commercial bank in Florida. In addition, he served in various positions, including
Senior Vice President, Chief Investment Officer and Controller, at Peninsula Federal Savings & Loan
Association, a publicly traded Florida S&L, from October 1983 to 1987. His prior employment,
during 1974 to 1983, included engineering, marketing and research positions with multinational
companies and research institutes in India and the United States. Dr. Uppaluri currently serves
on the Board of Directors of Ideation Acquisition Corp. (AMEX:IDI.U), a special purpose acquisition company
formed for the purpose of acquiring businesses in digital media, and
Longfoot Communications Corp. (OCTBB:LGFC),
a public shell company seeking to identify a merger or business combination candidate.
Naveed Shams, M.D., Ph.D. Dr. Shams has served as our Chief Medical Officer and Senior Vice
President of Research and Development since January 2008. Prior to joining the Company, Dr. Shams
served from September 2003 through November 2007 as Senior Medical Director, Head Ophthalmic
Medical Affairs and Post-Marketing Team Leader at Genentech, Inc.
(NYSE:DNA), a pharmaceutical company, where
he led the clinical team responsible for launching Lucentis®. Previously, Dr. Shams was also a
Director, Clinical Science for Novartis Ophthalmics, Inc. from April 1998 through September 2003,
and Senior Scientist and Glaucoma Group Leader-Discovery for Storz Ophthalmics from January 1995
through March 1998. Before joining industry, Dr. Shams was a member of the Research Faculty at the
Schepens Eye Research Institute and Department of Ophthalmology at Harvard Medical School.
CORPORATE GOVERNANCE
Our common stock is listed on the American Stock Exchange (AMEX). Pursuant to the Companys
Amended and Restated Bylaws and the Delaware General Corporation Law, our business and affairs are
managed under the direction of our Board of Directors. Directors are kept informed of the
Companys business through discussions with management, including our Chief Executive Officer,
Chief Financial Officer, and other senior officers, by
6
reviewing materials provided to them and by participating in meetings of the Board of
Directors and its committees. The Company has adopted a Code of Business Conduct and Ethics that
applies to all employees, officers, and directors of the Company. The Code of Business Conduct and
Ethics is available on our website: www.opko.com under Investor Relations. If the Company makes
any substantive amendments to, or grants a waiver (including an implicit waiver) from, a provision
of our Code of Business Conduct and Ethics that applies to our principal executive officer,
principal financial officer, principal accounting officer or controller, and that relates to any
element of the code of ethics definition enumerated in Item 406(b) of Regulation S-K, promulgated
under the Securities Exchange Act of 1934, as amended (the Exchange Act), we will disclose such
amendment or waiver on our website and in a Current Report on Form 8-K filed with the Securities
and Exchange Commission (SEC).
Change in Control During Fiscal 2007
On March 27, 2007, pursuant to the terms of a Merger Agreement and Plan of Reorganization, we
were part of a three-way merger with Froptix Corporation, or Froptix, a development stage research
and development company, controlled by The Frost Group, LLC, and Acuity Pharmaceuticals, Inc., or
Acuity, a development stage research and development company (collectively referred to as the
Acquisition). Per that agreement, we issued capital stock to acquire all of the issued and
outstanding capital stock of Froptix and Acuity. After the Acquisition, we began doing business as
OPKO Health, Inc., or OPKO, and changed our name as such.
Director Independence
In evaluating the independence of each of our directors, the Board of Directors considered
transactions and relationships between each director or any member of his or her immediate family
and the Company and its subsidiaries and affiliates. The Board of Directors also examined
transactions and relationships between directors or their known affiliates and members of the
Companys senior management and their known affiliates. The purpose of this review was to
determine whether any such relationships or transactions were inconsistent with a determination
that the director is independent under applicable laws and regulations and AMEX listing standards.
The Board of Directors affirmatively determined that a majority of our directors, including Messrs.
Robert A. Baron, Thomas E. Beier, Richard C. Pfenniger, Jr., Michael Reich and Drs. Pascal J.
Goldschmidt and Richard A. Lerner, are independent directors within the meaning of the listing
standards of AMEX and applicable law. The Board had also determined that Dr. Melvin Rubin and
David Eichler, who each served on our Board during all or part of 2007, were independent under
applicable law and AMEX listing standards. In making the independence determinations, the Board
considered a number of factors and relationships, including (i) Dr. Frosts service as a member of
the Board of Trustees for the University of Miami and its Service Committee, a 501(c)(3) entity for
which Dr. Goldschmidt serves as an executive officer; (ii) Michael Reichs familial relationship
with Sam Reich, the Companys EVP, Ophthalmics; and (iii) Dr. Frosts service on the board of
directors for Continucare Corporation, an entity for which Mr. Pfenniger serves as Chairman, Chief
Executive Officer, and President. Dr. Frost abstains from participating in any Service Committee
or Board of Trustee decisions which may implicate Dr. Goldschmidts compensation. As required by
the AMEX, the Companys independent directors meet at least annually in executive session without
the presence of its non-independent directors or management.
Board of Directors Voting
We currently have ten directors comprising the entirety of our Board. The Frost Group, LLC (the Frost Group),
an entity controlled by our Chairman and CEO and several of our members of senior management, has
agreed to vote for two of the directors, Messrs. Paganelli and Baron, under the Board of Director
composition provisions of a voting agreement between the Frost Group and the Company. In addition,
four of our current directors, Drs. Frost and Hsiao and Messrs. Reich and Rubin, were elected to
the Board pursuant to the merger agreement entered into in connection with the Acquisition. See
Certain Relationships and Related Party Transactions.
Meetings and Committees of the Board of Directors
Our Board met ten times during fiscal 2007. We intend for the independent directors of the
Board to meet separately from Board meetings from time to time at their discretion. In fiscal
2007, all incumbent directors attended 75% or more of the Board meetings and meetings of the committees on
which they served, other than Dr. Hsiao and Dr. Goldschmidt.
Although we encourage each member of our Board of Directors to attend our annual meetings of
stockholders, we do not have a formal policy requiring the members of our Board of Directors to
attend. We did not hold an annual meeting of stockholders during fiscal 2007.
7
Standing Committees of the Board of Directors
Our Board of Directors maintains several standing committees, including a compensation
committee, a nominating and governance committee, and a separately designated standing audit
committee established in accordance with Section 3(a)(58)(A) of the Exchange Act, and the rules and
regulations promulgated thereunder. These committees and their functions are described below. Our
Board of Directors may also establish various other committees to assist it in its
responsibilities. Our Board of Directors has adopted a written charter for each of its standing
committees. The full text of each charter is available on our website at http://www.opko.com.
The following table shows the current members (indicated by an X or Chair) of each of our
standing Board committees:
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Corporate |
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|
Governance |
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and |
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Audit |
|
Compensation |
|
Nominating |
Phillip Frost, M.D. |
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|
Jane H. Hsiao, Ph.D., MBA |
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Robert A. Baron |
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X |
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|
Chair |
Thomas E. Beier |
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X |
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X |
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|
Pascal J. Goldschmidt, M.D. |
|
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X |
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X |
|
Richard A. Lerner, M.D. |
|
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|
Chair |
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X |
|
John A. Paganelli |
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Richard C. Pfenniger, Jr. |
|
Chair |
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Michael Reich |
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X |
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Steven D. Rubin |
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Audit Committee
Our audit committee oversees our corporate accounting and financial reporting process. Our
audit committee met six times during fiscal 2007. The responsibilities of our audit committee are
set forth in a written charter adopted by our Board of Directors and reviewed and reassessed
annually by the audit committee. Our audit committee:
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evaluates the qualifications, independence and performance of our
independent registered public accounting firm; |
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|
determines the engagement of our independent registered public accounting firm; |
|
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|
approves the retention of our independent registered public accounting firm to
perform any proposed permissible non-audit services; |
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|
|
reviews our systems of internal controls established for finance, accounting, legal
compliance, and ethics; |
|
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|
reviews our accounting and financial reporting processes; |
|
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|
provides for effective communication between our Board of Directors, our senior and
financial management, and our independent auditors; |
|
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|
discusses with management and our independent auditors the results of our annual
audit and the review of our quarterly financial statements; |
|
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|
|
reviews the audits of our financial statements; |
8
|
|
|
implements a pre-approval policy for certain audit and non-audit services performed
by our registered independent public accounting firm; and |
|
|
|
|
reviews and approves any related party transactions that we are involved in. |
Our audit committee is composed of Messrs. Pfenniger, Baron, Beier, and Reich. Our Board of
Directors has determined that Messrs. Pfenniger and Beier, each of whom is independent as
independence for audit committee members is defined in AMEX listing standards, is an audit
committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K.
