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MOLECULAR DEVICES CORPORATION
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(Name
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TABLE OF CONTENTS
MOLECULAR DEVICES CORPORATION
1311 Orleans Drive
Sunnyvale, CA 94089
1311 Orleans Drive
Sunnyvale, CA 94089
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 23, 2002
-----------------
TO THE STOCKHOLDERS OF MOLECULAR DEVICES CORPORATION:
Notice Is Hereby Given that11, 2006
DearStockholder:
You are cordially invited to attend the Annual Meeting of Stockholders ofMolecular Devices Corporation, a Delaware corporation (the "Company"),corporation. The meeting will be held on
Thursday, May 23, 2002 at 10:30 a.m. local time at the Company'sMolecular Devices’ corporate headquarters, located at 1311 Orleans Drive, Sunnyvale, California 94089, on Thursday, May 11, 2006 at 10:30 a.m. local time, for the following purposes:
(1) To elect directors to serve for the ensuing year and until their
successors are elected.
(2) To approve the Company's 1995 Stock Option Plan, as amended, to
increase the aggregate number of shares of Common Stock authorized for
issuance under such plan by 500,000 shares.
(3) To approve the Company's 1995 Employee Stock Purchase Plan, as
amended, to increase the aggregate number of shares of Common Stock
authorized for issuance under such plan by 200,000 shares.
(4) To ratify the selection of Ernst & Young LLP as independent auditors
of the Company for its fiscal year ending December 31, 2002.
(5) To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
The foregoing
| 1. | To elect directors to serve for the ensuing year and until their successors are elected. | |
| 2. | To ratify the selection by the Audit Committee of the Board of Directors of Ernst & Young LLP as Molecular Devices’ independent registered public accounting firm for the fiscal year ending December 31, 2006. | |
| 3. | To conduct any other business properly brought before the meeting. |
These items of business are more fully described in the Proxy Statement accompanying this Notice.
The record date for the Annual Meeting is March 30, 2006. Only stockholders of record at the close of business on that date may vote at the meeting or any adjournment thereof.
By Order of the Board of Directors has fixed
James C. Kitch
Secretary
Sunnyvale, California
April 5, 2006
You are cordially invited to attend the meeting in person. Whether or not you expect to attend the meeting, please complete, date, sign and return the enclosed proxy as promptly as possible in order to ensure your representation at the meeting. A return envelope is enclosed for your convenience. Even if you have voted by proxy, you may still vote in person if you attend the meeting. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the meeting, you must obtain a proxy issued in your name from that record holder.
MOLECULAR DEVICES CORPORATION
1311 Orleans Drive
Sunnyvale, CA 94089
1311 Orleans Drive
Sunnyvale, CA 94089
PROXY STATEMENT
FOR THE 2006 ANNUAL MEETING OF STOCKHOLDERS
MAY 11, 2006
FOR THE 2006 ANNUAL MEETING OF STOCKHOLDERS
MAY 11, 2006
QUESTIONS AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING
Why am I receiving these materials?
We sent you this proxy statement and the enclosed proxy card because the Board of Directors of Molecular Devices Corporation is soliciting your proxy to vote at Molecular Devices’ 2006 Annual Meeting of Stockholders. You are invited to attend the Annual Meeting, and we request that you vote on the proposals described in this proxy statement. You do not need to attend the meeting to vote your shares, however. Instead, you may simply complete, sign and return the enclosed proxy card.
Molecular Devices intends to mail this proxy statement and the accompanying proxy card on or about April 13, 2006 to all stockholders of record entitled to vote at the Annual Meeting.
Who can vote at the Annual Meeting?
Only stockholders of record at the close of business on March 29, 2002,
as the record date for the determination of stockholders30, 2006 will be entitled to notice of
and to vote at the Annual Meeting. On this record date, there were 16,938,519 shares of common stock outstanding and entitled to vote.
Stockholder of Record: Shares Registered in Your Name
If on March 30, 2006, your shares were registered directly in your name with Molecular Devices’ transfer agent, Computershare Limited, then you are a stockholder of record. As a stockholder of record, you may vote in person at the meeting or vote by proxy. Whether or not you plan to attend the meeting, we urge you to fill out and return the enclosed proxy card to ensure your vote is counted.
Beneficial Owner: Shares Registered in the Name of a Broker or Bank
If on March 30, 2006, your shares were held not in your name, but rather in an account at a brokerage firm, bank, dealer, or other similar organization, then you are the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by that organization. The organization holding your account is considered to be the stockholder of record for purposes of voting at the Annual MeetingMeeting. As a beneficial owner, you have the right to direct your broker or other agent on how to vote the shares in your account. You are also invited to attend the Annual Meeting. Since you are not the stockholder of record, however, you may not vote your shares in person at the meeting unless you request and at any adjournmentobtain a valid proxy from your broker or postponement
thereof.
By Orderother agent.
What am I voting on?
There are two matters scheduled for a vote:
| • | Election of eight directors; and | |
| • | The ratification of Ernst & Young LLP as Molecular Devices’ independent registered public accounting firm for the fiscal year ending December 31, 2006. |
How do I vote?
You may either vote “For” all the nominees to the Board of Directors /s/ JAMES C. KITCH
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James C. Kitch
SECRETARY
Sunnyvale, California
April 22, 2002
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ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.
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MOLECULAR DEVICES CORPORATION
1311 ORLEANS DRIVE
SUNNYVALE, CA 94089
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PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 23, 2002
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INFORMATION CONCERNING SOLICITATION AND VOTING
GENERALor you may “Withhold” your vote for any nominee you specify. For the ratification of Ernst & Young LLP as Molecular Devices’ independent registered
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public accounting firm for the fiscal year ending December 31, 2006, you may vote “For” or “Against” or abstain from voting. The procedures for voting are fairly simple:
Stockholder of Record: Shares Registered in Your Name
If you are a stockholder of record, you may vote in person at the Annual Meeting, or vote by proxy using the enclosed proxy card. If you vote by proxy, your shares will be voted as you specify on the proxy card. Whether or not you plan to attend the Annual Meeting, we urge you to vote by proxy to ensure your vote is solicited on behalfcounted. You may still attend the Annual Meeting and vote in person if you have already voted by proxy.
| • | To vote in person, come to the Annual Meeting and we will give you a ballot when you arrive. | |
| • | To vote using the enclosed proxy card, simply complete, sign and date the enclosed proxy card and return it promptly in the envelope provided. If you return your signed proxy card to us before the Annual Meeting, we will vote your shares as you direct. |
Beneficial Owner: Shares Registered in the Name of Broker or Bank
If you are a beneficial owner of shares registered in the name of your broker, bank, or other agent, you should have received a proxy card and voting instructions with these proxy materials from that organization rather than from Molecular Devices. Simply complete and mail the proxy card to ensure that your vote is counted. To vote in person at the Annual Meeting, you must obtain a valid proxy from your broker, bank, or other agent. Follow the instructions from your broker or bank included with these proxy materials, or contact your broker or bank to request a proxy form.
How many votes do I have?
On each matter to be voted upon, you have one vote for each share of common stock you own as of March 30, 2006.
What if I return a proxy card but do not make specific choices?
If you return a signed and dated proxy card without marking any voting selections, your shares will be voted “For” the election of all of the nominees to the Board of Directors (the
"Board")and “For” the ratification of Ernst & Young LLP as Molecular Devices Corporation, a Delaware corporation ("Molecular
Devices" orDevices’ independent registered public accounting firm for the "Company"), for usefiscal year ending December 31, 2006. If any other matter is properly presented at the Annual Meetingmeeting, your proxy (i.e., one of Stockholdersthe individuals named on your proxy card) will vote your shares using his best judgment.
Who is paying for this proxy solicitation?
We will pay for the entire cost of soliciting proxies. In addition to these mailed proxy materials, our directors and employees may also solicit proxies in person, by telephone, or by other means of communication. Directors and employees will not be held on May 23, 2002, at 10:30 a.m. local time (the "Annual Meeting"),paid any additional compensation for soliciting proxies. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.
What does it mean if I receive more than one proxy card?
If you receive more than one proxy card, your shares are registered in more than one name or are registered in different accounts. Please complete, sign and returneachproxy card to ensure that all of your shares are voted.
Can I change my vote after submitting my proxy?
Yes. You may revoke your proxy at any adjournment or postponement thereof, fortime before the purposes set forth herein and in
the accompanying Notice of Annual Meeting. The Annual Meeting will be heldfinal vote at the Company's corporate headquarters, locatedmeeting. If you are the record holder of your shares, you may revoke your proxy in any one of three ways:
| • | You may submit another properly completed proxy card with a later date. | |
| • | You may send a written notice that you are revoking your proxy to Molecular Devices’ Secretary at 1311 Orleans Drive, Sunnyvale, California 94089. | |
| • | You may attend the Annual Meeting and vote in person. Simply attending the meeting will not, by itself, revoke your proxy. |
If your shares are held by your broker or bank as a nominee or agent, you should follow the instructions provided by your broker or bank.
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When are stockholder proposals due for next year’s Annual Meeting?
To be considered for inclusion in next year’s proxy materials, your proposal must be submitted in writing by December 6, 2006, to Molecular Devices’ Secretary at 1311 Orleans Drive, Sunnyvale, California 94089. The Company intendsHowever, if Molecular Devices’ 2007 Annual Meeting of Stockholders is not held between April 11, 2007 and June 10, 2007, then the deadline will be a reasonable time prior to the time we begin to print and mail thisour proxy statement and
accompanying proxy card onmaterials.
If you wish to bring a proposal before the stockholders or about April 22, 2002 to all stockholders entitled
to votenominate a director at the 2007 Annual Meeting.
SOLICITATION
The Company will bear the entire costMeeting of solicitation of proxies, including
preparation, assembly, printing and mailing of thisStockholders, but you are not requesting that your proposal or nomination be included in next year’s proxy statement, the proxy
card and any additional information furnished to stockholders. Copies of
solicitation materials, will be furnished to banks, brokerage houses, fiduciaries
and custodians holdingyou must notify Molecular Devices’ Secretary, in their names shares of Common Stock beneficially owned
by others to forward to such beneficial owners. The Company may reimburse
persons representing beneficial owners of Common Stock for their costs of
forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, telegram or
personal solicitation by directors, officers or other regular employees of the
Company. No additional compensation will be paid to directors, officers or other
regular employees for such services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock atwriting, not later than the close of business on March 29, 2002 will be entitled to notice of and to vote at the Annual Meeting. At12, 2007, nor earlier than the close of business on March 29, 2002,February 10, 2007. We also advise you to review Molecular Devices’ Bylaws, which contain additional requirements about advance notice of stockholder proposals and director nominations. The chairman of the Company had outstanding2007 Annual Meeting of Stockholders may determine, if the facts warrant, that a matter has not been properly brought before the meeting and, entitledtherefore, may not be considered at the meeting. In addition, if you do not also comply with the requirements ofRule 14a-4(c)(2) under the Securities Exchange Act of 1934, our management will have discretionary authority to vote 15,279,435all shares for which it has proxies in opposition to any such stockholder proposal or director nomination.
How are votes counted?
Votes will be counted by the inspector of Common Stock.
Eachelection appointed for the meeting, who will separately count “For” and “Withhold” and, with respect to the ratification of Ernst & Young LLP as Molecular Devices’ independent registered public accounting firm for the fiscal year ending December 31, 2006, “Against” votes, abstentions and broker non-votes. Abstentions will be counted towards the vote total for each proposal and will have the same effect as “Against” votes. Broker non-votes have no effect and will not be counted towards the vote total for any proposal. A “broker non-vote” occurs when a nominee, such as a broker or bank, holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that proposal and has not received instructions with respect to that proposal from the beneficial owner (despite voting on at least one other proposal for which it does have discretionary authority or for which it has received instructions). In the event that a broker, bank, custodian, nominee or other record holder of record of Common StockMolecular Devices common stock indicates on such datea proxy that it does not have discretionary authority to vote certain shares on a particular proposal, then those shares will be entitledtreated as broker non-votes with respect to one
vote forthat proposal.
How many votes are needed to approve each share held on all matters to be voted upon atproposal?
| • | For the election of directors, the eight nominees receiving the most “For” votes (among votes properly cast in person or by proxy) will be elected. Only votes “For” or “Withheld” will affect the outcome. | |
| • | Proposal No. 2, the ratification of Ernst & Young LLP as Molecular Devices’ independent registered public accounting firm for the fiscal year ending December 31, 2006, must receive a “For” vote from the majority of shares present and entitled to vote either in person or by proxy to be approved. If you “Abstain” from voting, it will have the same effect as an “Against” vote. Broker non-votes will have no effect. |
What is the Annual Meeting.
quorum requirement?
A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if at least a majority of the outstanding shares entitled to vote are represented by votes at the meeting or by proxy. All votes will be tabulated byOn the inspector of election appointed for the meeting, who will separately tabulate
affirmativerecord date, there were 16,938,519 shares outstanding and negative votes, abstentions and broker non-votes. Abstentionsentitled to vote.
Your shares will be counted towards the tabulation of votes castquorum only if you submit a valid proxy (or one is submitted on proposals presented toyour behalf by your broker, bank or other nominee) or if you vote in person at the stockholdersmeeting. Abstentions and broker non-votes will have the same effect as negative votes. Broker
non-votes arebe counted towards athe quorum but are not counted for any purpose in
determining whether a matter has been approved.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation hasrequirement. If there is no quorum, the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretarychairman of the Company at the Company's principal executive office, 1311
Orleans Drive, Sunnyvale, California 94089, a written notice of revocationmeeting or a duly executed proxy bearing a later date, or it may be revoked by attendingmajority of the meeting and voting in person. Attendancevotes present at the meeting may adjourn the meeting to another date.
How can I find out the results of the voting at the Annual Meeting?
Preliminary voting results will not, by itself,
revoke a proxy.
STOCKHOLDER PROPOSALS
be announced at the Annual Meeting. Final voting results will be published in Molecular Devices’ quarterly report onForm 10-Q for the second quarter of 2006.
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PROPOSAL 1
ELECTION OF DIRECTORS
The deadlinenames of the persons who are nominees for submitting a stockholder proposal for inclusiondirector and their positions and offices with Molecular Devices are set forth in the Company's proxy statement and form of proxy for the Company's 2003 annual
meeting of stockholders pursuant to Rule 14a-8 of the Securities and Exchange
Commission is December 13, 2002. Stockholders wishing to submit proposals or
director nominations that are not to be included in such proxy statement and
proxy must do so by March 24, 2003. Such proposal or nomination, however, may
not be submitted before February 22, 2003. Stockholders are also advised to
review the Company's Bylaws, which contain additional requirements with respect
to advance notice of stockholder proposals and director nominations.
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PROPOSAL 1
ELECTION OF DIRECTORS
There are eight nominees for the eight Board positions presently authorized
in the Company's Bylaws.table below. Each director to be elected will hold office until the next annual meeting2007 Annual Meeting of stockholdersStockholders and until his successor is elected and has qualified, or until such director'sdirector’s earlier death, resignation or removal. The authorized number of directors is presently nine, and, effective as of the Annual Meeting, the authorized number of directors will be reduced to eight.
Each of Molecular Devices’ current directors, except for Paul Goddard, Ph.D., has been nominated for election by the Board of Directors upon recommendation by the Nominating Committee of the Board of Directors. Dr. Goddard intends to serve on the Board of Directors through the date of the Annual Meeting. Except for Alan Finkel, Ph.D., Molecular Devices’ former Senior Vice President and Chief Technology Officer, each nominee listed below is currently a director of the Company, having beenMolecular Devices who was previously elected by the stockholders. In November 2005, Molecular Devices’ Board of Directors elected Dr. Finkel to the Board upon the recommendation of the Nominating Committee. Dr. Finkel was recommended for election to the Board of Directors by Molecular Devices’ Chief Executive Officer. Although there is no formal policy, Molecular Devices encourages its directors to attend Molecular Devices’ annual meetings. Other than Messrs. Anderson and Bowman, all of Molecular Devices’ directors attended the 2005 Annual Meeting of Stockholders.
Directors are elected by a plurality of the votes presentproperly cast in person or represented by proxy and entitled to vote.proxy. The eight nominees receiving the highest number of affirmative votes will be elected. Shares represented by executed proxies will be voted, if authority to do so is not withheld, for the election of the eight nominees named below. In the event thatIf any nominee should bebecomes unavailable for election as a result of an unexpected occurrence, suchyour shares will be voted for the election of sucha substitute nominee as managementproposed by Molecular Devices’ management. Proxies may propose.not be voted for more than eight directors, however. Each person nominated for election has agreed to serve if elected and management has no reason to believe that any nominee will be unable to serve.