Compensation Committee
Our compensation committee reviews and either approves, on behalf of the Board of Directors,
or recommends to the Board of Directors for approval, (i) annual salaries, bonuses, and other
compensation for our executive officers, and (ii) individual equity awards for our employees and
executive officers. Our compensation committee also oversees our compensation policies and
practices. Our compensation committee met seven times during fiscal 2007. Our compensation
committee may from time to time establish a subcommittee to perform any action required to be
performed by a committee of non-employee directors pursuant to Rule 16b-3 under the Securities
Exchange Act of 1934 and outside directors pursuant to Rule 162(m) under the Internal Revenue
Code.
Our compensation committee also performs the following functions related to executive
compensation:
|
|
|
coordinates the Board of Directors role in establishing performance criteria for
executive officers; |
|
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|
|
reviews and approves the annual salary, bonus, stock options, and other benefits,
direct and indirect, of our executive officers, including our Chief Executive Officer; |
|
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|
|
reviews and recommends new executive compensation programs; reviews the
operation and efficacy of our executive compensation programs; |
|
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|
|
establishes and periodically reviews policies in the area of senior management
perquisites; |
|
|
|
|
reviews and approves material changes in our employee benefit plans; |
|
|
|
|
administers our equity compensation and employee stock purchase plans; and |
|
|
|
|
reviews the adequacy of the compensation committee and its charter and recommends any
proposed changes to the Board of Directors not less than annually. |
In deciding upon the appropriate level of compensation for our executive officers, the
compensation committee reviews our compensation programs relative to our strategic objectives and
market practice and other changing business and market conditions. In addition, the compensation
committee also takes into consideration the recommendations of our Chief Executive Officer
concerning compensation actions for our other executive officers and may engage compensation
consultants if the committee deems it appropriate.
Our compensation committee is composed of Dr. Lerner (Chairman), Dr. Goldschmidt, and Mr.
Beier. We believe that the composition and functioning of our compensation committee complies with
all applicable requirements of the Sarbanes-Oxley Act of 2002, the AMEX, and the SECs rules and
regulations, including those regarding the independence of our compensation committee members.
Compensation Committee Interlocks and Insider Participation
The current members of our compensation committee are Dr. Lerner, Mr. Beier, and Dr.
Goldschmidt. Dr. Melvin L. Rubin was a member of the compensation committee until his resignation
from the Board of Directors on September 25, 2007. None of these individuals was at any time
during fiscal 2007 or at any time prior thereto, an officer or employee of ours.
Corporate Governance and Nominating Committee
Our corporate governance and nominating committees responsibilities include the selection of
potential candidates for our Board of Directors, making recommendations to our Board of Directors
concerning the structure
9
and membership of the other Board committees, and considering director candidates recommended
by others, including our Chief Executive Officer, other Board members, third parties, and
stockholders. Our corporate governance and nominating committee is composed of Mr. Baron
(Chairman), Dr. Goldschmidt, and Dr. Lerner. Our corporate governance and nominating committee
did not meet during fiscal 2007 but took action by written consent on
one occasion. We believe that the composition of our corporate governance and
nominating committee complies with applicable requirements of the Sarbanes-Oxley Act of 2002, the
AMEX, and the SECs rules and regulations, including those regarding the independence of our
corporate governance and nominating committee members.
The
corporate governance and nominating committee identifies director nominees through a
combination of referrals, including by stockholders, existing members of the Board of Directors,
management, third parties, and direct solicitations, where warranted. Once a candidate has been
identified, the corporate governance and nominating committee review the individuals experience
and background, and may discuss the proposed nominee with the source of the recommendation. The
corporate governance and nominating committee usually believes it to be appropriate for committee
members to interview the proposed nominee before making a final determination whether to recommend
the individual as a nominee to the entire Board of Directors to stand for election to the Board of
Directors. The committee does not plan to evaluate candidates identified by the corporate
governance and nominating committee differently from those recommended by a stockholder or
otherwise.
During
March 2008, the corporate governance and nominating committee met and
determined to recommend to the Board that it nominate each of the
incumbent directors for election at the Annual Meeting.
Director
Selection Criteria
The corporate governance and nominating committee will review and make
recommendations to the Board of Directors regarding the appropriate qualifications, skills, and
experience expected of individual members and of the Board of Directors as a whole with the
objective of having a Board of Directors with sound judgment and diverse backgrounds and experience
to represent stockholder interests.
The corporate governance and nominating committee believes that nominees for election to the
Board of Directors should possess sufficient business or financial experience and a willingness to
devote the time and effort necessary to discharge the responsibilities of a director. This
experience can include, but is not limited to, service on other boards of directors or active
involvement with other boards of directors, experience in the industries in which the Company
conducts its business, audit and financial expertise, clinical experience, operational experience,
or a scientific or medical background. The corporate governance and nominating committee does not
believe that nominees for election to the Board of Directors should be selected through mechanical
application of specified criteria. Rather, the corporate governance and nominating committee
believes that the qualifications and strengths of individuals should be considered in their
totality with a view to nominating persons for election to the Board of Directors whose
backgrounds, integrity, and personal characteristics indicate that they will make a positive
contribution to the Board of Directors.
Stockholder Nominations
The corporate governance and nominating committee will consider director candidates
recommended by stockholders. Stockholders who wish to recommend candidates for election to the
Board of Directors must do so in writing. The recommendation should be sent to the Secretary of the
Company, OPKO Health, Inc., 4400 Biscayne Boulevard, Suite 1180, Miami, Florida 33137, who will
forward the recommendation to the corporate governance and nominating committee. The recommendation must set forth (i) the name and
address as they appear on the Companys books of the stockholder making the recommendation and the
class and number of shares of capital stock of the Company beneficially owned by such stockholder
and (ii) the name of the candidate and all information relating to the candidate that is required
to be disclosed in solicitations of proxies for election of directors under the federal proxy
rules. The recommendation must be accompanied by the candidates written consent to being named in
the Companys proxy statement as a nominee for election to the Board of Directors and to serving as
a director, if elected. Stockholders must also comply with all requirements of the Companys
Amended and Restated Bylaws with respect to nomination of persons for election to the Board of
Directors.
Stockholder Communications with the Board
Stockholders may initiate in writing any communication with our Board of Directors or any
individual director by sending the correspondence to OPKO Health, Inc., 4400 Biscayne Blvd., Suite
1180, Miami, Florida 33137, Attention: Kate Inman, Secretary. This centralized process assists our
Board of Directors in reviewing and responding to stockholder communications in an appropriate
manner. If a stockholder would like the letter to be forwarded directly to one of the Chairmen of
the three standing committees of the Board, he or she should so
10
indicate. If no specific direction is indicated, the Secretarys office will review the
letter and forward it to the appropriate Board member(s).
Employee Communications with the Audit Committee
The
audit committee has established procedures for the receipt, retention, and treatment of
complaints regarding accounting, internal accounting controls or auditing matters, and the
confidential, anonymous submission by employees of concerns regarding questionable accounting and
auditing matters. These procedures are described in our OPKO Health, Inc. Policy for Reporting
Questionable Accounting and Auditing Practices and Policy Prohibiting Retaliation Against Reporting
Employees.
Certain Relationships and Related Party Transactions
A trust controlled by Dr. Phillip Frost, our Chairman of the Board and Chief Executive
Officer, Jane H. Hsiao, our Vice Chairman and Chief Technical Officer, Steven D. Rubin, our
Executive Vice President Administration and a member of our Board of Directors, and Rao Uppaluri,
our Senior Vice President and Chief Financial Officer, are members of The Frost Group, LLC, or the
Frost Group, an entity which beneficially owns approximately 11% of
our common stock.
Furthermore, the trust that is a principal member of the Frost Group
beneficially owns approximately 43% of our common
stock.
Prior
to the consummation of the Acquisition in March 2007, we were a public shell company whose
assets consisted of cash and nominal other assets. On
February 9, 2007, we sold
19,440,491 shares of our common stock for $8.0 million, constituting 51% of our issued and
outstanding shares of capital stock on a fully diluted basis, to a small group of investors led by
the Frost Group. The stock sale was made pursuant to the terms of a stock
purchase agreement dated August 14, 2006, as amended as of November 30, 2006. In connection with the above sale
we also issued 100,000 shares of our common stock to two Board members.
On February 9, 2007, the Frost Group entered into a voting agreement with us pursuant to which
the Frost Group agreed to vote its shares of our common stock for the election of John Paganelli
and Robert Baron as directors. The voting agreement continues for a period of three years.
On March 27, 2007, pursuant to the terms of a Merger Agreement and Plan of Reorganization, we
were part of a three-way merger with Froptix Corporation, or Froptix, a development stage research
and development company, controlled by the Frost Group, and Acuity Pharmaceuticals, Inc., or
Acuity, a development stage research and development company, referred to as the Acquisition. Per
that agreement, we issued new capital stock to acquire all of the issued and outstanding capital
stock of Froptix and Acuity. After the merger, we
began doing business as OPKO Health, Inc., or OPKO, and changed our name as such.
In connection with the consummation of the Acquisition, we assumed the rights and obligations
of Acuity under the line of credit Acuity had with the Frost Group. We also amended and restated
the Frost Group line of credit to provide additional available borrowing capacity. Under this
amended and restated line of credit, we gained access to a total of
$12.0 million in available borrowings and
we assumed Acuitys existing obligation to repay $4.0 million outstanding under the line of credit.
In 2007 we drew down the available amount under the line for a total
of $12.0 million borrowed. We are obligated to pay interest upon maturity, capitalized
quarterly on outstanding borrowings under the line of credit at a 10% annual rate, which is due
June 11, 2009. In connection with the assumption and amendment of the line of credit, we granted
warrants to purchase 4,000,000 shares of our common stock to the Frost Group.
In
June 2007, we paid a $125,000 filing fee payable to the Federal Trade Commission in
connection with filings to be made by us and Dr. Frost, our Chairman and Chief Executive Officer,
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR). The filings permit Dr.
Frost and his affiliates to acquire additional voting securities upon expiration of the HSR waiting
period which expired on July 12, 2007.
In
November 2007, we entered into an office lease (the
Lease) with Frost Real Estate Holdings, LLC, an
entity affiliated with Dr. Phillip Frost, the Companys Chairman of the Board and Chief Executive
Officer. The Lease is for approximately 8,300 square feet of space in an office building in Miami,
Florida, where the Companys principal executive offices are located. We had previously been
leasing this space from Frost Real Estate Holdings on a month-to-month basis while the parties were
negotiating the lease. The Lease provides for payments of approximately $18,000 per month in the
first year increasing annually to $24,000 per month in the fifth year, plus
11
applicable sales tax. The rent is inclusive of operating expenses, property taxes, and
parking. The rent for the first year has been reduced to reflect a $30,000 credit for the costs of
tenant improvements.
On December 5, 2007, members of the Frost Group made a $20 million investment in the Company.
Under the terms of the investment, we issued 10,869,565 shares of the Companys common stock, par
value $.01, at $1.84 per share, representing an approximately 40% discount to the average trading
price of our stock on the American Stock Exchange for the five trading days leading up to the
closing of the investment. The shares issued in the investment are restricted securities, subject
to a two year lockup, and no registration rights have been granted. Immediately following this investment, members of the Frost Group were collectively deemed
to beneficially own in the aggregate approximately 62% of our outstanding common stock.
We reimburse Dr. Frost for Company-related use by Dr. Frost and our other executives of an airplane owned by a
company that is beneficially owned by Dr. Frost. We reimburse Dr. Frost in an amount equal to the cost of a first class airline
ticket between the travel cities for each executive, including
Dr. Frost, traveling on the airplane for Company-related business. We do not reimburse Dr. Frost for personal use of the airplane by Dr. Frost
or any other executive. Nor do we pay for any other fixed or variable
operating costs of the airplane. During 2007, we reimbursed Dr. Frost
approximately $118,000 for Company-related travel by Dr. Frost and other Opko executives.
Our Policies Regarding Related Party Transactions
In April 2007, we adopted a written statement of policy with respect to related party
transactions, which is administered by our audit committee. Under our related party transaction
policy, a Related Party Transaction is any transaction,
arrangement, or relationship between us or
any of our subsidiaries and a Related Person, not including any transactions involving less than
$60,000 when aggregated with all similar transactions, or transactions that have received
pre-approval of our audit committee. A Related Person is any of our executive officers,
directors or director nominees, any stockholder beneficially owning in excess of 5% of our stock or
securities exchangeable for our stock, any immediate family member of any of the foregoing persons,
and any firm, corporation, or other entity in which any of the foregoing persons is an executive
officer, a partner or principal or in a similar position, or in which such person has a 5% or
greater beneficial ownership interest in such entity.
Pursuant to our related party transaction policy, a Related Party Transaction may only be
consummated if:
|
|
|
Our audit committee approves or ratifies such transaction in accordance with the
terms of the Policy; or |
|
|
|
|
the chair of our audit committee pre-approves or ratifies such transaction and the
amount involved in the transaction is less than $100,000, provided that for the Related
Party Transaction to continue it must be approved by our audit committee at its next
regularly scheduled meeting. |
If advance approval of a Related Party Transaction is not feasible, then that Related Party
Transaction will be considered and, if our audit committee determines it to be appropriate,
ratified, at its next regularly scheduled meeting. If we decide to proceed with a Related Party
Transaction without advance approval, then the terms of such Related Party Transaction must permit
termination by us without further material obligation in the event our audit committee ratification
is not forthcoming at our audit committees next regularly scheduled meeting.
Transactions with related persons, though not classified as Related Party Transactions by our
related party transaction policy and thus not subject to its review and approval requirements, may
still need to be disclosed if required by the applicable securities laws, rules, and regulations.
DIRECTOR COMPENSATION
On September 19, 2007, our Board of Directors, upon recommendation of the compensation
committee, approved certain changes in non-employee director compensation. Previously,
non-employee directors received an option to acquire 15,000 shares of the Companys common stock,
and the chairman of each of the committees of the Board received an option to acquire an additional
5,000 shares of Company common stock. Effective as of September 19, 2007, (i) each non-employee
director is entitled to receive: (a) an annual retainer of $10,000, payable in quarterly
installments; and (b) an option to acquire 40,000 shares of the Companys common stock upon initial
appointment to the Board and an option to acquire 20,000 shares each year thereafter; and (ii) the
chairman of each committee of the Board shall receive $5,000 annually, payable in quarterly
installments.
12
The following table sets forth information with respect to compensation of non-employee
directors of the Company during fiscal year 2007.
Fiscal 2007 Director Compensation
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|
|
|
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Fees |
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|
|
|
|
|
|
|
|
|
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Nonqualified |
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|
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|
|
Earned |
|
|
|
|
|
|
|
|
|
Non-Equity |
|
Deferred |
|
|
|
|
|
|
or Paid |
|
Stock |
|
Option |
|
Incentive Plan |
|
Compensation |
|
All Other |
|
|
|
|
in Cash |
|
Award |
|
Awards |
|
Compensation |
|
Earnings |
|
Compensation |
|
Total |
Name |
|
($) |
|
($) |
|
($)(1)(3) |
|
($) |
|
($) |
|
($) |
|
($) |
Robert A. Baron |
|
|
3,750 |
|
|
|
|
|
|
|
59,796 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63,546 |
|
David A, Eichler(2) |
|
|
3,750 |
|
|
|
|
|
|
|
166,336 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
170,086 |
|
Michael Reich(2) |
|
|
2,500 |
|
|
|
|
|
|
|
170,301 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
172,801 |
|
Richard A. Lerner, M.D. |
|
|
3,750 |
|
|
|
|
|
|
|
69,153 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72,903 |
|
Melvin Rubin, M.D. |
|
|
0 |
|
|
|
|
|
|
|
53,292 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53,292 |
|
Pascal J. Goldschmidt, M.D. |
|
|
2,500 |
|
|
|
|
|
|
|
30,605 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,105 |
|
|
|
|
(1) |
|
Reflects the dollar amounts recognized for financial statement reporting purposes
for the year ended December 31, 2007, in accordance with Statement of Financial Accounting
Standards No. 123R, or SFAS No. 123R, excluding the impact of estimated forfeitures related to
service-based vesting conditions. Assumptions made in the calculation of these amounts are
included in Note 8 to the Companys audited financial statements, included in the Companys
Annual Report on Form 10-K filed with the SEC. |
|
(2) |
|
Messrs. Eichlers and Reichs option award amounts include stock options issued in
connection with their service to the Acuity Board of Directors prior
to the Acquisition. |
|
(3) |
|
Each of the directors, other than Dr. Rubin, received a total of 40,000 stock
options during 2007 to acquire our common stock on different dates and at different stock prices. Dr.