NOMINEES
The namesfollowing is a brief biography of the nominees and certain information about them are set forth
below:
each nominee for director, including their respective ages as of March 31, 2006.
Name | Age | Position Held with Molecular Devices | ||||
| Joseph D. Keegan, | 52 | President and Chief Executive | ||||
| Moshe H. | 77 | Director | ||||
| David L. | 62 | Director | ||||
| A. Blaine | 59 | Director | ||||
| Alan Finkel, Ph.D. | 53 | Director | ||||
| André F. | 70 | Director | ||||
| Harden M. McConnell, | 78 | Director | ||||
| J. Allan Waitz, | 70 | Director | ||||
Joseph D. KEEGAN, PH.D.Keegan, Ph.D., has been a director of Molecular Devices since 1998. Dr. Keegan was appointed as President and Chief Executive Officer of the CompanyMolecular Devices effective March 30, 1998. From 1992 to 1998, Dr. Keegan served in various positions at Becton Dickinson and Company, a research and diagnostic company, including the positions of Vice President, Sales and Service, Vice President, General Manager of the Immunocytometry Systems Division and, most recently, President of the Worldwide Tissue Culture Business. From 1987 to 1992, he was employed by LEICA, Inc., a microscope manufacturer, where he held various senior management positions. Dr. Keegan is a memberdirector of the Board
of Directors of Upstate Group,Essen Instruments, Inc. Dr. Keegan holds a Ph.D. in Chemistry from Stanford University.
MOSHE
Moshe H. ALAFIAlafi has been a director of the CompanyMolecular Devices since 1985. Mr. Alafi has been the General Partner of Alafi Capital Company, which specializes in forming new companies in the medical, pharmaceutical and biological fields, since January 1984.
DAVID
David L. ANDERSONAnderson has been a director of the CompanyMolecular Devices since 1983. Mr. Anderson has been a Managing Director of the General Partner of Sutter Hill Ventures, aA California Limited Partnership, a venture capital
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company, since 1974. Mr. Anderson is also a director of Dionex Corporation, a leading supplier of analytical instrumentation, and BroadVision, Inc., a software company.
A. BLAINE BOWMANBlaine Bowman has been a director of the CompanyMolecular Devices since 1985. Mr. Bowman is also a director of Dionex Corporation, a leading supplier of analytical instrumentation. Previously, Mr. Bowman was Chairman of the Board of Dionex Corporation from 2002 to 2005, and has been since 1980, President, Chief Executive Officer and a director of Dionex Corporation.
PAUL GODDARD, PH.D.Corporation from 1980 to 2002.
Alan Finkel, Ph.D., has been a director of Molecular Devices since November 2005. From July 2004 to December 2005, Dr. Finkel served initially as the Company since September
1995. Dr. Goddard is the Chairman of A.P. Pharma, Inc., which develops,
manufactures and sells patented delivery systems to enhance the safety and
effectiveness of prescription products. Dr. Goddard served asVice President and Chief ExecutiveTechnical Officer of Elan Pharmaceuticals, a division of Elan PLC, from
1998 through 2000. Dr. Goddard served as Chairman, Chief Executive OfficerMolecular Devices and
Director of Neurex Corporation from 1991 through 1998 when Neurex Corporation
was
3
acquired by Elan PLC. From 1976 through February 1991, Dr. Goddard was employed
by SmithKline Beecham Corp., a pharmaceutical company, and its predecessors in
various positions, most recently as its Senior Vice President and Director,
Japan-Pacific. He is also a directorChief Technology Officer. Dr. Finkel was the founder of Onyx Pharmaceuticals,Axon Instruments, Inc. and Adolar
Corporation.
ANDREserved as its Chief Executive Officer from 1983 to until the acquisition of Axon Instruments by Molecular Devices in July 2004. From 2000 to 2003, Dr. Finkel was Adjunct Professor in the School of Biomedical Sciences at the University of Queensland and a Member of the John Curtin School of Medical Research Strategic Advisory Committee. From 1984 to 1987, Dr. Finkel was a Consulting Assistant Professor of Surgery, Stanford University. In 1981 and 1982, Dr. Finkel was a Research Fellow at the John Curtin School of Medical Research at the Australian National University in Canberra. Dr. Finkel received his doctorate in Electrical Engineering at Monash University, Australia, in 1981.
André F. MARIONMarion has been a director of the CompanyMolecular Devices since September 1995. Mr. Marion was a founder of Applied Biosystems, Inc., a supplier of instruments for biotechnology research, and served as its Chief Operating Officer from 1983 to 1986, its President from 1985 to 1993, its Chief Executive Officer from 1986 to 1993 and its Chairman of the Boardboard from 1987 to February 1993, when it merged with the Perkin-Elmer Corporation, a manufacturer of analytical instruments. Mr. Marion served as Vice President of Perkin-Elmer Corporation and President of its Applied Biosystems Division until his retirement in February 1995. Mr. Marion is presently a management consultant, and also serves as a director of Cygnus, Inc., Applied Imaging Corp., Alpha M.O.S., Aclara Biosciences Corp., Integrated Biosystems
Inc., Quantum Dot Corp., EDC Biosystems and Guava Technologies, Inc.
HARDENof several privately held corporations.
Harden M. MCCONNELL, PH.D.McConnell, Ph.D., founder of the Company,Molecular Devices, has been a director of and a consultant to the CompanyMolecular Devices since the Company'sits inception in July 1983. He is the Robert Eckles Swain Professor of Physical Chemistry, Emeritus at Stanford University and is a member of the National Academy of Sciences. Dr. McConnell has received many awards in recognition of his scientific work, mostwork. Most recently these include the 1987 Pauling Medal for Chemistry and, in 1988, the National Academy of Sciences Award in Chemical Sciences. Dr. McConnell has also received the Wolf Prize (1984), the Wheland Medal (1988), the National Medal of Science (1989), the Peter Debeye Award in Physical Chemistry (1990) and, the Bruker Prize of the Royal Society of Chemistry (1995) and the Welch Award (2002). Dr. McConnell holds a Ph.D. degree from the California Institute of Technology.
J. ALLAN WAITZ, PH.D.Allan Waitz, Ph.D., has been a director of the CompanyMolecular Devices since 1990. Dr.
Waitz is currently retired. Until 1992, Dr. Waitz was President and Chief Executive Officer of DNAX Research Institute of Molecular and Cellular Biology, Inc., a subsidiary of Schering-Plough Corporation, a pharmaceutical company.company, until his retirement in 1992. From 1991 through December 1996, Dr. Waitz served as chairperson of the Area Committee on Microbiology of the National Committee for Clinical Laboratory Standards.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR
OF EACHNAMED NOMINEE.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended December 31, 2001OF THE NOMINEES LISTED ABOVE.
OF EACH
Independence of the Board of Directors held
five meetings
As required under the NASDAQ Stock Market, Inc. (“NASDAQ”)listing standards, a majority of the members of a listed company’s board of directors must qualify as “independent,” as affirmatively determined by the board of directors. Molecular Devices’ Board of Directors consults with Molecular Devices’ counsel to ensure that the Board’s determinations are consistent with all relevant securities and acted by unanimous written consent two times. Theother laws and regulations regarding the definition of “independent,” including those set forth in pertinent listing standards of the NASDAQ, as in effect time to time.
Consistent with these considerations, after review of all relevant transactions or relationships between each director, or any of his family members, and Molecular Devices, its senior management and its independent
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registered public accounting firm, the Board has affirmatively determined that all of Molecular Devices’ directors are independent directors within the meaning of the applicable NASDAQlisting standards, except for Dr. Keegan, the President and Chief Executive Officer of Molecular Devices, and Dr. Finkel, the former Senior Vice President and Chief Technology Officer of Molecular Devices.
Information Regarding the Board of Directors and its Committees
Molecular Devices’ Board of Directors has an Audit Committee, and a Compensation Committee. The Board does not haveCommittee and a Nominating Committee. The following table provides membership information for 2005 for each of these committees:
Name | Audit | Compensation | Nominating | |||||||||
| Moshe H. Alafi | X | |||||||||||
| David L. Anderson | X | X | ||||||||||
| A. Blaine Bowman | X | X | ||||||||||
| Paul Goddard, Ph.D. | X | X | ||||||||||
| André F. Marion | X | X | X | |||||||||
| J. Allan Waitz, Ph.D. | X | X | ||||||||||
Below is a description of each committee of the Board of Directors. Each of the committees has authority to engage legal counsel or other experts or consultants, as it deems appropriate to carry out its responsibilities. The Board of Directors has determined that each member of each committee meets the applicable rules and regulations regarding “independence” and that each member is free of any relationship that would interfere with his individual exercise of independent judgment with regard to Molecular Devices.
Audit Committee
The Audit Committee meets with the Company'sMolecular Devices’ independent auditorsregistered public accounting firm at least annually to review, the resultsupon completion of the annual audit, financial results for the year; retains Molecular Devices’ independent registered public accounting firm; is responsible for the engagement of Molecular Devices’ independent registered public accounting firm, including the scope, extent and discussprocedures of the financial
statements; recommends toaudit and the Board the independent auditorscompensation to be retained;
overseespaid therefore; assists and interacts with Molecular Devices’ independent registered public accounting firm so that it may carry out its duties in the most efficient and cost effective manner; maintains a log of complaints regarding accounting or auditing matters submitted by employees and conducts the appropriate investigation; and determines and approves all professional services provided to Molecular Devices by its independent registered public accounting firm, prior to commencement of the engagement, and considers the possible effect of such services on the independence of theMolecular Devices’ independent auditors; evaluates the independent
auditors' performance; and receives and considers the independent auditors'
comments as to controls, adequacy of staff and management performance and
procedures in connection with audit and financial controls.registered public accounting firm. The Audit Committee meets at least quarterly. The Audit Committee is governed by a written Audit Committee Charter adopted by the Board of Directors. The Audit Committee charter can be found in the Corporate Governance section of the Investor Relations section of Molecular Devices’ website atwww.moleculardevices.com. The Audit Committee is currently composed of three directors: Dr. McConnell,Mr. Bowman, Dr. Goddard and Mr. Bowman. It
met two timesMarion. The Audit Committee held five meetings during the fiscal year ended December 31, 2001. All2005. The Board of Directors annually reviews the NASDAQ listing standards definition of independence for Audit Committee members and has determined that all members of the
Company'sMolecular Devices’ Audit Committee are independent (as independence is currently defined in Rule 4200(a)(14)4350(d)(2)(A)(i) and (ii) of the NASDNASDAQ listing standards). The Board of Directors has also determined that each member of the Audit Committee qualifies as an “audit committee financial expert,” as defined in the Securities and Exchange Commission rules.
Compensation Committee
The Compensation Committee makes recommendations concerning salaries and incentive compensation, awards stock options to employees and consultants under the Company'sMolecular Devices’ stock option plans, and otherwise determines compensation levels and performs such other functions regarding compensation as the Board may delegate. The Compensation Committee is currently composed of three outside directors: Mr. Anderson, Mr. Marion and Dr. Waitz. It metThe Compensation Committee held one timemeeting during the fiscal year ended December 31, 2001.
During2005. All members of
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Molecular Devices’ Compensation Committee are independent (as independence is defined in Rule 4200(a)(15) of the NASDAQ listing standards).
Nominating Committee
The Nominating Committee is responsible for (1) identifying, reviewing and evaluating candidates to serve as directors of Molecular Devices; (2) serving as a focal point for communication between such candidates, non-committee directors and Molecular Devices’ management; (3) recommending such candidates to the Board; and (4) making other recommendations to the Board regarding affairs relating to the directors of Molecular Devices, including director compensation. The Nominating Committee charter can be found in the Corporate Governance section of the Investor Relations section of Molecular Devices’ website atwww.moleculardevices.com. The Nominating Committee is currently composed of Mr. Bowman, Dr. Goddard, Mr. Alafi, Mr. Marion, Dr. Waitz and Mr. Anderson. All members of Molecular Devices’ Nominating Committee are independent (as independence is defined in Rule 4200(a)(15) of the NASDAQ listing standards). The Nominating Committee held one meeting during the fiscal year ended December 31, 2001, all2005. The Nominating Committee met on February 9, 2006 to review and recommend director nominations submitted in this proxy statement, which nominations were subsequently approved by the Board.
The Nominating Committee believes that candidates for director should have certain minimum qualifications, including being able to read and understand basic financial statements, being over 21 years of age and having the highest personal integrity and ethics. The Nominating Committee also intends to consider such factors as possessing relevant expertise upon which to be able to offer advice and guidance to management, having sufficient time to devote to the affairs of Molecular Devices, demonstrated excellence in his or her field, having the ability to exercise sound business judgment and having the commitment to rigorously represent the long-term interests of Molecular Devices’ stockholders. However, the Nominating Committee retains the right to modify these qualifications from time to time. Candidates for director nominees are evaluated by the Nominating Committee in the context of the current composition of the Board, the operating requirements of Molecular Devices and the long-term interests of Molecular Devices’ stockholders. In conducting this assessment, the Nominating Committee considers the criteria for director qualifications set by the Board of Directors, as well as diversity, age, skills, and such other factors as it deems appropriate given the current needs of the Board and Molecular Devices to maintain a balance of knowledge, experience and capability. In the case of incumbent directors except Mr.
Alafiwhose terms of office are set to expire, the Nominating Committee reviews such directors’ overall service to Molecular Devices during their term, including the number of meetings attended, level of participation, quality of performance, and any other relationships and transactions that might impair such directors’ independence. In the case of new director candidates, the Nominating Committee also determines whether the nominee must be independent for NASDAQ purposes, which determination is based upon applicable NASDAQ listing standards, applicable SEC rules and regulations and the advice of counsel, if necessary. The Nominating Committee may also use its network of contacts to compile a list of potential candidates, but may also engage, if it deems appropriate, a professional search firm. To date, Molecular Devices has not paid a fee to any third party to assist in the process of identifying or evaluating director candidates. The Nominating Committee conducts any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs of the Board. The Nominating Committee meets to discuss and consider such candidates’ qualifications and then selects a nominee for recommendation to the Board by majority vote.
The Nominating Committee will consider director candidates recommended by stockholders. The Nominating Committee does not intend to alter the manner in which it evaluates candidates, including the minimum criteria set forth above, based on whether the candidate was recommended by a stockholder or not. Stockholders who wish to recommend individuals for consideration by the Nominating Committee to become nominees for election to the Board for inclusion in the proxy statement for Molecular Devices’ annual meeting of stockholders are welcome to deliver a written recommendation to the Nominating Committee at the following address: 1311 Orleans Drive, Sunnyvale, California 94089 at least 75%120 days prior to the anniversary date of the aggregatemailing of Molecular Devices’ proxy statement for the last annual meeting of stockholders. Please include with all submissions the full name of the proposed nominee, a description of the proposed nominee’s business experience for at least the previous five years, complete biographical information, a description of the proposed nominee’s qualifications as a director and a
7
representation that the nominating stockholder is a beneficial or record owner of Molecular Devices’ stock. Any such submission must be accompanied by the written consent of the proposed nominee to be named as a nominee and to serve as a director if elected. To date, the Nominating Committee has not received any such submission from a stockholder of Molecular Devices.
Meetings of the Board of Directors
The Board of Directors met five times during the last fiscal year. Each Board member, except for Mr. Marion, attended 75% or more of the total number of meetings of the Board held
during the period for which they were a director, and all directors except Dr.
Goddard attended at least 75% of the aggregate of the meetings of the Board committees on which theysuch director served held during the period forperiod.
Stockholder Communications with the Board of Directors
Molecular Devices’ Board of Directors has adopted a formal process by which they were a
committee member.
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stockholders may communicate with the Board or any of its directors. This information is available in the Corporate Governance section of the Investor Relations section of Molecular Devices’ website atwww.moleculardevices.com.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS(1)
DIRECTORS(1)
The audit committeeAudit Committee oversees the Company'sMolecular Devices’ financial reporting process on behalf of the boardBoard of directors.Directors. Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal controls.control over financial reporting and disclosure controls and procedures. In fulfilling its oversight responsibilities, the committeeAudit Committee reviewed and discussed the audited consolidated financial statements included in theMolecular Devices’ Annual Report onForm 10-K for the year ended December 31, 2005 with management, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements.