Rubin received a total of 20,000 fully vested options during 2007, which were cancelled upon
his resignation in September 2007. |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors, executive officers and holders of
ten percent (10%) or more of our common stock (collectively, Reporting Persons) to file with the SEC initial
reports of ownership and reports of changes in ownership of our common stock and any other equity
securities. Based on a review of the copies of the
reports furnished to us, the Reporting Persons complied with all applicable Section 16(a)
filing requirements except for (i) one late Form 4 filing
for each of Drs. Hsiao, Lerner and Uppaluri, Mr. Rubin and The Frost Group, LLC; (ii) five late Form 4 filings for
Mr. Paganelli, and (iii) three late Form 4 filings for
Dr. Frost.
13
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Our compensation philosophy is to attract and retain talented and dedicated executives who
will work to achieve our desired business direction, strategy, and performance. The primary goals
of our compensation program for our Named Executive Officers are (i) to attract, motivate, and
retain talented executives with the skill sets and expertise we need to meet our scientific and
business objectives; (ii) to be competitive in the marketplace; (iii) to tie annual and long-term
cash and equity incentives to the achievement of specified performance objectives that will result
in increased stockholder value; and (iv) to be cost-effective. To achieve these goals, we have
formed a compensation committee that recommends executive compensation packages to our Board of
Directors. These packages are generally based on a mix of salary, discretionary bonus, and equity
awards. Although we have not adopted any formal guidelines for allocating total compensation
between equity compensation and cash compensation, we maintain compensation plans that tie a
substantial portion of our executives overall compensation to the achievement of corporate goals.
Benchmarking of Cash and Equity Compensation
Our compensation committee reviews executive compensation levels on an annual basis to ensure
they remain competitive in our industry. Data for this review is prepared and provided to the
compensation committee by our Vice President, Human Resources, with input from our Chief Executive
Officer, as well as other members of senior management. This data details relevant market rates
for executive base salaries, annual cash incentive, long-term incentive, and total compensation for
companies of similar size in our industry. The sources for this data include the Executive
Compensation Survey, a survey of 67 biotech companies ranging in size from less than $20 million in
revenues with less than 150 employees to over $500 million in revenue with over 1,000 employees.
The data we used for our analysis focused on 24 companies with less than $20 million in revenues
and less than 150 employees. We believe that criteria used by the Executive Compensation Survey
were effective in yielding a comprehensive survey group of companies, or peer groups, comparable to
the Company. Utilizing the compiled information, the compensation committee reviews the various
components of executive compensation to determine the base salary, annual cash incentive, long term
incentive, and equity compensation.
We may retain the services of third-party executive compensation specialists from time to time
in connection with the establishment of cash and equity compensation and related policies, although
we have not previously done so.
Elements of Compensation
We evaluate individual executive performance with a goal of setting compensation at levels the
Board of Directors and the compensation committee believe are comparable with executives in other
companies of similar size and stage of development. At the same time, our Board of Directors and
compensation committee takes into account our relative performance and our own strategic goals.
The primary elements of our compensation plans are base salary, discretionary annual bonus, and
equity compensation, each of which is described in greater detail below.
Base Salary. We establish and maintain competitive annual base salaries for our Named
Executive Officers by utilizing available resources, which include surveys as discussed above.
While base salaries are not primarily performance-based, we believe it is important to provide
adequate, fixed compensation to executives working in a highly volatile and competitive industry
such as ours. We provide fixed salary compensation to our Named Executive Officers based on their
responsibilities and individual experience, taking into account competitive market compensation
paid by other companies for similar positions within the pharmaceutical industry. Although it is
the general intent of the compensation committee to position base salaries at approximately the
competitive median of the Companys peer groups based on data reviewed, the base salaries for the
Companys Named Executive Officers in 2007 are below the median
of our peer group. Because we are a development stage company and
generated little revenue in 2007, we are trying to place emphasis on
incentive forms of compensation, such as stock option grants. For 2008, none
of the Named Executive Officers were granted increases in their base salaries.
Discretionary Annual Bonus. In addition to base salaries, our compensation committee has the
authority to award discretionary annual bonuses to our Named Executive Officers based on corporate
and individual performance. Incentives, as a percent of salary, increase with executive rank so
that, as rank increases, a greater portion of total annual cash compensation is based on annual
corporate and individual performance. Furthermore, as an executives rank increases, a greater
percentage of that executives cash bonus is based on corporate
14
performance, rather than individual performance. Because we are a development stage company
and generated little revenue during fiscal 2007, the compensation committee determined not to award
annual cash incentive bonuses for fiscal 2007 and to focus on other
forms of incentive compensation, such as stock option grants.
Equity Compensation. We believe that equity compensation should be a primary component of our
executive compensation program. Stock options are a critical element of our long-term incentive
strategy. The primary purpose of stock options is to provide Named Executive Officers and other
employees with a personal and financial interest in our success through stock ownership, thereby
aligning the interests of such persons with those of our stockholders. This broad-based program is
a vital element of our goal to empower and motivate outstanding long-term contributions by our
Named Executive Officers and other employees. The compensation committee believes that the value
of stock options will reflect our financial performance over the long-term. Under our employee
stock option program, options are granted at fair market value at the date of grant, and options
granted under the program become exercisable only after a vesting period. Consequently, employees
benefit from stock options only if the market value of our common stock increases over time. With
respect to these stock options, we recognize compensation expense based on the Statement of
Financial Accounting Standard 123R, Share-Based Payments (SFAS 123R). The compensation
committee typically grants stock options to our Named Executive Officers under our 2007 Equity
Incentive Plan. For all executives, other than the Chief Executive Officer, the compensation
committee considers the recommendations of our Chief Executive Officer based on his subjective
assessment of their performance. We have not granted any restricted stock or restricted stock
awards pursuant to our equity benefit plans. However, our compensation committee, in its
discretion, may in the future elect to make such grants to our Named Executive Officers if it deems
it advisable.
Employment
Agreements. We have not entered into an employment agreement with
any of our executive officers.
Severance and Change-in-Control Benefits. None of our current executive officers are entitled
to severance or change of control benefits.
401(k) Profit Sharing Plan. We have adopted a tax-qualified 401(k) Profit Sharing Plan (the
401(k) Plan) covering all qualified employees. The effective date of the 401(k) Plan is January
2008. Participants may elect a salary reduction of at least 1% as a contribution to the 401(k)
Plan, up to the statutorily prescribed annual limit for tax-deferred contributions ($15,500 for
employees under age 50 and an additional $5,000 for employees 50 and above in 2008). In 2008, the
Company adopted the Roth contribution for employee elections. The 401(k) Plan permits employer
matching of up to 4% of a participants salary up to the statutory limits. In 2008, we elected a
safe harbor contribution at 4% of annual compensation. All of our safe harbor contributions are
immediately vested.
Other Compensation. All of our Named Executive Officers have standard benefits that are
offered to all full-time, exempt employees. These standard benefits include health, dental and
life insurance, and short and long term disability. We intend to continue to maintain the current
benefits and perquisites for our Named Executive Officers; however, our compensation committee, in
its discretion, may in the future revise, amend, or add to the benefits and perquisites of any
Named Executive Officer if it deems it advisable.