The committee reviewedAudit Committee is responsible for reviewing, approving and managing the engagement of Molecular Devices’ independent registered public accounting firm, including the scope, extent and procedures of the annual audit and compensation to be paid therefore, and all other matters the Audit Committee deems appropriate, including Molecular Devices’ independent registered public accounting firm’s accountability to the Board and the Audit Committee. The Audit Committee discussed with theMolecular Devices’ independent auditors, who areregistered public accounting firm, which is responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles, their judgmentsits judgment as to the quality, not just the acceptability, of the Company'sMolecular Devices’ accounting principles and such other matters as are required to be discussed with the committeeAudit Committee under auditing standards generally accepted in the United States, including those described in Statement on Auditing Standards No. 61, as amended, "Communication“Communication with Audit Committees"Committees,” and discussed and reviewed the results of theMolecular Devices’ independent auditors'registered public accounting firm’s examination of the financial statements. In addition, the committeeAudit Committee has discussed with thereceived from Molecular Devices’ independent auditors the auditors' independence from
managementregistered public accounting firm written disclosures and the Company including the matters in the written disclosuresletter required by the Independence Standards Board Standard No. 1, "Independence“Independence Discussions with Audit Committees."Committees,” and discussed with Molecular Devices’ independent registered public accounting firm the independent registered public accounting firm’s independence from management and Molecular Devices. The committeeAudit Committee also considered whether the provision of non-audit services arewas compatible with maintaining auditor'sthe independent registered public accounting firm’s independence.
The committeeAudit Committee discussed with the Company'sMolecular Devices’ independent auditorsregistered public accounting firm the overall scope and plans for their respectiveits audits. The committeeAudit Committee meets with the
internal andMolecular Devices’ independent auditors,registered public accounting firm, with and without management present, to discuss the results of theirits examinations, theirits evaluations of the Company'sMolecular Devices’ internal controls,control over financial reporting and the overall quality of the Company's financial reporting.Molecular
(1) The committee held two meetings during fiscal year 2001.
In reliance on the reviews and discussions referred to above, the committee
recommended to the board of directors (and the board has approved) that the
audited financial statements be included in the Annual Report on Form 10-K for
the year ended December 31, 2001 for filing with the Securities and Exchange
Commission. The committee and the board have also recommended, subject to
stockholder approval, the selection of the Company's independent auditors.
Audit Committee
A. Blaine Bowman
Paul Goddard, Ph.D.
Harden M. McConnell, Ph.D.
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(1) This material in this report is not "soliciting“soliciting material,"” is not deemed "filed"“filed” with the SEC and is not to be incorporated by reference ininto any filing of the CompanyMolecular Devices under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
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PROPOSAL 2
APPROVAL OF 1995 STOCK OPTION PLAN, AS AMENDED
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Devices’ financial reporting. The Audit Committee held five meetings during the fiscal year ended December 31, 2005.
In October 1995,reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors adopted, and the stockholders
subsequently approved, the Company's 1995 Stock Option Plan (the "Option Plan").
There are 3,750,000 shares of Common Stock reserved under the Option Plan.
In April 2001,(and the Board approved an amendment tohas approved) that the Option Plan to
eliminate certain provisions that concernaudited consolidated financial statements be included in Molecular Devices’ Annual Report onForm 10-K for the repricing of options granted
thereunder. These provisions had expressly conferred authority onyear ended December 31, 2005 for filing with the Board to
offer optionholders the opportunity to replace outstanding higher priced options
with new lower priced options in the event of a decline in the value of the
Company's Common Stock.
In January 2002, the Board amended the Option Plan,Securities and Exchange Commission. The Audit Committee has also retained, subject to stockholder approval, to increase the number of shares of Common Stock authorized for
issuance under the Option Plan from a total of 3,750,000 shares to a total of
4,250,000 shares. The Board adopted this amendmentratification described in order to ensure that the
Company can continue to grant stock options at levels determined appropriate by
the Board.
As of February 15, 2002, options (net of canceled or expired options)
covering an aggregate of 2,216,900 shares of the Company's Common Stock had been
granted and were outstanding under the Option Plan, and only 293,677 shares of
Common Stock (plus any shares that might in the future be returned to the Option
Plan as a result of cancellations or expiration of options) remained available
for future grant under the Option Plan.
Stockholders are requested in this Proposal 2, to approve the Option Plan,Ernst & Young LLP as amended. The affirmative vote of the holders of a majority of the shares
present in person or represented by proxy and entitled to vote at the meeting
will be required to approve the amendment to the Option Plan. Abstentions will
be counted toward the tabulation of votes cast on proposals presented to the
stockholders and will have the same effect as negative votes. Broker non-votes
are counted towards a quorum, but are not counted for any purpose in determining
whether this matter has been approved.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
The essential features of the Option Plan are outlined below:
GENERAL
The Option Plan providesMolecular Devices’ independent registered public accounting firm for the grant of both incentive and nonstatutory
stock options. Incentive stock options granted under the Option Plan are
intended to qualify as "incentive stock options" within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"). Nonstatutory
stock options granted under the Option Plan are not intended to qualify as
incentive stock options under the Code. See "Federal Income Tax Information" for
a discussion of the tax treatment of options.
PURPOSE
The Board adopted the Option Plan to provide a means by which employees,
directors and consultants of the Company and its affiliates may be given an
opportunity to purchase stock in the Company, to assist in retaining the
services of such persons, to secure and retain the services of persons capable
of filling such positions and to provide incentives for such persons to exert
maximum efforts for the success of the Company and its affiliates. All of the
approximately 370 employees, directors and consultants of the Company and its
affiliates are eligible to participate in the Option Plan.
ADMINISTRATION
The Board administers the Option Plan. Subject to the provisions of the
Option Plan, the Board has the power to construe and interpret the Option Plan
and to determine the persons to whom and the dates on which options will be
granted, the number of shares of Common Stock to be subject to each option, the
time or times during the term of each option within which all or a portion of
such option may be exercised, the exercise price, the type of consideration and
other terms of the option.
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The Board has the power to delegate administration of the Option Plan to a
committee composed of not fewer than two members of the Board. In the discretion
of the Board, a committee may consist solely of two or more outside directors in
accordance with Section 162(m) of the Code or solely of two or more non-employee
directors in accordance with Rule 16b-3 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). The Board has not delegated administration of
the Option Plan to a committee of the Board. As used herein with respect to the
Option Plan, the "Board" refers to any committee the Board appoints as well as
to the Board itself.
The regulations under Section 162(m) of the Code require that the directors
who serve as members of the committee must be "outside directors." The Option
Plan provides that, in the Board's discretion, directors serving on the
committee may be "outside directors" within the meaning of Section 162(m). This
limitation would exclude from the committee directors who are (i) current
employees of the Company or an affiliate, (ii) former employees of the Company
or an affiliate receiving compensation for past services (other than benefits
under a tax-qualified pension Option Plan), (iii) current and former officers of
the Company or an affiliate, (iv) directors currently receiving direct or
indirect remuneration from the Company or an affiliate in any capacity (other
than as a director), and (v) any other person who is otherwise considered an
"outside director" for purposes of Section 162(m). The definition of an "outside
director" under Section 162(m) is generally narrower than the definition of a
"non-employee director" under Rule 16b-3 of the Exchange Act.
ELIGIBILITY
Incentive stock options may be granted under the Option Plan only to
employees (including officers) of the Company and its affiliates. Employees
(including officers), directors and consultants of both the Company and its
affiliates are eligible to receive nonstatutory stock options under the Option
Plan.
No option may be granted under the Option Plan to any person who, at the
time of the grant, owns (or is deemed to own) stock possessing more than 10% of
the total combined voting power of the Company or any affiliate of the Company,
unless the exercise price is at least 110% of the fair market value of the stock
subject to the option on the date of grant and the term of the option does not
exceed five years from the date of grant. In addition, the aggregate fair market
value, determined at the time of grant, of the shares of Common Stock with
respect to which incentive stock options are exercisable for the first time by
an optionholder during any calendar year (under the Option Plan and all other
such plans of the Company and its affiliates) may not exceed $100,000.
No person may be granted options under the Option Plan exercisable for more
than 500,000 shares of Common Stock during any calendar fiscal year (the
"Section 162(m) Limitation").
STOCK SUBJECT TO THE OPTION PLAN
Subject to this Proposal, an aggregate of 3,250,000 shares of Common Stock,
plus up to 1,000,000 shares issuable in connection with the Company's terminated
1988 Stock Option Plan (the "1988 Plan"), is reserved for issuance under the
Option Plan. If options granted under the Option Plan or the 1988 Plan expire or
otherwise terminate without being exercised, the shares of Common Stock not
acquired pursuant to such options again becomes available for issuance under the
Option Plan. If the Company reacquires unvested stock issued under the Option
Plan, the reacquired stock will not again become available for reissuance under
the Option Plan.
TERMS OF OPTIONS
The following is a description of the permissible terms of options under
the Option Plan. Individual option grants may be more restrictive as to any or
all of the permissible terms described below.
EXERCISE PRICE; PAYMENT. The exercise price of incentive stock options may
not be less than 100% of the fair market value of the stock subject to the
option on the date of the grant and, in some cases (see "Eligibility" above),
may not be less than 110% of such fair market value. The exercise price of
nonstatutory options may not be less than 85% of the fair market value of the
stock on the date of grant and, in some cases (see "Eligibility" above), may not
be less than 110% of such fair market value. If options were granted with
exercise prices below market value, deductions for compensation attributable to
the exercise of such options could be limited by Section 162(m) of the Code. See
"Federal Income Tax Information." As of March 28, 2002, the closing price of the
Company's Common Stock as reported on the Nasdaq National Market System was
$18.17 per share.
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The exercise price of options granted under the Option Plan must be paid
either in cash at the time the option is exercised or at the discretion of the
Board, (i) by delivery of other Common Stock of the Company, (ii) pursuant to a
deferred payment arrangement or (iii) in any other form of legal consideration
acceptable to the Board.
OPTION EXERCISE. Options granted under the Option Plan may become
exercisable in cumulative increments ("vest") as determined by the Board. Shares
covered by currently outstanding options under the Option Plan typically vest at
the rate of 20-25% per year during the optionholder's employment by, or service
as a director or consultant to, the Company or an affiliate (collectively,
"service"). Shares covered by options granted in the future under the Option
Plan may be subject to different vesting terms. The Board has the power to
accelerate the time during which an option may vest or be exercised. In
addition, options granted under the Option Plan may permit exercise prior to
vesting, but in such event the optionholder may be required to enter into an
early exercise stock purchase agreement that allows the Company to repurchase
unvested shares, generally at their exercise price, should the optionholder's
service terminate before vesting. To the extent provided by the terms of an
option, an optionholder may satisfy any federal, state or local tax withholding
obligation relating to the exercise of such option by a cash payment upon
exercise, by authorizing the Company to withhold a portion of the stock
otherwise issuable to the optionholder, by delivering already-owned Common Stock
of the Company or by a combination of these means.
TERM. The maximum term of options under the Option Plan is 10 years, except
that in certain cases (see "Eligibility") the maximum term is five years.
Options under the Option Plan generally terminate three months after termination
of the optionholder's service unless (i) such termination is due to the
optionholder's disability, in which case the option may, but need not, provide
that it may be exercised (to the extent the option was exercisable at the time
of the termination of service) at any time within 12 months of such termination;
(ii) the optionholder dies before the optionholder's service has terminated, or
within a period specified in the option after termination of such service, in
which case the option may, but need not, provide that it may be exercised (to
the extent the option was exercisable at the time of the optionholder's death)
within 18 months of the optionholder's death by the person or persons to whom
the rights to such option pass by will or by the laws of descent and
distribution; or (iii) the option by its terms specifically provides otherwise.
An optionholder may designate a beneficiary who may exercise the option
following the optionholder's death. Individual option grants by their terms may
provide for exercise within a longer period of time following termination of
service.
RESTRICTIONS ON TRANSFER
The optionholder may not transfer an incentive stock option otherwise than
by will or by the laws of descent and distribution. During the lifetime of the
optionholder, only the optionholder may exercise an incentive stock option. In
addition to transfers effective on death, an optionee may transfer a
nonstatutory stock option pursuant to certain domestic relations orders and the
transferee may then exercise such option according to its terms. Except as noted
above, options granted under the Option Plan are generally nontransferable.
Shares subject to repurchase by the Company under an early exercise stock
purchase agreement may be subject to restrictions on transfer that the Board
deems appropriate.
ADJUSTMENT PROVISIONS
Transactions not involving receipt of consideration by the Company, such as
a merger, consolidation, reorganization, stock dividend or stock split, may
change the class and number of shares of Common Stock subject to the Option Plan
and outstanding options. In that event, the Option Plan will be appropriately
adjusted as to the class and the maximum number of shares of Common Stock
subject to the Option Plan and the Section 162(m) Limitation, and outstanding
options will be adjusted as to the class, number of shares and price per share
of Common Stock subject to such options.
EFFECT OF CERTAIN CORPORATE EVENTS
The Option Plan provides that, in the event of a dissolution, liquidation
or sale of substantially all of the assets of the Company, specified types of
merger, or other corporate reorganization ("change in control"), to the extent
permitted by law, any surviving corporation will be required to either assume
options outstanding under the Option Plan or substitute similar options for
those outstanding under the Option Plan, or such outstanding options will
8
continue in full force and effect. If any surviving corporation declines to
assume options outstanding under the Option Plan, or to substitute similar
options, then, with respect to optionholders whose service has not terminated,
the vesting and the time during which such options may be exercised may, at the
discretion of the Board, be accelerated. In addition, if any surviving
corporation declines to assume options outstanding under the Option Plan, or to
substitute similar options, then an outstanding option will terminate if the
optionholder does not exercise it before the change in control. The acceleration
of an option in the event of an acquisition or similar corporate event may be
viewed as an anti-takeover provision, which may have the effect of discouraging
a proposal to acquire or otherwise obtain control of the Company.
DURATION, AMENDMENT AND TERMINATION
The Board may suspend or terminate the Option Plan without stockholder
approval or ratification at any time or from time to time. Unless sooner
terminated, the Option Plan will terminate on October 29, 2005.
The Board may also amend the Option Plan at any time or from time to time.
However, no amendment will be effective unless approved by the stockholders of
the Company within 12 months before or after its adoption by the Board if the
amendment would (i) modify the requirements as to eligibility for participation
(to the extent such modification requires stockholder approval in order for the
Option Plan to satisfy Section 422 of the Code, if applicable, or Rule 16b-3 of
the Exchange Act); (ii) increase the number of shares reserved for issuance upon
exercise of options; or (iii) change any other provision of the Option Plan in
any other way if such modification requires stockholder approval in order to
comply with Rule 16b-3 of the Exchange Act or satisfy the requirements of
Section 422 of the Code or any securities exchange listing requirements. The
Board may submit any other amendment to the Option Plan for stockholder
approval, including, but not limited to, amendments intended to satisfy the
requirements of Section 162(m) of the Code regarding the exclusion of
performance-based compensation from the limitation on the deductibility of
compensation paid to certain employees.
FEDERAL INCOME TAX INFORMATION
Long-term capital gains currently are generally subject to lower tax rates
than ordinary income or short-term capital gains. The maximum long-term capital
gains rate for federal income tax purposes is currently 20% while the maximum
ordinary income rate and short-term capital gains rate is effectively 38.6%.
Slightly different rules may apply to optionholders who acquire stock subject to
certain repurchase options or who are subject to Section 16(b) of the Exchange
Act.
INCENTIVE STOCK OPTIONS. Incentive stock options under the Option Plan are
intended to be eligible for the favorable federal income tax treatment accorded
"incentive stock options" under the Code.
There generally are no federal income tax consequences to the optionholder
or the Company by reason of the grant or exercise of an incentive stock option.
However, the exercise of an incentive stock option may increase the
optionholder's alternative minimum tax liability, if any.
If an optionholder holds stock acquired through exercise of an incentive
stock option for at least two years from the date on which the option is granted
and at least one year from the date on which the shares are transferred to the
optionholder upon exercise of the option, any gain or loss on a disposition of
such stock will be a long-term capital gain or loss if the optionholder held the
stock for more than one year.
Generally, if the optionholder disposes of the stock before the expiration
of either of these holding periods (a "disqualifying disposition"), then at the
time of disposition the optionholder will realize taxable ordinary income equal
to the lesser of (i) the excess of the stock's fair market value on the date of
exercise over the exercise price, or (ii) the optionholder's actual gain, if
any, on the purchase and sale. The optionholder's additional gain or any loss
upon the disqualifying disposition will be a capital gain or loss, which will be
long-term or short-term depending on whether the stock was held for more than
one year.