Section 162(m) of the Internal Revenue Code
Section 162(m) of the Internal Revenue Code generally does not allow a deduction for annual
compensation in excess of $1,000,000 paid to our executive officers. This limitation on
deductibility does not apply to certain compensation, including performance based compensation
under a plan approved by our stockholders. It is expected that equity
grants under our 2007 Equity Incentive Plan will qualify for the
performance-based exceptions from the Section 162(m)
limitations. Our policy is generally to preserve the federal income
tax deductibility of compensation and to qualify eligible compensation for the performance-based
exception in order for compensation not to be subject to the limitation on deductibility imposed by
Section 162(m) of the Internal Revenue Code. We may, however, approve compensation that may not be
deductible if we determine that the compensation is in our best interests as well as the best
interests of our stockholders.
15
COMPENSATION COMMITTEE REPORT
The compensation committee of our Board has submitted the following report for inclusion in
this proxy statement.
The compensation committee has reviewed and discussed the Compensation Discussion and Analysis
contained in this proxy statement with management. Based on its review and discussions with
management with respect to the Compensation Discussion and Analysis, the compensation committee
recommended to the Board that the Compensation Discussion and Analysis be included in this proxy
statement on Schedule 14A for filing with the Securities and Exchange Commission.
Compensation Committee
Richard A. Lerner, M.D., Chairman
Thomas E. Beier
Pascal J. Goldschmidt, M.D.
April 28, 2008
The compensation committee report above shall not be deemed to be soliciting material or to
be filed with the Securities and Exchange Commission, nor shall such information be incorporated
by reference into any future filing under the Securities Act of 1933 or the Securities Exchange Act
of 1934, each as amended, except to the extent that we specifically incorporate it by reference
into such filing.
16
Summary Compensation Table
The following table sets forth information regarding compensation earned in or with respect to
fiscal 2007 by:
|
|
|
The persons who served as our Chief Executive Officer during fiscal 2007; |
|
|
|
|
The persons who served as our Principal Financial Officer during fiscal 2007; |
|
|
|
|
Our only two executive officers (other than individuals serving as our Chief
Executive Officer or our Principal Financial Officer) who were serving as executive
officers at the end of the last completed fiscal year; and |
|
|
|
|
An individual for which disclosure would have been provided but for the fact the
individual was not serving as an executive officer at the end of the last completed
fiscal year. |
We refer to these officers collectively as our Named Executive Officers.
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Change in |
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|
Non-Equity |
|
Pension Plan & |
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|
Option |
|
Incentive |
|
Non-qualified |
|
All Other |
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|
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|
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|
Stock Award(s) |
|
Award(s) |
|
Plan |
|
Compensation |
|
Compensation |
|
|
Name and Principal Position |
|
Year |
|
Salary ($)(4) |
|
Bonus ($)(5) |
|
($)(10) |
|
($)(6) |
|
Compensation |
|
Earnings |
|
($)(7)(8)(9) |
|
Total ($) |
Phillip Frost, M.D.(1)
|
|
|
2007 |
|
|
|
208,332 |
|
|
|
|
|
|
|
|
|
|
|
503,517 |
|
|
|
|
|
|
|
|
|
|
|
133,333 |
|
|
|
845,182 |
|
Chief Executive Officer |
|
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|
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|
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|
|
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|
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|
|
|
|
John A. Paganelli(2) |
|
|
2007 |
|
|
|
|
|
|
|
|
|
|
|
96,500 |
|
|
|
59,796 |
|
|
|
|
|
|
|
|
|
|
|
2,500 |
|
|
|
158,796 |
|
Interim Chief Executive Officer |
|
|
2006 |
|
|
|
25,000 |
|
|
|
|
|
|
|
|
|
|
|
810 |
|
|
|
|
|
|
|
|
|
|
|
75,000 |
|
|
|
100,000 |
|
Dale R. Pfost(3)
|
|
|
2007 |
|
|
|
134,834 |
|
|
|
40,000 |
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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2,124,949 |
|
|
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2,299,783 |
|
Former President |
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|
Jane H. Hsiao, Ph.D.(1)
Chief Technical Officer |
|
|
2007 |
|
|
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192,307 |
|
|
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|
|
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|
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327,285 |
|
|
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|
|
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|
|
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7,692 |
|
|
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527,286 |
|
Steven D. Rubin(1)
|
|
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2007 |
|
|
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192,307 |
|
|
|
|
|
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|
|
|
|
|
251,758 |
|
|
|
|
|
|
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|
|
|
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7,692 |
|
|
|
451,278 |
|
Executive Vice
President-Administration |
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|
Rao Uppaluri, Ph.D.(1)
|
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2007 |
|
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176,284 |
|
|
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|
|
|
|
201,407 |
|
|
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7,051 |
|
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|
384,743 |
|
Senior Vice President and Chief
Financial Officer |
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Adam Logal(3)
|
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2007 |
|
|
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106,574 |
|
|
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6,000 |
|
|
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|
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|
|
185,413 |
|
|
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297,987 |
|
Executive Director of Finance,
Chief Accounting Officer and
Treasurer |
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|
(1) |
|
Dr. Frost became our Chief Executive Officer upon consummation of the Acquisition on
March 27, 2007. Dr. Hsiao was appointed as Chief Technical
Officer in May 2007. Mr. Rubin and Dr. Uppaluri were appointed as Executive Vice President, Administration and Chief
Financial Officer, respectively, in May 2007. None of our current executive officers received
any compensation from the Company prior to 2007. |
|
(2) |
|
Mr. Paganelli served as our interim Chief Executive Officer from June 29, 2005
through March 27, 2007. Mr. Paganelli is no longer an executive officer of the Company;
however, Mr. Paganelli continues to serve on our Board of Directors. |
|
(3) |
|
Dr. Dale Pfost served as our President from March 27, 2007 through May 31, 2007.
Dr. Pfost was the
Chairman, CEO and President of Acuity prior to the Acquisition. Mr. Logal currently serves as
our Executive Director of Finance, Chief Accounting Officer and Treasurer, and served as our
principal financial officer from March 27, 2007 through May 3, 2007. |
|
(4) |
|
Includes $65,208 and $10,218 in salary payments to Dr. Pfost and Mr. Logal,
respectively, in connection with their employment with Acuity prior to the Acquisition. |
|
(5) |
|
Amount for Dr. Pfost represents the annual bonus for employment with Acuity prior to
the Acquisition, but paid after the Acquisition in March 2007. Amount for Mr. Logal
represents a signing bonus paid in connection with commencement of his employment with Acuity
prior to the Acquisition, but paid after the Acquisition in March 2007. |
17
|
|
|
(6) |
|
Reflects the dollar amounts recognized for financial statement reporting purposes
for the year ended December 31, 2007, in accordance with Statement of Financial Accounting
Standards No. 123R, or SFAS No. 123R, excluding the impact of estimated forfeitures related to
service-based vesting conditions. Assumptions made in the calculation of these amounts are
included in Note 8 to the Companys audited financial statements, included in the Companys
Annual Report on Form 10-K filed with the Securities and Exchange Commission. For Mr.
Paganelli, the number includes options granted to him in connection with his service as a
director. |
|
(7) |
|
Includes $125,000 for a Hart-Scott-Rodino Antitrust Improvements Act filing fee paid
on behalf of Dr. Frost in June 2007; and contributions made by the Company under its 401(k)
Plan in the amount of $8,333 on behalf of Dr. Frost, $7,692 on behalf of each of Dr. Hsiao and
Mr. Rubin and $7,051 on behalf of Dr. Uppaluri. |
|
(8) |
|
Includes $218,750 of severance payments made to Dr. Pfost during 2007, $1,817,257
of expense related to the acceleration of certain stock options in connection with Dr. Pfosts
severance from the Company, $48,101 for reimbursement of relocation costs to Dr. Pfost, a
tax gross-up payment of $31,841 related to the reimbursement of such
costs, and $9000 of
contributions by the Company made on behalf of Dr Pfost under its 401(k) Plan. |
|
(9) |
|
Includes $2,500 and $75,000 of directors fees paid to Mr. Paganelli, respectively, for 2007 and 2006. |
|
(10) |
|
Relates to 50,000 shares granted to Mr. Paganelli in conjunction with the
investment by a group of investors led by the Frost Group in eXegenics, Inc. on February 9,
2007. |
Grants of Plan-Based Awards in 2007
The following table presents information concerning grants of plan-based awards to each of the
Named Executive Officers and certain other persons during the year ended December 31, 2007. The
exercise price per share of each option granted to our Named Executive Officers during 2007 was
equal to the fair market value of our common stock, as determined by our compensation committee on
the date of the grant.
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Grant Date |
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Number of Securities |
|
Exercise Price |
|
Fair Value of |
Name |
|
Grant Date |
|
Underlying Options |
|
Per Share |
|
Option Awards |
Phillip Frost, M.D.(1) |
|
|
5/3/07 |
|
|
|
1,000,000 |
|
|
|
4.88 |
|
|
|
3,021,100 |
|
John A. Paganelli(2) |
|
|
5/3/07 |
|
|
|
15,000 |
|
|
|
4.88 |
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|
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39,969 |
|
|
|
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9/19/07 |
|
|
|
25,000 |
|
|
|
4.15 |
|
|
|
59,480 |
|
Dale R. Pfost(3) |
|
|
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|
|
|
|
|
|
|
|
|
Jane H. Hsiao, Ph.D.(1) |
|
|
5/3/07 |
|
|
|
650,000 |
|
|
|
4.88 |
|
|
|
1,963,715 |
|
Steven D Rubin(1) |
|
|
5/3/07 |
|
|
|
500,000 |
|
|
|
4.88 |
|
|
|
1,510,550 |
|
Rao Uppaluri, Ph.D.(1) |
|
|
5/3/07 |
|
|
|
400,000 |
|
|
|
4.88 |
|
|
|
1,208,440 |
|
Adam Logal(3) |
|
|
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|
(1) |
|
Dr. Frost became our Chief Executive Officer upon consummation of the Acquisition on
March 27, 2007. Dr. Hsiao was appointed Chief Technical
Officer in May 2007. Mr. Rubin
and Dr. Uppaluri were appointed Executive Vice President, Administration and Chief Financial
Officer, respectively, in May 2007. |
|
(2) |
|
Mr. Paganelli served as our interim Chief Executive Officer from June 29, 2005
through March 27, 2007. Mr. Paganelli is no longer an executive officer of the Company;
however, Mr. Paganelli continues to serve on our Board of Directors. The grants of stock
options to Mr. Paganelli in 2007 were in connection with his service as a director. |
|
(3) |
|
Dr. Pfost and Mr. Logal did not receive a grant of
stock options from the Company in 2007. Dr. Pfosts and
Mr. Logals stock options with Acuity Pharmaceuticals, Inc. of 3,308,249
and 389,207 shares, respectively, converted to stock options in OPKO in conjunction with the
merger with Acuity in March 2007. Dr. Pfost served as our President from March 27,
2007 through May 31, 2007. He was the Chairman, CEO and President of Acuity prior to
the Acquisition. Mr. Logal currently serves as our Executive Director of
Finance, Chief Accounting Officer and Treasurer, and he served as our principal financial officer
from March 27, 2007 through May 3, 2007. |
18
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth information as of December 31, 2007 with respect to equity
awards granted by the Company to our Named Executive Officers in 2007.
|
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Option Awards |
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Stock Awards |
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Number of |
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Number of |
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Securities |
|
Securities |
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Number of |
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Market Value of |
|
|
Underlying |
|
Underlying |
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|
Shares or Units of |
|
Shares or Units of |
|
|
Unexercised |
|
Unexercised |
|
Option |
|
Option |
|
Stock That |
|
Stock That |
|
|
Options |
|
Options |
|
Exercise |
|
Expiration |
|
Have Not |
|
Have Not |
Name |
|
(#) Exercisable |
|
(#) Unexercisable |
|
Price ($) |
|
Date |
|
Vested (#) |
|
Vested ($) |
Phillip Frost, M.D.(1) |
|
|
|
|
|
|
1,000,000 |
|
|
|
4.88 |
|
|
|
5/2/14 |
|
|
|
|
|
|
|
|
|
John A. Paganelli(2) |
|
|
10,000 |
|
|
|
|
|
|
|
0.89 |
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|
|
4/26/14 |
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|
|
5,000 |
|
|
|
|
|
|
|
0.71 |
|
|
|
6/30/14 |
|
|
|
|
|
|
|
|
|
|
|
|
5,000 |
|
|
|
|
|
|
|
0.67 |
|
|
|
9/30/14 |
|
|
|
|
|
|
|
|
|
|
|
|
5,000 |
|
|
|
|
|
|
|
0.32 |
|
|
|
1/2/15 |
|
|
|
|
|
|
|
|
|
|
|
|
5,000 |
|
|
|
|
|
|
|
0.40 |
|
|
|
3/31/15 |
|
|
|
|
|
|
|
|
|
|
|
|
5,000 |
|
|
|
|
|
|
|
0.42 |
|
|
|
6/30/15 |
|
|
|
|
|
|
|
|
|
|
|
|
5,000 |
|
|
|
|
|
|
|
0.45 |
|
|
|
10/3/15 |
|
|
|
|
|
|
|
|
|
|
|
|
5,000 |
|
|
|
|
|
|
|
0.41 |
|
|
|
1/2/16 |
|
|
|
|
|
|
|
|
|
|
|
|
5,000 |
|
|
|
|
|
|
|
0.41 |
|
|
|
4/2/16 |
|
|
|
|
|
|
|
|
|
|
|
|
5,000 |
|
|
|
|
|
|
|
0.39 |
|
|
|
7/3/16 |
|
|
|
|
|
|
|
|
|
|
|
|
15,000 |
|
|
|
|
|
|
|
4.88 |
|
|
|
5/2/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000 |
|
|
|
4.15 |
|
|
|
9/18/14 |
|
|
|
|
|
|
|
|
|
Dale R. Pfost(3) |
|
|
430,723 |
|
|
|
|
|
|
|
0.04 |
|
|
|
5/31/08 |
|
|
|
|
|
|
|
|
|
|
|
|
225,740 |
|
|
|
|
|
|
|
0.04 |
|
|
|
5/31/08 |
|
|
|
|
|
|
|
|
|
|
|
|
731,700 |
|
|
|
|
|
|
|
0.32 |
|
|
|
5/31/08 |
|
|
|
|
|
|
|
|
|
|
|
|
1,297,358 |
|
|
|
|
|
|
|
0.04 |
|
|
|
5/31/08 |
|
|
|
|
|
|
|
|
|
|
|
|
311,366 |
|
|
|
|
|
|
|
0.05 |
|
|
|
5/31/08 |
|
|
|
|
|
|
|
|
|
|
|
|
311,366 |
|
|
|
|
|
|
|
0.05 |
|
|
|
5/31/08 |
|
|
|
|
|
|
|
|
|
Jane H. Hsiao, Ph.D.(1) |
|
|
|
|
|
|
650,000 |
|
|
|
4.88 |
|
|
|
5/2/14 |
|
|
|
|
|
|
|
|
|
Steven D. Rubin(1) |
|
|
|
|
|
|
500,000 |
|
|
|
4.88 |
|
|
|
5/2/14 |
|
|
|
|
|
|
|
|
|
Rao Uppaluri, Ph.D.(1) |
|
|
|
|
|
|
400,000 |
|
|
|
4.88 |
|
|
|
5/2/14 |
|
|
|
|
|
|
|
|
|
Adam Logal(3) |
|
|
72,975 |
|
|
|
316,232 |
|
|
|
0.56 |
|
|
|
3/14/17 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Dr. Frost became our Chief Executive Officer upon consummation of the Acquisition on
March 27, 2007. Dr. Hsiao was appointed Chief Technical
Officer in May 2007. Mr. Rubin
and Dr. Uppaluri were appointed Executive Vice President, Administration and Chief Financial
Officer, respectively, in May 2007. |
|
(2) |
|
Mr. Paganelli served as our interim Chief Executive Officer from June 29, 2005
through March 27, 2007. Mr. Paganelli is no longer an executive officer of the Company;
however, Mr. Paganelli continues to serve on our Board of Directors. |
|
(3) |
|
Dr. Pfost served as our President from March 27, 2007 through May 31, 2007. Dr.