To the extent the optionholder recognizes ordinary income by reason of a
disqualifying disposition, the Company will generally be entitled (subject to
the requirement of reasonableness, the provisions of Section 162(m) of the Code
and the satisfaction of a tax reporting obligation) to a corresponding business
expense deduction in the tax year in which the disqualifying disposition occurs.
ending December 31, 2006.
Audit Committee
A. Blaine Bowman
Paul Goddard, Ph.D.
André F. Marion
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NONSTATUTORY STOCK OPTIONS. Nonstatutory stock options granted under the
Option Plan generally have the following federal income tax consequences:
There are no tax consequences to the optionholder or the Company by reason
of the grant of a nonstatutory stock option. Upon exercise of a nonstatutory
stock option, the optionholder normally will recognize taxable ordinary income
equal to the excess, if any, of the stock's fair market value on the date of
exercise over the option exercise price. However, to the extent the stock is
subject to certain types of vesting restrictions, the taxable event will be
delayed until the vesting restrictions lapse unless the participant elects to be
taxed on receipt of the stock. With respect to employees, the Company is
generally required to withhold from regular wages or supplemental wage payments
an amount based on the ordinary income recognized. Subject to the requirement of
reasonableness, the provisions of Section 162(m) of the Code and the
satisfaction of a tax reporting obligation, the Company will generally be
entitled to a business expense deduction equal to the taxable ordinary income
realized by the optionholder.
Upon disposition of the stock, the optionholder will recognize a capital
gain or loss equal to the difference between the selling price and the sum of
the amount paid for such stock plus any amount recognized as ordinary income
upon exercise of the option (or vesting of the stock). Such gain or loss will be
long-term or short-term depending on whether the stock was held for more than
one year. Slightly different rules may apply to optionholders who acquire stock
subject to certain repurchase options or who are subject to Section 16(b) of the
Exchange Act.
POTENTIAL LIMITATION ON COMPANY DEDUCTIONS. Section 162(m) of the Code
denies a deduction to any publicly held corporation for compensation paid to
certain "covered employees" in a taxable year to the extent that compensation to
such covered employee exceeds $1 million. It is possible that compensation
attributable to stock options, when combined with all other types of
compensation received by a covered employee from the Company, may cause this
limitation to be exceeded in any particular year.
Certain kinds of compensation, including qualified "performance-based
compensation," are disregarded for purposes of the deduction limitation. In
accordance with Treasury regulations issued under Section 162(m), compensation
attributable to stock options will qualify as performance-based compensation if
the option is granted by a compensation committee comprised solely of "outside
directors" and either (i) the plan contains a per-employee limitation on the
number of shares for which options may be granted during a specified period, the
per-employee limitation is approved by the stockholders, and the exercise price
of the option is no less than the fair market value of the stock on the date of
grant, or (ii) the option is granted (or exercisable) only upon the achievement
(as certified in writing by the compensation committee) of an objective
performance goal established in writing by the compensation committee while the
outcome is substantially uncertain, and the option is approved by stockholders.
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PROPOSAL 3
APPROVAL OF 1995 EMPLOYEE STOCK PURCHASE PLAN, AS AMENDED
In October 1995, the Board of Directors adopted, and the stockholders
subsequently approved, the Company's 1995 Employee Stock Purchase Plan (the
"Purchase Plan"). In October 2001, the Board amended and restated the Purchase
Plan to make certain technical amendments, effective as of January 2002. There
are 200,000 shares of Common Stock reserved for issuance under the Purchase
Plan.
In January 2002, the Board amended the Purchase Plan, subject to
stockholder approval, to increase the number of shares of Common Stock
authorized for issuance under the Purchase Plan from a total of 200,000 shares
to a total of 400,000 shares. The Board adopted this amendment in order to
ensure that the Company can continue to grant purchase rights at levels
determined appropriate by the Board.
During the last fiscal year, shares of Common Stock were purchased in the
amounts and at the weighted average prices per share under the Purchase Plan as
follows: Joseph D. Keegan, Ph.D., 365 shares ($17.39), Timothy A. Harkness, 365
shares ($17.39), John S. Senaldi, 365 shares ($17.39), Robert J. Murray, 183
shares ($17.05), Patricia C. Sharp, 183 shares ($17.05), Tony M. Lima, 365
shares ($17.39), all executive officers as a group, 1826 shares ($17.32) and all
employees (excluding executive officers) as a group 35,888 shares ($17.33).
As of February 15, 2002, an aggregate of 156,806 shares of the Company's
Common Stock had been granted under the Purchase Plan. Only 43,194 shares of
Common Stock (plus any shares that might in the future be returned to the
Purchase Plan as a result of cancellations or expiration of purchase rights)
remained available for future grant under the Purchase Plan.
Stockholders are requested in this Proposal 3 to approve the Purchase Plan,
as amended. The affirmative vote of the holders of a majority of the shares
present in person or represented by proxy and entitled to vote at the meeting
will be required to approve the amendment to the Purchase Plan. Abstentions will
be counted toward the tabulation of votes cast on proposals presented to the
stockholders and will have the same effect as negative votes. Broker non-votes
are counted towards a quorum, but are not counted for any purpose in determining
whether this matter has been approved.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 3.
The essential features of the Purchase Plan, as amended, are outlined
below:
PURPOSE
The purpose of the Purchase Plan is to provide a means by which employees
of the Company (and any parent or subsidiary of the Company designated by the
Board to participate in the Purchase Plan) may be given an opportunity to
purchase Common Stock of the Company through payroll deductions, to assist the
Company in retaining the services of its employees, to secure and retain the
services of new employees, and to provide incentives for such persons to exert
maximum efforts for the success of the Company. All of the approximately 370
employees of the Company and its affiliates are eligible to participate in the
Purchase Plan.
The rights to purchase Common Stock granted under the Purchase Plan are
intended to qualify as options issued under an "employee stock purchase plan" as
that term is defined in Section 423(b) of the Code.
ADMINISTRATION
The Board administers the Purchase Plan and has the final power to construe
and interpret both the Purchase Plan and the rights granted under it. The Board
has the power, subject to the provisions of the Purchase Plan, to determine when
and how rights to purchase Common Stock of the Company will be granted, the
provisions of each offering of such rights (which need not be identical), and
whether employees of any parent or subsidiary of the Company will be eligible to
participate in the Purchase Plan.
The Board has the power, which it has not yet exercised, to delegate
administration of the Purchase Plan to a committee composed of not fewer than
two members of the Board. As used herein with respect to the Purchase Plan, the
"Board" refers to any committee the Board appoints as well as to the Board
itself.
11
STOCK SUBJECT TO PURCHASE PLAN
Subject to this Proposal, an aggregate of 400,000 shares of Common Stock is
reserved for issuance under the Purchase Plan. If rights granted under the
Purchase Plan expire, lapse or otherwise terminate without being exercised, the
shares of Common Stock not purchased under such rights again become available
for issuance under the Purchase Plan.
OFFERINGS
The Purchase Plan is implemented by offerings of rights to all eligible
employees from time to time by the Board. The maximum length for an offering
under the Purchase Plan is 27 months. The current offering under the Purchase
Plan commenced on January 2 2002 and will terminate on June 28, 2002. Subject
to this Proposal, the Board plans to adopt a new offering under the Purchase
Plan with an offering period of approximately two years, divided into four
shorter "purchase periods" of approximately six months.
ELIGIBILITY
Any person who is customarily employed at least 20 hours per week and five
months per calendar year by the Company (or by any parent or subsidiary of the
Company designated by the Board) on the first day of an offering is eligible to
participate in that offering, provided that such employee has been continuously
employed by the Company or the designated parent or subsidiary corporation for a
period as long as the Board may require, which period shall not exceed two
years. The Board may provide that officers of the Company who are "highly
compensated" as defined in the Code are not eligible to participate in the
offerings.
However, no employee is eligible to participate in the Purchase Plan if,
immediately after the grant of purchase rights, the employee would own, directly
or indirectly, stock possessing 5% or more of the total combined voting power or
value of all classes of stock of the Company or of any parent or subsidiary of
the Company (including any stock which such employee may purchase under all
outstanding rights and options). In addition, no employee may purchase more than
$25,000 worth of Common Stock (determined at the fair market value of the shares
at the time such rights are granted) under all employee stock purchase plans of
the Company and its parent and subsidiary corporations in any calendar year.
PARTICIPATION IN THE PURCHASE PLAN
On each offering date, each eligible employee, pursuant to an offering made
under the Purchase Plan, shall be granted the right to purchase up to the number
of shares of Common Stock of the Company purchasable with a percentage
designated by the Board not exceeding 15% of such employee's earnings during the
period which begins on the offering date (or such later date as the Board
determines for a particular offering) and ends on the date stated in the
offering, which date shall be no later than the end of the offering.
PURCHASE PRICE
The purchase price per share at which shares of Common Stock are sold in an
offering under the Purchase Plan is the lower of (i) 85% of the fair market
value of a share of Common Stock on first day of the offering or (ii) 85% of the
fair market value of a share of Common Stock on the last day of the purchase
period.
PAYMENT OF PURCHASE PRICE; PAYROLL DEDUCTIONS
The purchase price of the shares is accumulated by payroll deductions over
the offering. At any time during the offering, a participant may reduce or
terminate his or her payroll deductions as the Board provides in the offering. A
participant may not increase or begin such payroll deductions after the
beginning of the offering, except, if the Board provides, in the case of an
employee who first becomes eligible to participate as of a date specified during
the offering. All payroll deductions made for a participant are credited to his
or her account under the Purchase Plan and deposited with the general funds of
the Company. A participant may not make additional payments into such account.
12
PURCHASE OF STOCK
By executing an agreement to participate in the Purchase Plan, the employee
is entitled to purchase shares under the Purchase Plan. In connection with
offerings made under the Purchase Plan, the Board specifies a maximum number of
shares of Common Stock an employee may be granted the right to purchase and the
maximum aggregate number of shares of Common Stock that may be purchased
pursuant to such offering by all participants. If the aggregate number of shares
to be purchased upon exercise of rights granted in the offering would exceed the
maximum aggregate number of shares of Common Stock available, the Board would
make a pro rata allocation of available shares in a uniform and equitable
manner. Unless the employee's participation is discontinued, his or her right to
purchase shares is exercised automatically at the end of the offering at the
applicable price. See "Withdrawal" below.
WITHDRAWAL
While each participant in the Purchase Plan is required to sign an
agreement authorizing payroll deductions, the participant may withdraw from a
given offering by terminating his or her payroll deductions and by delivering to
the Company a notice of withdrawal from the Purchase Plan. Such withdrawal may
be elected at any time prior to the end of the applicable offering, except as
provided otherwise in the offering document.
Upon any withdrawal from an offering by the employee, the Company will
distribute to the employee his or her accumulated payroll deductions without
interest, less any accumulated deductions previously applied to the purchase of
shares of Common Stock on the employee's behalf during such offering, and such
employee's interest in the offering will be automatically terminated. The
employee is not entitled to again participate in that offering. However, an
employee's withdrawal from an offering will not have any effect upon such
employee's eligibility to participate in subsequent offerings under the Purchase
Plan.
TERMINATION OF EMPLOYMENT
Rights granted pursuant to any offering under the Purchase Plan terminate
immediately upon cessation of an employee's employment for any reason, and the
Company will distribute to such employee all of his or her accumulated payroll
deductions, without interest.
RESTRICTIONS ON TRANSFER
Rights granted under the Purchase Plan are not transferable and may be
exercised only by the person to whom such rights are granted.
ADJUSTMENT PROVISIONS
Transactions not involving receipt of consideration by the Company, such as
a merger, consolidation, reorganization, stock dividend or stock split, may
change the type(s), class(es) and number of shares of Common Stock subject to
the Purchase Plan and to outstanding purchase rights. In that event, the
Purchase Plan will be appropriately adjusted in the type(s), class(es) and
maximum number of shares subject to the Purchase Plan and the outstanding
purchase rights granted under the Purchase Plan will be appropriately adjusted
in the type(s), class(es), number of shares and purchase limits of such purchase
rights.
EFFECT OF CERTAIN CORPORATE TRANSACTIONS
In the event of (i) the sale, lease, license or other disposition of all or
substantially all of the assets of the Company, (ii) the sale or other
disposition of at least 90% of the outstanding securities of the Company, or
(iii) certain specified types of merger, consolidation or similar transactions
(each, a "corporate transaction"), any surviving or acquiring corporation may
continue or assume rights outstanding under the Purchase Plan or may substitute
similar rights. If any surviving or acquiring corporation does not assume such
rights or substitute similar rights, then the participants' accumulated payroll
deductions will be used to purchase shares of Common Stock immediately prior to
the corporate transaction under the ongoing offering and the participants'
rights under the ongoing offering will terminate immediately after such
purchase.
13
DURATION, AMENDMENT AND TERMINATION
The Board may suspend or terminate the Purchase Plan at any time.
The Board may amend the Purchase Plan at any time. Any amendment of the
Purchase Plan must be approved by the stockholders within 12 months of its
adoption by the Board if the amendment is necessary for the Purchase Plan to
satisfy Sections 423 of the Code or other applicable laws and regulations.
Rights granted before amendment or termination of the Purchase Plan will
not be altered or impaired by any amendment, suspension or termination of the
Purchase Plan without consent of the employee to whom such rights were granted
except (i) with the consent of the employee to whom such rights were granted,
(ii) as necessary to comply with any laws or governmental regulations or (iii)
as necessary to ensure that the Purchase Plan and any such rights under the
Purchase Plan comply with the requirements of Section 423 of the Code.
FEDERAL INCOME TAX INFORMATION
Rights granted under the Purchase Plan are intended to qualify for
favorable federal income tax treatment associated with rights granted under an
employee stock purchase plan which qualifies under provisions of Section 423 of
the Code.
A participant will be taxed on amounts withheld for the purchase of shares
of Common Stock as if such amounts were actually received. Other than this, no
income will be taxable to a participant until disposition of the acquired
shares, and the method of taxation will depend upon the holding period of the
acquired shares.
If the stock is disposed of more than two years after the beginning of the
offering period and more than one year after the stock is transferred to the
participant, then the lesser of (i) the excess of the fair market value of the
stock at the time of such disposition over the exercise price or (ii) the excess
of the fair market value of the stock as of the beginning of the offering period
over the exercise price (determined as of the beginning of the offering period)
will be treated as ordinary income. Any further gain or any loss will be taxed
as a long-term capital gain or loss. At present, such capital gains generally
are subject to lower tax rates than ordinary income.
If the stock is sold or disposed of before the expiration of either of the
holding periods described above, then the excess of the fair market value of the
stock on the exercise date over the exercise price will be treated as ordinary
income at the time of such disposition. The balance of any gain will be treated
as capital gain. Even if the stock is later disposed of for less than its fair
market value on the exercise date, the same amount of ordinary income is
attributed to the participant, and a capital loss is recognized equal to the
difference between the sales price and the fair market value of the stock on
such exercise date. Any capital gain or loss will be short-term or long-term,
depending on how long the stock has been held.
There are no federal income tax consequences to the Company by reason of
the grant or exercise of rights under the Purchase Plan. The Company is entitled
to a deduction to the extent amounts are taxed as ordinary income to a
participant (subject to the requirement of reasonableness and the satisfaction
of tax reporting obligations).
14
PROPOSAL 4
The Audit Committee of the Board of Directors has selected Ernst & Young LLP as the Company'sMolecular Devices’ independent auditorsregistered public accounting firm for the fiscal year ending December 31, 2002 and2006. The Board of Directors, on behalf of the Audit Committee, has
further directed that management submit the selection of Ernst & Young LLP as Molecular Devices’ independent auditorsregistered public accounting firm for ratification by the stockholders at the Annual Meeting. Ernst & Young LLP has audited the Company'sMolecular Devices’ financial statements since its inception in 1983. Representatives of Ernst & Young LLP are expected to be present at the Annual
Meeting,annual meeting. They will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.
Stockholder ratification of the selection of Ernst & Young LLP as the
Company'sMolecular Devices’ independent auditorsregistered public accounting firm is not required by the Company'sMolecular Devices’ Bylaws or otherwise. However, the Board of Directors, on behalf of the Audit Committee, is submitting the selection of Ernst & Young LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the Audit Committee and the Board
will reconsider whether or not to retain that firm. Even if the selection is ratified, the Audit Committee and the Board in theirits discretion may direct the appointment of different independent auditorsregistered public accounting firm at any time during the year if they determine that such a change would be in the best interests of the CompanyMolecular Devices and its stockholders.