Pfost was the Chairman, CEO and President of Acuity prior to the Acquisition. Mr. Logal
currently serves as our Executive Director of Finance, Chief Accounting Officer and Treasurer,
and he served as our principal financial officer from March 27,
2007 through May 3, 2007. The amounts included for
Mr. Logal and Dr. Pfost reflect options granted to them in
connection with their employment into Acuity prior to the Acquisition. |
Option Exercises during Fiscal 2007
None of our Named Executive Officers exercised stock options during fiscal 2007.
19
Pension Benefits
None of our named executive officers is covered by a pension plan or other similar benefit
plan that provides for payments or other benefits at, following, or in connection with retirement.
Employment Agreements and Change in Control Arrangements
None
of our current executive officers have employment, severance, or change in control agreements with
the Company.
We
previously employed Dale R. Pfost as our President from
March 27, 2007 until May 31, 2007. Under the terms of
a settlement agreement we entered into with Dr. Pfost, Dr. Pfost is to receive a severance payment
equivalent to one years salary, or $325,000, to be paid in monthly installments as well as
reimbursement for up to $65,000 in relocation expenses. The agreement provides that all
outstanding equity awards which would vest by May 31, 2008 will be automatically vested and
provides that Dr. Pfost will be able to exercise all vested options until May 31, 2008. Dr. Pfost
is also eligible to receive COBRA benefits for 12 months after his termination.
Adam Logal currently serves as our Executive Director of Finance, Chief Accounting Officer and
Treasurer. Prior to the Acquisition, he entered into a severance agreement with Acuity
Pharmaceuticals, Inc., pursuant to which the Company will be required to pay to Mr. Logal four
months of paid salary and continued benefits if he is terminated without cause or if he terminates for good reason. Upon any such termination, we have agreed to accelerate the vesting of
all unvested stock options granted to Mr. Logal in connection with the commencement of his
employment.
Potential Payments Upon Termination or Change in Control
|
|
|
|
|
|
|
|
|
|
|
Cash Payments upon |
|
|
|
|
Termination with Cause or |
|
|
|
|
Resignation for Good |
|
|
Name and Principal Position |
|
Reason |
|
Vesting of Stock Options |
Adam Logal |
|
|
|
|
|
|
|
|
Executive Director of Finance, Chief Accounting Officer and Treasurer |
|
$ |
46,667 |
|
|
|
389,207 |
|
Fiscal Year-End Equity Compensation Plan Information
The following table sets forth aggregated information concerning our equity compensation plans
outstanding at December 31, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
Securities to be |
|
|
|
|
|
|
Number of Securities |
|
|
|
Issued upon |
|
|
|
|
|
|
Remaining Available |
|
|
|
Exercise of |
|
|
|
|
|
|
for Future Issuance |
|
|
|
Outstanding |
|
|
|
|
|
|
Under Equity |
|
|
|
Options, Warrants |
|
|
Weighted-Average |
|
|
Compensation Plans |
|
|
|
and Rights |
|
|
Exercise Price of |
|
|
(excluding shares |
|
|
|
Outstanding |
|
|
Outstanding Options, |
|
|
reflected in |
|
Plan Category |
|
at FY End (#) |
|
|
Warrants and Rights |
|
|
the 1st column) |
|
Equity Compensation
Plans Approved by
Stockholders |
|
|
16,307,434 |
|
|
$ |
1.45 |
|
|
|
18,038,329 |
|
Equity Compensation
Plans Not Approved
by Stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
16,307,434 |
|
|
$ |
1.45 |
|
|
|
18,038,329 |
|
|
|
|
|
|
|
|
|
|
|
20
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
The audit committee has selected Ernst & Young LLP (Ernst & Young), as the Companys
independent registered public accounting firm to audit our financial statements for fiscal 2008.
We expect that a representative of Ernst & Young will attend the Annual Meeting, will have an
opportunity to make a statement if he or she desires to do so, and will be available to respond to
appropriate questions.
On April 9, 2007, the Board of Directors of the Company approved the decision to dismiss
Rotenberg & Co., LLP (Rotenberg & Co.) and to engage Ernst & Young as the Companys independent registered public
accounting firm to audit our financial statements for the fiscal year ended December 31, 2007.
Rotenberg & Co. served as our independent auditors for 2006. Our stockholders, acting by majority
written consent, ratified this appointment of Ernst & Young as the Companys independent
registered public accounting firm effective June 5, 2007.
The reports of Rotenberg & Co. for the fiscal years ended December 31, 2006 and 2005 did not
contain any adverse opinion or disclaimer of opinion and were not modified or qualified as to
uncertainty, audit scope, or accounting principles. From September 23, 2005 through the end of the
fiscal year ended December 31, 2006, there were no disagreements with Rotenberg & Co. on any matter
of accounting principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of Rotenberg & Co., would have
caused Rotenberg & Co. to make reference to the subject matter of the disagreements in connection
with its report and there were no reportable events as defined in Item 304(a)(1)(v) of Regulation
S-K.
On April 9, 2007, the Company requested that Rotenberg & Co. furnish it with a letter
addressed to the Securities and Exchange Commission stating whether or not it agrees with the above
statements. A copy of such letter, dated April 11, 2007, was filed as an exhibit to a Current
Report on Form 8-K filed by the Company on April 13, 2007.
During the fiscal years ended December 31, 2005 and 2006 and from January 1, 2007 through
April 9, 2007, neither the Company nor anyone acting on its behalf consulted Ernst & Young
regarding (1) either the application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on the Companys
consolidated financial statements or (2) any matter that was either the subject of a disagreement
with Rotenberg & Co. on accounting principles or practices, financial statement disclosure, or auditing
scope or procedures, which, if not resolved to the satisfaction of Rotenberg & Co., would have
caused Rotenberg & Co. to make reference to the matter in its report, or a reportable event as
defined in Item 304(a)(1)(v) of Regulation S-K of the Securities and Exchange Commission. On April
11, 2007, the Company provided a copy of the foregoing disclosure to Ernst and Young and
provided Ernst and Young with an opportunity to furnish a letter addressed to the Securities
and Exchange Commission containing any new information, clarification of the Companys expression
of its views, or the respects in which it does not agree with the statements made by the Company.
Ernst and Young advised the Company that it reviewed the foregoing disclosures and had no basis
on which to submit such a letter addressed to the Securities and Exchange Commission in response to
Item 304 of SEC Regulation S-K.
The following table presents fees for professional audit services provided by Ernst & Young
for the audit of our annual financial statements during fiscal 2007 and fiscal 2006 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
FY 2007 |
|
|
FY 2006 |
|
Audit Fees |
|
$ |
327,043 |
|
|
$ |
15,000 |
|
Audit Related Fees |
|
|
|
|
|
|
|
|
Tax Fees |
|
|
|
|
|
|
|
|
All Other Fees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
327,043 |
|
|
$ |
15,000 |
|
|
|
|
|
|
|
|
Audit Fees included fees for services rendered for the audit of our annual consolidated
financial statements, the review of financial statements included in our quarterly reports on Form
10-Q, and consents and other services normally provided in connection with statutory and regulatory
filings or engagements for those fiscal years. The audit fees for 2006 relate to the audit of
Froptix Corporation who was deemed the accounting acquiror in the
Acquisition for financial statement reporting purposes.
21
Audit-Related Fees would principally include fees for due diligence in connection with
potential transactions and accounting consultations.
Tax Fees would include fees for services rendered for tax compliance, tax advice, and tax
planning. We obtain these types of services from a professional services firm other than Ernst &
Young.
All Other Fees would include fees for all other services rendered to us that do not constitute
Audit Fees, Audit-Related Fees, or Tax Fees.
In considering the nature of the services provided by Ernst & Young, the audit committee
determined that such services are compatible with the provision of independent audit services. The
audit committee discussed these services with Ernst & Young and management to determine that they
are permitted under the rules and regulations concerning auditor independence promulgated by the
SEC to implement the Sarbanes-Oxley Act of 2002, as well as the American Institute of Certified
Public Accountants.
Audit Committee Policy for Pre-approval of Independent Auditor Services
The audit committee of the Board of Directors is required to pre-approve all audit and
non-audit services provided by the Companys independent auditors in order to assure that the
provision of such services does not impair the auditors independence. The audit committee has
established a policy regarding pre-approval of permissible audit,
audit-related, and other services
provided by the independent auditors, which services are periodically reviewed and revised by the
audit committee. Unless a type of service has received general pre-approval under the policy, the
service will require specific approval by the audit committee. The policy also includes
pre-approved fee levels for specified services and any proposed service exceeding the established
fee level must be specifically approved by the committee.
22
AUDIT COMMITTEE REPORT
The following Audit Committee Report shall not be deemed to be soliciting material or to be
filed with the SEC or incorporated by reference in any other filing by us under the Securities
Act of 1933 or Securities Exchange Act of 1934.
The members of the audit committee of the Board are Messrs. Pfenniger, Baron, Beier, and
Reich. The primary purpose of the audit committee is to assist the Board in its general oversight
of the Companys accounting and financial reporting processes. The audit committees functions are
more fully described in its charter, which the Board has adopted. The audit committee reviews and
reassesses the adequacy of its charter on an annual basis. The Board annually reviews the AMEX
listing standards definition of independence for audit committee members and has determined that
each member of the audit committee is independent under that standard.
Management
is responsible for the preparation, presentations, and integrity of the Companys
financial statements, accounting and financial reporting principles
and internal controls, and
procedures designed to ensure compliance with accounting standards,
applicable laws, and
regulations.
The Companys independent registered public accounting firm, Ernst & Young LLP, is responsible
for performing an independent annual audit of the Companys consolidated financial statements and expressing
an opinion on the conformity of those financial statements with United States generally accepted
accounting principles. The audit committees policy is that all services rendered by the Companys
independent auditor are either specifically approved or pre-approved and are monitored both as to
spending level and work content to maintain the appropriate objectivity and independence of the
independent auditor. The audit committees policy provides that the audit committee has the
ultimate authority to approve all audit engagement fees and terms and that the audit committee
shall review, evaluate, and approve the engagement proposal of the independent auditor.
In conjunction with its activities during fiscal 2007, the audit committee reviewed and
discussed our interim unaudited and annual audited financial statements with the Companys
independent registered public accounting firm with and without management present, and with
management. The members of the audit committee discussed the agreed upon quarterly procedures and
annual audit procedures performed by the independent registered public accounting firm in
connection with the quarterly interim unaudited and annual audited financial statements with
management of the Company and its independent registered public accounting firm. The members of
the audit committee also discussed with the Companys independent registered public accounting firm
the matters required to be discussed by the Statement on Auditing Standards No. 61, as amended
(AICPA, Professional Standards, Vol. 1. AU Section 380), as adopted by the Public Accounting
Oversight Board in Rule 3200T. In addition, the audit committee received from the Companys
independent registered public accounting firm the written disclosures and the letter required by
Independence Standards Board No. 1 (Independence Standards Board
Standard No. 1, Independence
Discussions with Audit Committee) and discussed its independence with the independent registered
public accounting firm. Based on the foregoing reviews and discussions, the audit committee
recommended to the Board, and the Board approved, that the fiscal 2007 annual audited financial
statements be included in the Companys Annual Report on Form 10-K for fiscal 2007 for filing with
the SEC.
Audit Committee
Richard C. Pfenniger, Jr., Chairman
Robert A. Baron
Thomas E. Beier
Michael Reich
23
OTHER INFORMATION
Stockholder Proposals for the 2009 Annual Meeting
Pursuant to Rule 14a-8 under the Exchange Act, our stockholders may present proper proposals
for inclusion in our proxy statement and form of proxy and for consideration at the next annual
meeting by submitting their proposals to us in a timely manner. Any stockholder of the Company who
wishes to present a proposal for inclusion in the proxy statement and form of proxy for action at
the 2009 annual meeting of stockholders (the 2009 Annual Meeting) must comply with our Amended
and Restated Bylaws and the rules and regulations of the SEC, each as then in effect. Such
proposals must be mailed to us at our offices at 4400 Biscayne Blvd., Suite 1180, Miami, Florida
33137, attention: Secretary. Under the rules of the SEC, any stockholder proposal intended to be
presented at the 2009 Annual Meeting must be received no later than January 12, 2009 in order to be
considered for inclusion in our proxy statement and form of proxy relating to such meeting. If a
stockholder notifies us of an intent to present a proposal at the 2009 Annual Meeting at any time
after March 27, 2009 (and for any reason the proposal is voted on at that meeting), it will be
considered untimely and our proxy holders will have the right to exercise discretionary voting
authority with respect to the proposal, if presented at the meeting, without including information
regarding the proposal in our proxy materials.
Expenses of Solicitation
We will bear the cost of this proxy solicitation. In addition to the use of the mails, some
of our regular employees, without additional remuneration, may solicit proxies personally or by
telephone or facsimile. We will reimburse brokers, dealers, banks, and other custodians, nominees,
and fiduciaries for their reasonable expenses in forwarding solicitation materials to beneficial
owners of our common stock.
Other Business
As of the date of this proxy statement, the Board knows of no business to be presented at the
Annual Meeting other than as set forth in this proxy statement. If other matters properly come
before the Annual Meeting, or any of its adjournments, the persons named as proxies will vote on
such matters in their discretion.
24
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR
BLACK INK AS SHOWN HERE x
1. Election of ten directors.
NOMINEES:
Phillip Frost, M.D.
Jane H. Hsiao, Ph.D.
Steven D. Rubin
Robert A. Baron
Thomas E. Beier
Pascal J. Goldschmidt, M.D.
Richard A. Lerner, M.D.
John A. Paganelli
Richard C. Pfenniger, Jr.
Michael Reich
|
|
|
o |
|
WITHHOLD AUTHORITY
FOR ALL NOMINEES |
|
|
|
o |
|
FOR ALL EXCEPT
(See instructions below) |
INSTRUCTION: To withhold authority to vote
for any individual nominee(s), mark FOR ALL
EXCEPT and write the nominees name(s)
below.
To change the address on your account,
please check the box at right and indicate
your new address in the address space above.
Please note that changes to the registered
name(s) on the account may not be submitted
via this method. o
2. |
|
In their discretion, the proxy holders are authorized to vote
upon such other matters as may properly come before the meeting
or any postponement or adjournment thereof. |
|
|
|
|
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
ELECTION OF THE DIRECTORS NAMED IN PROPOSAL 1.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
The undersigned acknowledges receipt of the accompanying Notice of Annual Meeting of
Stockholders and Proxy Statement for the June 11, 2008 meeting.
Signature of Shareholder
Date:
Signature of Shareholder
Date:
NOTE: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly,
each stockholder should sign. When signing as executor, administrator, attorney, trustee or
guardian, please give full title as such. If the signer is a corporation, please sign full
corporate name by duly authorized officer, giving full title as such. If signer is a partnership,
please sign in partnership name by authorized person.
PROXY
OPKO HEALTH, INC.
4400 Biscayne Blvd., Suite 1180
Miami, Florida 33137
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS JUNE 11, 2008
The undersigned hereby appoints Rao Uppaluri and Steven Rubin, and each of them severally, as
proxies of the undersigned, each with full power to appoint his substitute, to represent the
undersigned at the Annual Meeting of Stockholders of OPKO Health, Inc. (the Company) to be held on
June 11, 2008, and at any adjournments thereof, and to vote thereat all shares of common and Series
A Preferred Stock of the Company held of record by the undersigned at the close of business on April
23, 2008 in accordance with the instructions set forth on this proxy card and, in their discretion,
to vote such shares on any other business as may properly come before the meeting and on matters
incident to the conduct of the meeting. Any proxy heretofore given by the undersigned with respect
to such stock is hereby revoked.
PLEASE MARK, DATE AND SIGN THIS PROXY ON THE REVERSE SIDE AND RETURN IT IN THE ENCLOSED ENVELOPE