The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote at the Annual Meeting will be required to ratify the selection of Ernst & Young LLP. Abstentions will be counted toward the tabulation of votes cast on proposals presented to the
stockholdersthis proposal and will have the same effect as negative votes. Broker non-votes are counted towards a quorum, but are not counted for any purpose in determining whether this matterproposal has been approved.
DISCLOSURE
ON BEHALF OF AUDITOR FEES
In additionTHE AUDIT COMMITTEE, THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
A VOTE IN FAVOR OF PROPOSAL 2.
Principal Accountant Fees
The following is a summary of the aggregate fees billed as of March 31, 2006 to retainingMolecular Devices by Ernst & Young LLP for professional services rendered during the Company's independent
auditors, tofiscal years ended December 31, 2005 and 2004.
| Fiscal Year Ended | ||||||||
| December 31, | ||||||||
| 2005 | 2004 | |||||||
| Audit Fees | $ | 1,100,000 | $ | 959,000 | ||||
| Audit-Related Fees | — | 313,000 | ||||||
| Tax Fees | 9,000 | — | ||||||
| All Other Fees | — | — | ||||||
| Total Fees | $ | 1,109,000 | $ | 1,272,000 | ||||
Audit Fees. Consists of fees billed for professional services rendered for the audit the consolidatedof Molecular Devices’ financial statements and review of the interim financial statements included in quarterly reports and services that are normally provided by Ernst & Young LLP in connection with statutory and regulatory filings or engagements.
Audit-Related Fees. Consists of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of Molecular Devices’ financial statements and are not reported under “Audit Fees.” During the fiscal year ended December 31, 2001, the Company2004, these services included assurance and its subsidiaries retained Ernst & Young
LLP to provide otherrelated services associated with potential and expect to continue to do so in the future. The
aggregatecompleted business development transactions, as well as audits of Molecular Devices’ 401(k) plan. No audit-related fees incurred for professional services renderedwere billed by Ernst & Young LLP
relating to the fiscal year ending December 31, 2001 were:
AUDIT FEES: $280,000 for services rendered relating to the annual audit of
the Company's consolidated financial statements for the fiscal year ended
December 31, 2001 and the quarterly reviews of the consolidated financial
statements included in the Company's quarterly reports on Form 10-Q filed during
fiscal year 2001.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES: The Company
did not engage Ernst & Young LLP to provide advice to the Company regarding
financial information systems design and implementation during the fiscal year ended December 31, 2001.
ALL OTHER FEES: $402,0002005.
10
Tax Fees. Consists of fees billed for all otherprofessional services rendered duringfor tax compliance, tax advice and tax planning. During the fiscal year ended December 31, 2001. Of2005, these services included tax return preparation for certain international entities and acquired entities. During the fiscal year ended December 31, 2004, Ernst & Young LLP did not provide tax services to Molecular Devices.
All Other Fees. During each of the fiscal years ended December 31, 2005 and 2004, no fees $163,000 relatewere billed by Ernst & Young LLP other than as set forth under “Audit Fees,” “Audit-Related Fees” and “Tax Fees” above.
All fees described above were approved by the Audit Committee.
Pre-Approval of Audit and Non-Audit Services
The Audit Committee pre-approves all audit and permissible non-audit services provided by Molecular Devices’ independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. Pre-approval may be given as part of the Audit Committee’s approval of the scope of the engagement of the independent registered public accounting firm or on an individual explicitcase-by-case basis. The Chairman of the Audit Committee is also authorized to audit relatedpre-approve any services, (which typically include fees for accounting consultations, SEC
Registration Statements, and statutorily required audits in certain locations
outsideprovided the United States whereAudit Committee is advised at its next meeting of any services pre-approved by the Company has operations), and the remaining
$239,000 relate to tax consulting projects.
Chairman.
The Audit Committee has determined that the rendering of allthe services other non-auditthan audit services by Ernst & Young LLP is compatible with maintaining the auditors'principal accountant’s independence.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 4.
15
11
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership of the Company's Common StockMolecular Devices’ common stock as of February 15, 2002March 1, 2006 (except as noted) by: (i) each director and nominee for director; (ii) each of the executive officers named in the Summary Compensation Table;Table presented later in this proxy statement; (iii) all executive officers and directors of the CompanyMolecular Devices as a group; and (iv) all those known by the CompanyMolecular Devices to be beneficial owners of more than five percent of its Common Stock.
common stock.
| Beneficial Ownership(1) | ||||||||
| Percent of | ||||||||
Beneficial Owner | Number of Shares | Total | ||||||
| Franklin Resources, Inc.(2) | 1,451,420 | 8.6 | % | |||||
| One Franklin Parkway | ||||||||
| San Mateo, CA 94403 | ||||||||
| Lord, Abbett & Co. LLC(3) | 1,131,779 | 6.7 | ||||||
| 90 Hudson Street | ||||||||
| Jersey City, NJ 07302 | ||||||||
| Brown Capital Management, Inc.(4) | 1,093,020 | 6.5 | ||||||
| 1201 North Calvert Street | ||||||||
| Baltimore, Maryland 21202 | ||||||||
| Wellington Management Company, LLP(5) | 994,600 | 5.9 | ||||||
| 75 State Street | ||||||||
| Boston, Massachusetts 02109 | ||||||||
| Moshe H. Alafi(6) | 355,040 | 2.1 | ||||||
| Joseph D. Keegan, Ph.D.(7) | 335,599 | 1.9 | ||||||
| Harden M. McConnell, Ph.D.(8) | 234,030 | 1.4 | ||||||
| Robert J. Murray(9) | 150,047 | * | ||||||
| Patricia C. Sharp(10) | 95,325 | * | ||||||
| Timothy A. Harkness(11) | 76,510 | * | ||||||
| A. Blaine Bowman(12) | 72,500 | * | ||||||
| David L. Anderson(13) | 42,500 | * | ||||||
| J. Allan Waitz, Ph.D.(14) | 39,000 | * | ||||||
| André F. Marion(15) | 33,500 | * | ||||||
| Paul Goddard, Ph.D.(16) | 32,500 | * | ||||||
| Thomas J. O’Lenic(17) | 12,022 | * | ||||||
| Alan Finkel, Ph.D.(18) | 5,871 | * | ||||||
| All directors and executive officers as a group (17 persons)(19) | 1,577,374 | 8.8 | ||||||
| * | Less than one percent. | |
| (1) | This table is based upon information supplied by officers, directors and principal stockholders and Schedules 13G filed with the SEC. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, Molecular Devices believes that each of the stockholders named in this table has sole voting and investment power with respect to the shares indicated as beneficially owned. Applicable percentages are based on 16,900,906 shares outstanding on March 1, 2006, adjusted as required by rules promulgated by the SEC. Unless otherwise indicated, the address of each of the individuals and entities listed in this table is c/o Molecular Devices at the address on the first page of this proxy statement. | |
| (2) | Based upon a Schedule 13G/A filed with the SEC on February 8, 2006 by Franklin Resources, Inc. (“FRI”). Such shares are beneficially owned by one or more open or closed-end investment companies or other managed accounts that are investment advisory clients of investment advisers that are direct or indirect subsidiaries of FRI (the “FRI Subsidiaries”). FRI, Charles B. Johnson and Rupert H. Johnson, Jr., each an owner of more than 10% of the outstanding common stock of FRI (the “FRI Shareholders”), may be deemed to |
12
| be beneficial owners of securities held by persons and entities advised by FRI Subsidiaries. Franklin Advisers, Inc., a FRI Subsidiary, has sole voting power over 730,557 of such shares and sole dispositive power over 746,357 of such shares. Franklin Templeton Portfolio Advisors, Inc., a FRI Subsidiary, has sole voting and dispositive power over 575,263 of such shares. Franklin Templeton Investments Corp., a FRI subsidiary, has sole voting and dispositive power over 129,800 of such shares. Each of FRI, the FRI Subsidiaries and the FRI Shareholders disclaims beneficial ownership of such shares. The Schedule 13G/A filed by FRI provides information only as of December 31, 2005 and, consequently, FRI’s beneficial ownership of Molecular Devices’ common stock may have changed between December 31, 2005 and March 1, 2006. | ||
| (3) | Based upon a Schedule 13G/A filed with the SEC on February 14, 2006 by Lord, Abbett & Co. LLC (“LAC”). LAC has sole voting power and sole dispositive power over all of such shares. The Schedule 13G/A filed by LAC provides information only as of December 31, 2005 and, consequently, LAC’s beneficial ownership of Molecular Devices’ common stock may have changed between December 31, 2005 and March 1, 2006. | |
| (4) | Based upon a Schedule 13G/A filed with the SEC on February 6, 2006 by Brown Capital Management, Inc. (“BCM”) in its capacity as a registered investment adviser. Such shares are owned by various investment advisory clients of BCM, which is deemed to be a beneficial owner of such shares, due to its discretionary power to make investment decisions over such shares for its clients and its ability to vote such shares. BCM has sole dispositive power over all of such shares and has sole voting power over 871,820 of such shares. Persons other than BCM have the right to receive, or the power to direct the receipt of, dividends from, or the proceeds from the sale of, such shares. The Schedule 13G/A filed by BCM provides information only as of December 31, 2005 and, consequently, BCM’s beneficial ownership of Molecular Devices’ common stock may have changed between December 31, 2005 and March 1, 2006. | |
| (5) | Based upon a Schedule 13G/A filed with the SEC on February 14, 2006 by Wellington Management Company, | |
| (6) | Includes 306,040 shares beneficially owned by Alafi Capital | |
| (7) | Consists of 849 shares held by the Keegan 1990 Revocable Trust UAD 4/27/90, of which Dr. Keegan is a trustee, and 334,750 shares that may be acquired within 60 days after March 1, 2006 pursuant to outstanding stock options. | |
| (8) | Consists of 201,530 shares held by the Harden M. McConnell | |
| (9) | Includes 121,875 shares that may be acquired within 60 days after March 1, 2006 pursuant to outstanding stock options. | |
| (10) | Includes 92,000 shares that may be acquired within 60 days after March 1, 2006 pursuant to outstanding stock options. | |
| (11) | Includes 70,000 shares that may be acquired within 60 days after March 1, 2006 pursuant to outstanding stock options. | |
| (12) | Includes 32,500 shares that may be acquired within 60 days after March 1, 2006 pursuant to outstanding stock options. | |
| (13) | Consists of 10,000 shares held by the Anderson Living Trust UAD 1/22/98, of which Mr. Anderson is a trustee, and 32,500 shares that may be acquired within 60 days after March 1, 2006 pursuant to outstanding stock options. Mr. Anderson disclaims beneficial ownership of the shares held by the Anderson Living Trust UAD 1/22/98. |
13
| (14) | Includes 32,500 shares that may be acquired within 60 days after March 1, 2006 pursuant to outstanding stock options. | |
| (15) | Includes 32,500 shares that may be acquired within 60 days after March 1, 2006 pursuant to outstanding stock options. | |
| (16) | Consists solely of shares that may be acquired within 60 days after March 1, 2006 pursuant to outstanding stock options. | |
| (17) | Includes 11,250 shares that may be acquired within 60 days after March 1, 2006 pursuant to outstanding stock options. | |
| (18) | Consists solely of shares that may be acquired within 60 days after March 1, 2006 pursuant to outstanding stock options. | |
| (19) | Includes 518,993 shares held by personsand/or entities affiliated with certain directors and executive officers |
EQUITY COMPENSATION PLAN INFORMATION
The following table is based uponprovides certain information supplied by officers, directors
and principal stockholders and Schedules 13D and 13G filed with the
Securities and Exchange Commission (the "SEC"). Unless otherwise indicated
in the footnotes to this table and subject to community property laws where
applicable, the Company believes that each of the stockholders named in
this table has sole voting and investment power with respect to the shares
indicatedall of Molecular Devices’ equity compensation plans in effect as beneficially owned. Applicable percentages are based on
15,467,368 shares outstanding on February 15, 2002, adjusted as required by
rules promulgatedof December 31, 2005:
| Number of Securities Remaining | ||||||||||||
| Number of Securities to | Available for Issuance Under | |||||||||||
| be Issued Upon Exercise | Weighted-Average Exercise | Equity Compensation Plans | ||||||||||
| of Outstanding Options, | Price of Outstanding Options, | (Excluding Securities Reflected in | ||||||||||
Plan Category | Warrants and Rights (a) | Warrants and Rights (b) | Column (a))(c) | |||||||||
| Equity compensation plans approved by security holders | 2,649,780 | $ | 24.44 | 1,073,451 | ||||||||
| Equity compensation plans not approved by security holders(1) | 89,055 | $ | 18.45 | 3,267 | ||||||||
| Total | 2,738,835 | $ | 24.24 | 1,076,718 | ||||||||
| (1) | Represents shares issuable upon the exercise of outstanding options under the Molecular Devices Corporation 2001 Stock Option Plan and shares remaining available for issuance thereunder. The table does not include information with respect to shares subject to outstanding options granted under equity compensation arrangements assumed by Molecular Devices in connection with the acquisitions of LJL BioSystems, Inc. in August 2000 and Axon Instruments, Inc. in July 2004. As of December 31, 2005, a total of 345,495 shares of Molecular Devices’ common stock were issuable upon the exercise of outstanding options under those assumed arrangements at a weighted average exercise price of $9.77. No additional options may be granted under those assumed arrangements. |
Molecular Devices Corporation 2001 Stock Option Plan
The Molecular Devices Corporation 2001 Stock Option Plan, or 2001 Plan, was adopted by the SEC.
16
Board in July 2001 without the approval of Molecular Devices’ security holders. An aggregate of 100,000 shares of Molecular Devices’ common stock have been reserved for issuance under the 2001 Plan. As of December 31, 2005, options to purchase 89,055 shares of common stock were outstanding under the 2001 Plan, and 3,267 shares (plus any shares that might in the future be returned to the 2001 Plan as a result of cancellations or expiration of options) remained available for grant. The 2001 Plan provides for the grant of nonstatutory stock options only to employees who, at the time of grant, are working or residing outside of the United States and are not officers or directors of Molecular Devices. The exercise price of nonstatutory stock options granted under the 2001 Plan may not be less than 85% of the fair market value of a share of Molecular Devices’ common stock on the date of grant. All stock options have a maximum term of twelve years and typically vest over a four-year period. Options may be exercised prior to vesting,
14
subject to repurchase rights in favor of Molecular Devices that expire over the vesting period. The Board at any time, and from time to time, may amend the 2001 Plan, provided that the rights of an optionholder under the 2001 plan cannot be impaired without the optionholder’s consent. In the event of: (1) a dissolution, liquidation or sale of substantially all of the assets of Molecular Devices; (2) Wellington Management Company, LLPa merger or consolidation in which Molecular Devices is not the ownersurviving corporation; or (3) a reverse merger in which Molecular Devices is the surviving corporation but the shares of recordMolecular Devices’ common stock outstanding immediately preceding the merger are converted by virtue of such
shares and disclaimsthe merger into other property, whether in the form of securities, cash or otherwise, then to the extent permitted by applicable law, any pecuniary interest (as such term is defined in
Rule 16a-1(a)surviving corporation shall either assume the options or shall substitute similar options for those outstanding under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) in2001 Plan, or such shares.
(3) Kopp Investment Advisors, Inc. is wholly-owned by Kopp Holding Company,
which is wholly-owned by LeRoy Kopp. Kopp Holding Company and LeRoy Kopp
are also deemedoptions shall terminate to beneficially ownthe extent not exercised prior to such shares. Kopp Investment Advisors,
Inc. disclaims beneficial ownership of 1,540,946 shares deemed to be
beneficially owned by it withinevent; provided, however, that at the meaning of Rule 13d-3 under the
Exchange Act.
(4) OrbiMed Advisors LLC is affiliated with OrbiMed Advisors Inc. and Samuel D.
Isaly, each of which are also deemed to beneficially own such shares.
(5) Includes 306,040 shares beneficially owned by Alafi Capital Company, of
which Mr. Alafi, a directordiscretion of the Company, is a general partner, and
33,000 shares thatBoard the options may be acquired within 60 days after February 15, 2002
pursuantaccelerated prior to outstanding stock options.
(6) Includes 251,000 shares held by Harden M. McConnell and Sophia G. McConnell
Trust, of which Dr. McConnell is a co-trustee, and 16,500 shares that may
be acquired within 60 days after February 15, 2002 pursuant to outstanding
stock options.
(7) Includes 195,166 shares beneficially owned by Dionex Corporation, of which
Mr. Bowman, a director of the Company, is the President and Chief Executive
Officer, and 23,000 shares that may be acquired within 60 days after
February 15, 2002 pursuant to outstanding stock options. Mr. Bowman
disclaims beneficial ownership of the shares held by Dionex Corporation
within the meaning of Rule 13d-3 under the Exchange Act.
(8) Includes 5,335 shares held by the Keegan 1990 Revocable Trust UAD 4/27/90,
of which Dr. Keegan is a trustee, and includes 123,750 shares that may be
acquired within 60 days after February 15, 2002 pursuant to outstanding
stock options.
(9) Includes 26,907 shares held by the Anderson Living Trust UAD 1/22/98, of
which Mr. Anderson is a trustee, includes 33,000 shares that may be
acquired within 60 days after February 15, 2002 pursuant to outstanding
stock options. Mr. Anderson disclaims beneficial ownership of the shares
held by the Anderson Living Trust UAD 1/22/98 within the meaning of Rule
13d-3 under the Exchange Act.
(10) Includes 52,187 shares that may be acquired within 60 days after February
15, 2002 pursuant to outstanding stock options.
(11) Includes 27,062 shares that may be acquired within 60 days after February
15, 2002 pursuant to outstanding stock options.
(12) Includes 36,142 shares that may be acquired within 60 days after February
15, 2002 pursuant to outstanding stock options.
(13) Includes 33,000 shares that may be acquired within 60 days after February
15, 2002 pursuant to outstanding stock options.
(14) Includes 22,812 and 313 shares that may be acquired within 60 days after
February 15, 2002 pursuant to outstanding stock options and periodic stock
grant rights, respectively.
(15) Includes 23,000 shares that may be acquired within 60 days after February
15, 2002 pursuant to outstanding stock options.
(16) Includes 17,500 shares that may be acquired within 60 days after February
15, 2002 pursuant to outstanding stock options.
(17) Includes 7,500 shares that may be acquired within 60 days after February
15, 2002 pursuant to outstanding stock options.
(18) Includes 757,541 shares held by entities affiliated with certain directors
and 543,340 shares that certain directors and officers have the right to
acquire within 60 days after February 15, 2002 pursuant to the exercise of
outstanding stock options and/or periodic stock grant rights. See Footnotes
(5) through (17).
17
such event.
SECTION 16(A)16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company'sMolecular Devices’ directors and executive officers, and persons who own more than ten percent of a registered class of the Company'sMolecular Devices’ equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of Common Stockcommon stock and other equity securities of the Company.Molecular Devices. Officers, directors and greater than ten percent stockholders are required by SEC regulationregulations to furnish the CompanyMolecular Devices with copies of all Section 16(a) forms they file.
To the Company'sMolecular Devices’ knowledge, based solely on a review of the copies of such reports furnished to the Company and written representations that no other reports were required, during the fiscal year ended December 31, 20012005, Molecular Devices believes that all Section 16(a) filing requirements applicable to its officers, directors and greater than ten percent beneficial owners were complied with;with, except that one
report, covering one transaction, was filed late by Mr. Alafi, one report,
covering one transaction, was filed late by Mr. Anderson, one report, covering
one transaction, was filed late by Mr. Bowman, one report, covering one
transaction, was filed late by Dr. Goddard, one report, covering one transaction
was filed late by Mr. Harkness, one report, covering one transaction, was filed
late by Dr. Humphries, one report, covering one transaction, was filed late by
Dr. Keegan, one report, covering one transaction, was filed late by Mr. Lima,
one report, covering one transaction, was filed late by Mr. Marion, one report,
covering one transaction, was filed late by Dr. McConnell, one report, covering
one transaction, was filed late by Dr. Modlin, one report, covering one
transaction, was filed late by Mr. Murray, one report, covering one transaction,
was filed late by Mr. Senaldi, one report, covering one transaction, was filed
late by Ms. Sharp, one report, covering one transaction, was filed late by Dr.
Waitz, and one report, covering two transactions, was filed late by Dr. Zander.
Mr. Alafi timely filed a report but incorrectly reported a transaction that was
subsequently corrected by amendment on a subsequent report.
18
as noted below:
| • | Each of Messrs. Alafi, Anderson, Bowman and Marion and each of Drs. Goddard, Finkel, McConnell and Waitz filed a late report on Form 4, covering one transaction each. | |
| • | Steve Davenport, Molecular Devices’ Vice President European Operations, filed a late report on Form 4, covering one transaction. |
EXECUTIVE OFFICERS OF THE COMPANY
The
Molecular Devices’ executive officers, and certain key employees of the Company and their ages and their positions as of February 15, 2002March 31, 2006, are as follows:
Name | Age | Position Held with Molecular Devices | ||||
| Joseph D. Keegan, | 52 | President and Chief Executive Officer | ||||
| Timothy A. | 39 | Chief Financial Officer and Senior Vice President Finance | ||||
| Steve Davenport | 40 | Vice President | ||||
| Jan Hughes | 45 | Vice President Worldwide Marketing | ||||
| Gillian M.K. Humphries, Ph.D. | 67 | Vice President Strategic Affairs | ||||
| Robert J. Murray | 57 | Vice President Worldwide Operations | ||||
| Thomas J. | 42 | Vice President North American Sales and Service | ||||
| Patricia C. | 62 | Vice President Human Resources | ||||
| J. Richard Sportsman, Ph.D. | 53 | Vice President | ||||
Joseph D. KEEGAN, PH.D.Keegan, Ph.D., was appointed as President and Chief Executive Officer of the CompanyMolecular Devices effective March 30, 1998. Dr. Keegan has been a director of Molecular Devices since 1998. From 1992 to 1998, Dr. Keegan served in various positions at Becton Dickinson and Company, a research and diagnostic company, including the positions of Vice President, Sales and Service, Vice President, General Manager of the Immunocytometry Systems Division and, most recently, President of the Worldwide Tissue Culture Business. From 1987 to 1992, he was employed by LEICA, Inc., a microscope manufacturer, where he held various senior management
15
positions. Dr. Keegan is a memberdirector of the Board
of Directors of Upstate Group,Essen Instruments, Inc. Dr. Keegan holds a Ph.D. in Chemistry from Stanford University.
TIMOTHY
Timothy A. HARKNESS Harknesshas served as Molecular Devices’ Chief Financial Officer since July 1998, served as its Senior Vice President and Chief Financial Officer from August 2004 to July 2005 and was appointed as Chief Financial Officer and Senior Vice President Finance and Chief
Financial Officer of Molecular Devices Corporation since July 1998.Operations effective August 1, 2005. From 1997 to 1998, Mr. Harkness was Vice President of Business Development at Vivra Specialty Partners, a physician practice management company. Previously, Mr. Harkness was with Montgomery Securities in the Health Care Investment Banking Group from 1994 to 1997 and with Arthur Andersen & Co. from 1989 to 1992. Mr. Harkness is a
member of the Board of Directors of Essen Instruments, Inc. Mr. Harkness holds an MBAM.B.A. from Stanford University Graduate School of Business, a B.B.A. from the University of Wisconsin-Madison, and is a CPA.
GILLIANC.P.A.
Steve Davenportwas appointed as Vice President European Operations of Molecular Devices on February 16, 2005. Mr. Davenport joined Molecular Devices in March 2002 and served as Molecular Devices’ General Manager European Operations. From 1989 to 2002, Mr. Davenport was employed by Amersham plc and Amersham Biosciences (now a part of GE Healthcare) in a variety of roles involving sales of technologies for genomics, proteomics and high throughput screening to pharmaceutical companies throughout Europe. From August 2001 to March 2002, Mr. Davenport held the post of European Business Director Technology Programs with Amersham Biosciences. Mr. Davenport holds a first class honors degree in Applied Chemistry from the University of Wales Institute of Science and Technology, Cardiff, U.K.
Jan Hugheswas appointed as Vice President Worldwide Marketing of Molecular Devices on February 16, 2005. Mr. Hughes joined Molecular Devices in September 2003 as Director of Product Development, IonWorks and was subsequently promoted to Vice President of Product Development, IonWorks in March 2004. In 1994, Mr. Hughes co-founded Argonaut Technologies, Inc., a bioanalytical instrument company, where he served in various capacities until September 2003, including most recently as Senior Vice President and Chief Technology Officer. Prior to co-founding Argonaut, Mr. Hughes was employed by Applied Biosystems, a bioanalytical instrument company, for approximately ten years where he led instrument product development efforts in protein sequencing, amino acid analysis and both DNA and protein synthesis. Mr. Hughes holds a B.S. in Mechanical Engineering from Cal Poly, San Luis Obispo.
Gillian M.K. HUMPHRIES, PH.D.Humphries, Ph.D., has served as a Vice President of the
CompanyMolecular Devices since March 1990. Dr. Humphries served as a consultant to the CompanyMolecular Devices since its inception in 1983. In 1984, Dr. Humphries joined the CompanyMolecular Devices on a full time basis as a research scientist and, from 1985 to 1990, she served as Director of MAXline and Cytosensor Development. Dr. Humphries holds a Ph.D. in Biochemistry from Stanford University and an MSM.S. in Biochemistry from San Jose State University.
ROBERT
Robert J. MURRAY Murrayhas served as a Vice President in charge of Worldwide Operations of Molecular Devices since July 1995. Mr. Murray served as the Company's1995 and its Director of Operations from October 1993 to July 1995. During 1993,Prior to joining Molecular Devices, Mr. Murray washeld general management and executive positions at a consultant to Tandem
Computers, Incorporated, a computer manufacturer. From 1991 to 1993, Mr. Murray
was Vice Presidentvariety of Marketing and Manufacturing atcompanies, including Electromer Corporation, an
electronic component company,Comptronix Corp. and from 1989 to 1991, as Vice President and
General Manager of Comptronix Corp., a contract manufacturing company. Prior to
that, Mr. Murray was Vice President of Operations of Gould Biomation, Inc., a diversified
conglomerate. Mr. Murray holds an M.B.A. from the University of California at Berkeley, an M.S. in Electrical Engineering from San Jose State University, and a B.S. in Science from the University of California at Davis.
STEPHEN
Thomas J. OLDFIELD, PH.D. has served as Vice President, in charge of
Worldwide Marketing, since December 2001. Dr. Oldfield served as the Company's
Marketing Director for Cell Analysis products from 1999 to 2001. From 1997 to
1999, Dr. Oldfield was the Director of Marketing at Molecular Probes, Inc., a
biotechnology company. From 1995 to 1997, Dr. Oldfield was the Director of
Marketing at FMC Bioproducts, a biotechnology supplier, which was subsequently
acquired by Cambrex Corporation. Dr. Oldfield served in various management
positions at Molecular Dynamics, a bioanalytical instrument provider now part of
Amersham Biosciences, in England and the United States from 1988 to 1995, and at
Pharmacia Biotechnology, a biotechnology company in Sweden from 1984 to 1988.
Dr. Oldfield holds a Ph.D. from Imperial College, London and a BSc from the
University of Sheffield.
19
THOMAS J. O'LENIC O’LenicO'LenicO’Lenic served in various Sales Management positions at Molecular Devices, most recently as Director of North American Sales, Life Sciences Division. From 1994 to 1995, Mr. O'LenicO’Lenic was with PerSeptive Biosystems, a bioanalytical instrument company. From 1990 to 1994, Mr. O'LenicO’Lenic worked for Millipore Corporation, a multinational bioscience company, and from 1989 to 1990, he worked for Bios Corporation, a life science products company. Mr. O'LenicO’Lenic holds a B.S. in Biology from the University of South Florida.
JOHN S. SENALDI was appointed Vice President and General Manager,
IonWorks(TM) business unit in November 2001. Prior to this role, Mr. Senaldi
Patricia C. Sharphas served as Vice President Worldwide Marketing from August 1998, when he joined
the Company. From 1993 to 1998, Mr. Senaldi held various management positions at
Becton Dickinson and Company, a research and diagnostic company, including
Program Management for Becton's Immunocytometry Systems Division, Director of
Business Development and Senior Product Manager in both Europe and North America
for Becton's Diabetes Healthcare business. Prior to joining Becton Dickinson,
Mr. Senaldi held various management positions in manufacturing and marketing
with General Electric Company and in engineering functions with several start-up
medical device/diagnostic companies. Mr. Senaldi holds an MBA from Harvard
Business School, an MSEE from Rensselaer Polytechnic Institute and a B.S. in
Engineering from Trinity College.
PATRICIA C. SHARP was appointed as Vice President of Human Resources of
the Company effectivesince September 2000. From 1997 to 2000, Ms. Sharp served as Human Resources consultant at Sharp Associates Consulting specializing in Human Resources management, leadership and organizational development. Previously, Ms. Sharp worked at Apple Computer, Inc. as Senior Vice President, Human Resources. Ms. Sharp has a B.A. in Behavioral Sciences from San Jose State University.
ANDREW T. ZANDER, PH.D.
16
J. Richard Sportsman, Ph.D., joined Molecular Deviceshas served as Vice President Engineering in March 2000. Dr. Zander came to the Company from Transgenomic,
Inc., a biotechnology company, where he was Vice President,Assay and Reagent Research and Development and priorsince August 2002. From 2000 to that he was at Varian Associates, a medical systems
company, for 12 years, where he was a2002, Dr. Sportsman served as Director of Research for Varian's
corporate R&D activities. Before Varian, he had workedBiochemistry of Molecular Devices. From 1998 to 2000, Dr. Sportsman served as Senior Director, Assay Systems, at Perkin-Elmer and
Beckman. As an Officer in the U.S. Naval Reserve, he worked with the Office of
Naval ResearchLJL BioSystems. From 1993 to 1998, Dr. Sportsman served as a Scientific Liaison Officer. Dr. Zander holds a B.S. in
Chemistry fromStaff Scientist and Director of Molecular Recognition at Telik, Inc. (formerly Terrapin Technologies, Inc.).
EXECUTIVE COMPENSATION
Compensation of Directors
Cash Compensation Arrangements. Each non-employee director of Molecular Devices receives an annual retainer of $10,000 (with the Universityexception of Illinois and a Ph.D. in Analytical Chemistry
from the University of Maryland.
20
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
For the year 2002, each member of the Company's Board of Directors will
receive $1,000Molecular Devices’ Audit Committee Chairman, Mr. Bowman, who receives $12,000) payable semiannually. Each non-employee director also receives $1,500 for each Board meeting attended in person by such director and $750 for each meeting attended via teleconference. Each non-employee Board committee member receives $1,000 for each committee meeting attended in person and $500 for each Board committee meeting attended.attended via teleconference. The total compensation paid to non-employee directors in fiscal year 2005 was $226,200. In addition, the non-employee members of the Board may be reimbursed forout-of-pocket and travel expenses incurred in connection with attendance at Board and committee meetings.
During 1995,
Equity Compensation Arrangements. Each non-employee director of Molecular Devices is eligible to receive automatic stock option grants under Molecular Devices’ 2005 Equity Incentive Plan, or the Board adopted the 1995 Non-Employee Directors' Stock
Option Plan (the "Directors' Plan") to provide2005 Plan. However, Dr. Finkel has declined for the automatic granttime being any equity compensation for his service as a non-employee director at this point. In connection with the adoption of the 2005 Plan in April 2005, Molecular Devices’ Board of Directors adopted resolutions setting forth the terms of options to purchase shares of Common Stockbe granted to Molecular Devices’ non-employee directors, of the
Company ("Non-Employee Directors"). The maximum number of shares of Common Stock
thatwhich are described below. Molecular Devices’ Board may be issued pursuant to options granted under the Directors' Plan is
347,500. Pursuant toat any time, however, adopt resolutions modifying, amending or otherwise changing the terms of the Directors'options to be granted to non-employee directors under the 2005 Plan, subject to any applicable stockholder approval requirements. Under these resolutions, each Non-Employee
Directorperson who is, after May 26, 2005, elected for the first time to be a non-employee director automatically grantedreceives, at the time of his or her initial election to the Board, an option to purchase 10,000 shares of Common
Stock on the date of his or her election to the Board. Thereafter,Molecular Devices’ common stock. In addition, each Non-Employee Director will be grantednon-employee director automatically receives an additional option to purchase an additional 4,000 shares of Common Stockcommon stock immediately following each annual meeting of stockholders. Outstanding optionsIn this regard, immediately following the 2005 Annual Meeting of Stockholders, Molecular Devices granted each non-employee director an option under the Directors'2005 Plan vestcovering 4,000 shares of common stock at an exercise price per share of $19.20, the fair market value of such shares based on the closing sales price reported on the NASDAQ on the date of grant. The exercise price of each option granted to the non-employee directors is 100% of the fair market value of the common stock subject to the option on the date of grant. The options granted to non-employee directors under the 2005 Plan become exercisable in installments over a period of four years from the date of grant in equal annual installments. The exercise price of
options granted under the Directors' Plan must equal or exceed the fair market
value of the Common Stockinstallments commencing on the date of grant. No option granted under the
Directors' Plan may be exercisedone year after the expirationdate of ten years from the date
it was granted. Options granted undergrant. However, attendance at no less than two-thirds of the Directors' Plan are generally
non-transferable. Theregularly scheduled Board may suspend or terminatemeetings occurring during a vesting installment period is required for the Directors' Plan atoptions to become vested with respect to such installment. Failure to satisfy this requirement during any time.particular installment period will result in an abatement of the vesting of the options during the applicable installment period and the aggregate vesting period of the options will be increased by one additional year. In the event of certain change in control events, as specified in the 2005 Plan, any outstanding options to a merger or consolidation, or a reverse merger or
reorganization in whichnon-employee director will be fully accelerated and the Company is not the surviving corporation, options
outstanding under the Directors' Plan will automatically become fully vested andoption will terminate if not exercised prior to such event. DuringVesting will cease upon the last fiscal year,termination of service of a non-employee director. The maximum term of options granted to the Company granted options covering 10,000
sharesnon-employee directors under the 2005 Plan is ten years. Prior to each Non-Employee Director, at an exercise price of $21.62 per share,
which was the fair market valueadoption of the Common2005 Plan, option grants to non-employee directors had been made under the Molecular Devices Corporation 1995 Non-Employee Directors’ Stock Option Plan, or the Directors’ Plan. The Directors’ Plan was terminated on May 26, 2005 following stockholder approval of the date2005 Plan; however, all outstanding option grants under the Directors’ Plan continue in effect in accordance with their existing terms and conditions.
17
Compensation of grant.
21
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY OF COMPENSATION
Executive Officers
The following table shows for the fiscalcalendar years ended December 31, 1999,
20002003, 2004 and 2001,2005, compensation awarded or paid to, or earned by, the Company'sMolecular Devices’ Chief Executive Officer and its other four most highly compensated executive officers at December 31, 2001, and one other former executive officer who
departed from the Company during fiscal year 20012005 (the "Named“Named Executive Officers"Officers”):
SUMMARY COMPENSATION TABLE
| Long-Term | ||||||||||||||||||||||||
| Compensation | ||||||||||||||||||||||||
| Annual Compensation | Securities | All Other | ||||||||||||||||||||||
| Other Annual | Underlying | Compensation | ||||||||||||||||||||||
Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Compensation ($) | Options (#) | ($)(2) | ||||||||||||||||||
| Joseph D. Keegan, Ph.D. | 2005 | $ | 416,667 | $ | 600,000 | $ | 16,250 | (3) | 52,500 | $ | 16,535 | |||||||||||||
| President and | 2004 | 396,667 | 645,000 | 28,515 | (4) | 60,000 | 16,230 | |||||||||||||||||
| Chief Executive Officer | 2003 | 377,445 | 468,084 | 13,130 | (5) | 47,500 | 9,029 | |||||||||||||||||
| Timothy A. Harkness | 2005 | 299,804 | 269,823 | 10,225 | (6) | 32,500 | 8,350 | |||||||||||||||||
| Chief Financial Officer | 2004 | 260,833 | 234,750 | 750 | (7) | 35,000 | 10,930 | |||||||||||||||||
| and Senior Vice President | 2003 | 237,499 | 142,500 | — | 32,500 | 3,104 | ||||||||||||||||||
| Finance and Operations | ||||||||||||||||||||||||
| Robert J. Murray | 2005 | 215,396 | 150,777 | — | 20,000 | 2,542 | ||||||||||||||||||
| Vice President | 2004 | 209,633 | 125,780 | — | 25,000 | 4,514 | ||||||||||||||||||
| Worldwide Operations | 2003 | 201,500 | 90,675 | — | 22,500 | 8,234 | ||||||||||||||||||
| Patricia C. Sharp | 2005 | 215,396 | 140,007 | — | 25,000 | 6,474 | ||||||||||||||||||
| Vice President | 2004 | 209,633 | 125,780 | 13,659 | (8) | 25,000 | 3,848 | |||||||||||||||||
| Human Resources | 2003 | 201,500 | 100,750 | 13,659 | (8) | 25,000 | 5,191 | |||||||||||||||||
| Thomas J. O’Lenic | 2005 | 208,733 | 156,550 | 3,581 | (7) | 25,000 | 5,157 | |||||||||||||||||
| Vice President North | 2004 | 200,400 | 140,280 | 3,399 | (7) | 25,000 | 4,485 | |||||||||||||||||
| American Sales and Service | 2003 | 191,167 | 95,583 | 2,152 | (7) | 22,500 | 3,757 | |||||||||||||||||
| (1) | Represents amounts earned in respect of 2003, 2004 and | |
| (2) | Represents the taxable portion of group life insurance paid by Molecular Devices, supplemental health plan amounts reimbursed by Molecular Devices, and | |
| (3) | Consists of the following payments made by Molecular Devices: (i) $12,000 for the use of an automobile, and (ii) $4,250 for professional services. | |
| (4) | Consists of the following payments made by Molecular Devices: (i) $12,000 for the use of an automobile, and (ii) $16,515 for professional services. | |
| (5) | Consists of the following payments made by Molecular Devices: (i) $12,000 for the use of an automobile, and (ii) $1,130 for professional services. | |
| (6) | Consists of the following payments made by Molecular Devices: (i) $9,375 for the use of an automobile, and (ii) $850 for professional services. | |
| (7) | Consists of payments made by Molecular Devices for the use of an automobile. | |
| (8) | Represents loan amount forgiven by Molecular Devices for the previous payment of certain taxes. |
18
Stock Option Plan (the "Option Plan"). As of February 15, 2002, options to purchase a
total of 2,216,900 shares were outstanding under the Option PlanGrants and options to
purchase 293,677 shares remained available for grant thereunder.
Exercises
The following tables show, for the fiscal year ended December 31, 2001,2005, certain information regarding options granted to, exercised by, and held at year end by, each of the Named Executive Officers:
Officers.
OPTION GRANTS IN LAST FISCAL YEAR
| Individual Grants | ||||||||||||||||||||||||
| Number of | Percentage of | Potential Realizable Value at | ||||||||||||||||||||||
| Securities | Total Options | Assumed Annual Rates of Stock | ||||||||||||||||||||||
| Underlying | Granted to | Exercise or | Price Appreciation for Option | |||||||||||||||||||||
| Options | Employees in | Base Price | Expiration | Term(3) | ||||||||||||||||||||
Name | Granted (#)(1) | Fiscal Year(2) | ($/SH) | Date | 5% ($) | 10% ($) | ||||||||||||||||||
| Joseph D. Keegan, Ph.D. | 52,500 | 16.80 | % | $ | 21.32 | 02/15/15 | $ | 703,922 | $ | 1,783,876 | ||||||||||||||
| Timothy A. Harkness | 32,500 | 10.40 | % | 21.32 | 02/15/15 | 435,761 | 1,104,304 | |||||||||||||||||
| Robert J. Murray | 20,000 | 6.40 | % | 21.32 | 02/15/15 | 268,161 | 679,572 | |||||||||||||||||
| Patricia C. Sharp | 25,000 | 8.00 | % | 21.32 | 02/15/15 | 335,201 | 849,465 | |||||||||||||||||
| Thomas J. O’Lenic | 25,000 | 8.00 | % | 21.32 | 02/15/15 | 335,201 | 849,465 | |||||||||||||||||
| (1) | The options have a ten-year term, subject to earlier termination upon death, disability or termination of employment. Options vest at the rate of 25% of the shares subject to the option per year, subject to acceleration as described under the caption “Employment Contracts, Severance and Change of Control Arrangements” below. The exercise price per share was equal to the fair market value of Molecular Devices’ common stock on the date of grant. | |
| (2) | Based upon options to purchase 312,500 shares granted to employees of Molecular Devices during the fiscal year ended December 31, 2005. | |
| (3) | The potential realizable value is calculated based on the term of the option at its time of grant, or ten years, compounded annually. Assumed stock price appreciation of 5% |
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
AND FISCAL YEAR END OPTION VALUES
| Number of Securities Underlying | Value of Unexercised In-the | |||||||||||||||||||||||
| Shares | Value | Unexercised Options at | Money Options at | |||||||||||||||||||||
| Acquired on | Realized | December 31, 2005 (#)(1) | December 31, 2005 ($)(2) | |||||||||||||||||||||
Name | Exercise (#) | ($) | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||||
| Joseph D. Keegan, Ph.D. | — | — | 376,656 | 104,844 | $ | 2,385,673 | $ | 939,285 | ||||||||||||||||
| Timothy A. Harkness | — | — | 195,467 | 64,533 | 1,438,550 | 581,788 | ||||||||||||||||||
| Robert J. Murray | — | — | 115,341 | 42,659 | 739,044 | 388,196 | ||||||||||||||||||
| Patricia C. Sharp | 3,500 | $ | 32,760 | 132,905 | 48,595 | 714,780 | 437,815 | |||||||||||||||||
| Thomas J. O’Lenic | 17,467 | 121,794 | 35,764 | 48,596 | 232,479 | 434,426 | ||||||||||||||||||
| (1) | Reflects shares vested and unvested at December 31, 2005. | |
| (2) | Value is based on the fair market value of Molecular Devices’ common stock at December 30, 2005 ($ |
19
Employment Contracts, Severance and Change of the fair market value of the Common
Stock on the date of the grant.
(3) The potential realizable value is calculated based on the term of the
option at its time of grant (10 years) and is calculated by assuming that
the stock price on the date of grant as determined by the Board of
Directors appreciates at the indicated annual rate compounded annually for
the entire term of the option and that the option is exercised and sold on
the last day of its term for the appreciated price. The 5% and 10% assumed
rates of appreciation are derived from the rules of the Securities and
Exchange Commission and do not represent the Company's estimate or
projection of the future Common Stock price.
(4) The options have a ten-year term, subject to earlier termination upon
death, disability or termination of employment. Options vest at the rate
of 25% per year.
- --------------------
(1) Represents the fair market value of the underlying shares on the last day
of the fiscal year ($20.87 based on the closing sales price of the Common
Stock as reported on the Nasdaq National Market) less the exercise price
of the options multiplied by the number of shares underlying the option.
23
EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL ARRANGEMENTS
CHIEF EXECUTIVE OFFICER KEY EMPLOYEE AGREEMENT
Control Arrangements
Chief Executive Officer Key Employee Agreement
On March 11, 1998,July 29, 2004, Molecular Devices entered into an Amended Key Employee Agreement with Joseph D. Keegan, Ph.D., entered into a Key Employee
Agreement with the Company that provided for the following:
o Dr. Keegan was appointed as President and Chief Executive Officer effective March 30, 1998 (the "Employment Date").
oof Molecular Devices. The agreement supersedes and replaces Dr. Keegan would be paid an annual base salary of $280,000.
o Dr. Keegan would receive a one time "signing bonus" of $150,000.
Such bonus was subject to repayment if Dr. Keegan terminates his
employmentKeegan’s original Key Employment Agreement with the Company within the first year of his employment.
o Dr. Keegan is eligible to receive an annual performance bonus up to
50% of his base salary based on achievement of certain goals
specified by the Board.
o The Board granted Dr. Keegan options to purchase 170,000 shares of
the Company's Common Stock with an exercise price equal to the fair
market value of the Common Stock on the Employment Date. The Options
will vest over five years with 34,000 shares vesting on the first
anniversary of the Employment DateMolecular Devices and 8,500 shares vesting every
June 30, September 30, December 30, and March 30 thereafter. Vesting
ceases if Dr. Keegan's employment terminates at any time for any
reason with the following exceptions: (a) Dr. Keegan is retained by
the Company in a post-employment consulting position, as specified,
thus providing for an additional year of vesting, or (b) if Dr.
Keegan is demoted without cause, as defined in the agreement, within
two years following certain defined transactions, then vesting of
the remaining unvested options will accelerate such that Dr. Keegan
will be fully vested with respect to the options to purchase 170,000
shares of the Company's Common Stock.
o The Board granted Dr. Keegan an aggregate of 30,000 shares of the
Company's Common Stock subject to applicable securities laws
restrictions, over two years. A total of 3,750 shares would be
granted following the completion of each quarter of service with the
Company as President and Chief Executive Officer on June 30, 1998
and 1999, September 30, 1998 and 1999, December 30, 1998 and 1999,
and March 30, 1999 and 2000. Upon granting, each individual grant
would be fully earned and vested. Granting of stock ceases if Dr.
Keegan's employment terminates at any time for any reason, except if
Dr. Keegan is demoted without cause, as defined in the agreement,
within two years following certain defined transactions, then
granting of the remaining ungranted shares will accelerate such that
a total of 170,000 shares of the Company's Common Stock will be
vested. The Company agreed to loan Dr. Keegan amounts required for
the payment of tax obligations related to these share grants. As of
December 31, 2001, $378,825 was outstanding under these loans.
o In the event Dr. Keegan's employment is terminated by the Company
without cause, as defined in the agreement, the Company shall
provide Dr. Keegan with a one-year consulting agreement, as defined,
and outplacement services.
In April 2002, Dr. Keegan agreed to forgo the change in control severance
benefits under his Key Employee Agreement and enrolled in the Change in Control Severance Benefit Plan described below. Inestablished by Molecular Devices for Dr. Keegan. Pursuant to the event thatterms of the planagreement, Dr. Keegan’s base salary was initially set at $400,000, which is amended
or terminated and, as a result, the benefits toreviewed annually. Dr. Keegan underis also eligible for a variable discretionary performance bonus based on the plan are
reduced to the extent that such benefits would be less than those provided by
his Key Employee Agreement, then the changeattainment of certain corporate goals established in control severance benefits under
his Key Employee Agreement would be restored.
24
CHIEF FINANCIAL OFFICER EMPLOYEE AGREEMENT
On July 8, 1998, Timothy A. Harkness, entered into an Employee Agreementagreement with the Company that provided for the following:
o Mr. Harkness was appointed as Vice PresidentBoard of Finance and Chief
Financial Officer, effective July 9, 1998 (the "Employment Date").
o Mr. Harkness would be paid an annual base salary of $150,000. His
salary would increaseDirectors, which is intended to $162,000 per yearresult in 3 months and $175,000
per year in 6 months upon certain milestone achievements.
o Mr. Harkness would receive a one time hiring bonus of $87,500.
o Mr. Harkness is eligibleequal to participate in the Company's bonus plan
at 40%100% of his base salary prorated for employment tenure.
o Mr. Harkness was eligible to receive options to purchase 75,000
sharesif performance is at 100% of target.
In the Company's Common Stock. The options will vest over
five years with 15,000 shares vesting on the first anniversary of
the Employment Date and 3,750 shares vesting every quarter
thereafter.
o Mr. Harkness is eligible to receive an aggregate of 10,000 shares of
the Company's Common Stock. A total of 1,250 shares will be granted
following each quarter of service with the Company. Upon granting,
each share will be fully earned and vested. If Mr. Harknessevent Dr. Keegan is terminated without cause withinor Dr. Keegan resigns from Molecular Devices for good reason, other than in connection with a change in control, Dr. Keegan will, subject to certain conditions, be entitled to receive certain severance benefits, including the first two years, then (i) the
granting of shares will accelerate such that Mr. Harkness will
receive 10,000 shares of the Company's Common Stock and (ii) Mr.
Harkness would receive a one-time severance payment equal to the
prior 6 months compensation. The Company agreed to loan Mr. Harkness
amounts required for the payment of tax obligations related to these
share grants. As of December 31, 2001 $74,275 was outstanding under
these loans, which will be forgiven over time under an employment
vesting schedule.
o following:
| • | Molecular Devices will retain Dr. Keegan as a consultant for a period of one year following his termination, during which time he will be entitled to a monthly cash payment equal to1/12th of the sum of (i) his annual base salary in effect at the time of his termination plus (ii) the bonus amount Dr. Keegan would have earned at 100% of target for the year in which the termination occurs. | |
| • | The outstanding stock options held by Dr. Keegan as of the date of his termination will become fully vested and exercisable as of that date. |
In the event ofDr. Keegan is terminated without cause or Dr. Keegan resigns from Molecular Devices for good reason within two months prior to, or 24 months after, a change of control resulting in either termination
or demotion, all of Mr. Harkness' stock options and shares will
become fully vested on such date. In addition, Mr. Harkness would be
granted a one-time severance payment equal to the last 12 months
compensation.
In April 2002, Mr. Harkness agreed to forgo the change in control, Dr. Keegan will, subject to certain conditions, be entitled to receive certain severance benefits under(in lieu of the severance benefits described above), including the following:
| • | Dr. Keegan will be entitled to a single lump-sum payment equal to the sum of (i) 24 months of his annual base salary in effect at the time of his termination, plus (ii) a bonus amount equal to twice what Dr. Keegan would have earned at 100% of target for the year in which the termination occurs. | |
| • | The outstanding stock options held by Dr. Keegan as of the date of his termination will become fully vested and exercisable as of that date. |
Chief Financial Officer Employment Agreement
On December 17, 2004, Molecular Devices entered into an Amended Key Employee Agreement with Timothy A. Harkness, Chief Financial Officer and enrolled inSenior Vice President Finance and Operations of Molecular Devices. The agreement supersedes and replaces Mr. Harkness’ original offer letter agreement with Molecular Devices and the Change in Control Severance Benefit Plan described below. In the eventestablished by Molecular Devices that the plan is
amended or terminated and, as a result, the benefitswas previously applicable to Mr. Harkness under the
plan are reducedHarkness. Pursuant to the extent that such benefits would be less than those
provided by his Employee Agreement, thenterms of the changeagreement, Mr. Harkness’ base salary was initially set at $275,000, which is reviewed annually. Mr. Harkness is also eligible for a variable discretionary performance bonus based on the attainment of certain corporate goals established in control severance
benefits under his Employee Agreement would be restored.
VICE PRESIDENT EMPLOYMENT AGREEMENT
On July 13, 1998, John S. Senaldi, Vice President of Worldwide Marketing,
entered into an employment agreement with the Company that provided for the
following:
o Mr. Senaldi would be paid an annual base salaryChief Executive Officer of $160,020. Mr.
Senaldi would receiveMolecular Devices, which is intended to result in a one-time signing bonus of $30,000.
o Mr. Senaldi is eligibleequal to participate in the Company's bonus plan
at 40%60% of his base salary prorated from the time he has been
employed, with a guaranteed minimum bonusif performance is at 100% of $30,000 under the plan
for the 1998 plan year.
o Mr. Senaldi was eligible to receive options to purchase 46,000
shares of the Company's Common Stock. The options will vest over
five years with 9,200 shares vesting on each of the first and second
anniversary of the employment date and 2,300 shares vesting
quarterly following the second anniversary of the employment date.
o Mr. Senaldi was eligible to receive an aggregate of 25,000 shares of
the Company's Common Stock. The shares will be granted ratably and
quarterly over a period of two years. The Company agreed to loan Mr.
Senaldi amounts required for the payment of tax obligations related
to these share grants. As of December 31, 2000, $18,110 was
outstanding under these loans. target.
In the event ofMr. Harkness is terminated without cause or Mr. Harkness resigns from Molecular Devices for good reason, other than in connection with a Change of Control,
all ofchange in control, Mr. Senaldi's stock options and sharesHarkness will, become fully
vested at such date.
o subject to certain conditions, be entitled to receive certain severance benefits, including the following:
| • | Molecular Devices will retain Mr. Harkness as a consultant for a period of one year following his termination, during which time he will be entitled to a monthly cash payment equal to1/12th of the sum of (i) his annual base salary in effect at the time of his termination plus (ii) the bonus amount Mr. Harkness would have earned at 100% of target for the year in which the termination occurs. | |
| • | The outstanding stock options held by Mr. Harkness as of the date of his termination will become fully vested and exercisable as of that date. |
In the event ofMr. Harkness is terminated without cause or Mr. Harkness resigns from Molecular Devices for good reason within two months prior to, or 24 months after, a Change of Control, all of Mr. Senaldi's stock
options and shares will become fully vested at such date.
25
In April 2002, Mr. Senaldi agreed to forgo the change in control, Mr. Harkness will, subject to certain
20
conditions, be entitled to receive certain severance benefits under his employment agreement and enrolled in(in lieu of the Change in Control
Severance Benefit Plan, described below. In the event that the plan is amended
or terminated and, as a result, the benefits to Mr. Senaldi under the plan are
reduced to the extent that such benefits would be less than those provided by
his employment agreement, then the change in control severance benefits under
his employment agreement would be restored.
VICE PRESIDENT EMPLOYMENT AGREEMENT
described above), including the following:
| • | Mr. Harkness will be entitled to a single lump-sum payment equal to the sum of (i) 18 months of his annual base salary in effect at the time of his termination, plus (ii) 1.5 times the bonus amount Mr. Harkness would have earned at 100% of target for the year in which the termination occurs. | |
| • | The outstanding stock options held by Mr. Harkness as of the date of his termination will become fully vested and exercisable as of that date. |
Vice President Employment Agreements
On July 25, 2000, Patricia C. Sharp, Vice President of Human Resources, entered into an employment contractletter agreement with the CompanyMolecular Devices that provided for the following:
o Ms. Sharp would be paid an annual base salary of $185,000. Ms. Sharp
would receive a one time signing bonus of $25,000. Upon the
completion of six months of satisfactory employment, Ms. Sharp would
receive an additional bonus of $25,000.
o Ms. Sharp would be eligible to participate in the Company's bonus
plan at 40% of her base salary prorated from the time she has been
employed.
o Ms. Sharp would be eligible to receive options to purchase 47,500
shares of the Company's Common Stock. The options would vest over
four years with 11,875 shares vesting on each anniversary of the
employment date. Ms. Sharp would be eligible to receive an aggregate
of 2,500 shares of restricted Common Stock. The shares would be
granted ratably and quarterly over a period of two years.
VICE PRESIDENT EMPLOYMENT AGREEMENT
| • | Ms. Sharp’s initial annual base salary was $185,000 per year, subject to annual review, and her initial bonus was $50,000. Ms. Sharp is also eligible to receive variable discretionary bonuses annually thereafter. | |
| • | Ms. Sharp was entitled to receive options to purchase 47,500 shares of Molecular Devices common stock. The options vested over four years with 11,875 shares vesting on each anniversary of the employment date. | |
| • | Ms. Sharp was eligible to receive an aggregate of 2,500 shares of restricted common stock. The shares were granted ratably and quarterly over a period of two years. Molecular Devices also agreed to loan Ms. Sharp amounts required for the payment of tax obligations related to these share grants. |
On July 9, 1998, Tony M. Lima,January 10, 2002, Tom O’Lenic, Vice President of WorldwideNorth America Sales and Service, entered into an employment letter agreement with the Company that providedMolecular Devices. The agreement provides for
the following:
o Mr. Lima would be paid an annual base salary of $175,000.
o$185,000 per year and Mr. Lima would be eligibleO’Lenic’s eligibility to participate inreceive certain variable discretionary bonuses. Pursuant to the Company's bonus
plan at 40% of his base salary prorated from the time he has been
employed, with a guaranteed minimum bonus of $30,000 under the plan
for the 1998 plan year.
oagreement, Mr. Lima would be eligibleO’Lenic was entitled to receive options to purchase 50,00040,000 shares of the Company's Common Stock.Molecular Devices’ common stock. The options would vestvested over five yearsa period of four years.
On October 4, 1993, Robert J. Murray, Vice President Worldwide Operations, entered into an employment letter agreement with 10,000Molecular Devices. The agreement provides for an annual base salary of $100,000 per year and Mr. Murray’s eligibility to receive certain variable discretionary bonuses. Pursuant to the agreement, Mr. Murray was entitled to receive options to purchase 20,000 shares vesting on each of the first and
second anniversaryMolecular Devices’ common stock. The options vested over a period of the employment date and 2,500 shares vesting
quarterly following the second anniversary of the employment date.
This agreement was terminatedfour years.
Change in connection with Mr. Lima's resignation on
December 31, 2001.
CHANGE IN CONTROL SEVERANCE BENEFIT PLAN
Control Severance Benefit Plan
In February 2001, the Board of Directors adopted a Change in Control Severance Benefit Plan to provide certain benefits and protections to designated executive officers, currently including Ms. Sharp and Messrs. Murray and O’Lenic, who have not entered into individual severance benefit or change in control agreements with the Company.Molecular Devices. The plan provides that in the event of a constructive or involuntarily termination without cause within 13 months after a Changechange in Control,control, as defined in the plan, such terminated executive officer will receive (i)(1) lump sum payment equal to 12 months'months’ salary, (ii)(2) a bonus payment equal to what would have been earned at 100% of target for the year of termination, (iii)(3) continued health insurance benefits for 18 months, unless the executive officer obtains coverage from another employer during that time, (iv)(4) full acceleration of vesting for all outstanding options and (v)(5) payment for an executive assistance program lasting up to three months and not to exceed $7,500, provided that the executive officer enrolls within six months following termination. If the total amount of payment under the plan would cause the executive officer to incur "golden parachute"“golden parachute” excise tax liability in connection with the Changechange in Control,control, then the payments will be reduced to the extent necessary to leave him or her in a better after-tax position than if no such reduction had occurred. The plan provides these certain
benefits
Compensation Committee Interlocks and protectionsInsider Participation
As previously noted, the Compensation Committee is composed of three non-employee directors: Dr. Waitz and Messrs. Anderson and Marion. Mr. Marion served as an interim chief executive officer of Molecular Devices from October 1997 to March 1998. No member of the following executive officers: Gillian M.K.
Humphries, Ph.D., Robert J. Murray, Stephen J. Oldfield, Ph.D., Thomas J.
O'Lenic, Patricia C. SharpCompensation Committee is or was formerly a permanent officer or employee of Molecular Devices. No interlocking relationship exists between Molecular Devices’ Board of Directors or Compensation Committee and Andrew T. Zander, Ph.D.
26
the Board of Directors or compensation committee of any other company, nor has such interlocking relationship existed in the past.
21
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVECOMPENSATION(1)
COMPENSATION(1)
ON EXECUTIVE
The Compensation Committee of the Board of Directors (the "Committee"“Committee”) is comprised of Mr. Anderson, Mr. Marion and Dr. Waitz, noneall of whom has been a
permanent officer or employee of the Company.are independent directors. The Committee is responsible for establishing the Company'sMolecular Devices’ compensation for executive officers, including reviewing and approving annually all compensation decisions related to the executive officers.
Overview. The goals of theMolecular Devices’ executive compensation program are to align compensation with business objectives and performance and to enable the CompanyMolecular Devices to attract, retain and reward executive officers and other key employees who contribute to the long-term success of the CompanyMolecular Devices and to motivate them to enhance long-term stockholder value. To meetMolecular Devices’ executive compensation program for 2005 was designed with these goals in mind. As discussed below, the executive compensation program for 2005 consisted of, and was intended to strike a balance among, the following three elements:
| • | Base Salary. Salary for the Chief Executive Officer is based principally on the Committee’s assessment of the Chief Executive Officer’s current salary against his individual performance and the life science and general industry peer group pay levels. The salaries for all other executive officers are determined by the Committee on the basis of similar criteria. | |
| • | Bonus. Executive bonuses are primarily based on an evaluation of individual and company-wide performance against a number of metrics established by the Board of Directors. | |
| • | Long-Term Incentive Compensation. Long-term incentive awards, comprised of stock option grants, are designed to insure that incentive compensation is linked to the long-term performance of Molecular Devices. |
Molecular Devices also offers to its executive officers participation (with all other eligible employees of Molecular Devices) in its 401(k) Plan and certain other benefits available generally to employees of Molecular Devices, as well as certain perquisites.
Base Salary. The Committee determines the base salary of the Chief Executive Officer and reviews and approves base salaries for each of Molecular Devices’ other executive officers annually. In setting or adjusting base salaries for 2005, the Committee has adoptedassessed each executive officer’s current salary against a number of factors, including corporate and individual performance during 2005, his or her tenure at Molecular Devices, his or her pay level compared to other executives of Molecular Devices, as well as general economic factors such as increases in the cost of living. The Committee neither based its considerations on any single factor nor did it specifically assign relative weights to factors but rather considered a mix of the
compensation elements of salary, bonusfactors and stock options.
BASE SALARY.evaluated individual salaries against that mix. The Committee meets at least annuallyalso reviewed the reported compensation levels for executive officers of certain peer companies in the life sciences industry to review and approve
each executive officer's salary forenable it to compare the ensuing year. When reviewing base salaries of Molecular Devices’ executives to base salaries for comparable executives reported by those peer companies. The peer companies reviewed by the Committee considers the following factors, in order of importance:
competitive pay practices, individual performance against goals, levels of
responsibility, breadth of knowledge and prior experience. To provide the
Committee withincluded a more information for making compensation comparisons, the Company
surveys adiverse group of comparablelife sciences companies withthan those companies included in the peer group index used in the performance measurement comparison graph included in this proxy statement. Merit increases, if any, normally take effect on March 1 of each year. In March 2005, all Named Executive Officers named in the Summary Compensation Table received merit salary increases.
Bonus. Molecular Devices maintains a capitalization similar to that of
the Company.
BONUS. The bonus program is a discretionary program forto reward executive officers and other key employees of the Company. The Committee meets in the first quarter
following the year of the awards to be made to determine the amount of the
bonuses.for attaining individual performance objectives, as well as company-wide objectives. The bonus award depends on the extent to which the Companythese company-wide and individual performance objectives are achieved. The Company'sCompany-wide objectives consist of operating, strategic and financial goals that are considered to be critical to the Company'sMolecular Devices’ fundamental long-term goal of building stockholder value. For fiscal 2001,2005, these goalsobjectives were included in Molecular Devices’ 2005 Balanced Scorecard, which set forth a number of metrics established by the Board of
(1) The material in this report is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference into any filing of Molecular Devices under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
22
Directors based on recommendations of management that applied generally to employees of Molecular Devices in determining their bonuses. These objectives related to specific increasesproduct development and quality, customer satisfaction, financial performance metrics and employee training and development. As with setting or adjusting base salaries, for 2005, the Committee neither based its considerations on any single individual or company-wide performance factor nor did it specifically assign relative weights to factors, but rather considered a mix of factors and evaluated individual performance against that mix both in revenue,
operating incomeabsolute terms and earnings per share overin relation to other company executives. The Committee’s assessment also involved a subjective review of overall corporate and individual performance. Commensurate with Molecular Devices’ philosophy of establishing a strong link between compensation and corporate performance, bonuses represent a greater component of overall cash compensation for executive officers than for other employees. For fiscal 2005, each executive officer was assigned a target bonus ranging from 40% to 100% of his or her base salary which would be earned by the prior years.
STOCK OPTIONS. Theofficer upon achievement of his or her respective performance target at the 100% level. Performance below 100% of target could result in a reduced bonus or no bonus. Performance above target, on the other hand, could result in bonuses above the target bonus level. In 2005, each Named Executive Officer named in the Summary Compensation Table had received bonus above his or her target bonus, based primarily on Molecular Devices’ overall financial and corporate performance in 2005, as well as his or her leadership in advancing Molecular Devices’ performance objectives in fiscal 2005.
Long-Term Incentive Compensation. In April 2005, the Board adopted, and the stockholders subsequently approved, the Molecular Devices’ 2005 Equity Incentive Plan, or the 2005 Plan, as an amendment and restatement of Molecular Devices’ 1995 Stock Option Plan, maintained byor the Company1995 Plan. The 2005 Plan was established to provide employees of the CompanyMolecular Devices with an opportunity to share,participate, along with stockholders of the Company,Molecular Devices, in the long-term performance of Molecular Devices. Under the Company.
Initial2005 Plan, or the 1995 Plan prior to the adoption of the 2005 Plan, initial grants of stock options are generally made to eligible employees upon commencement of employment, with additional grants being made to certain employees periodically or following a significant change in the job responsibilities, scope or title of such employment. Stock options under the Options2005 Plan generally vest over a four or five-year period and expire ten years from the date of grant. The exercise price of such options is usually 100% of the fair market value of the underlying stock on the date of grant.
Guidelines for the number of stock options for each participant under the Option2005 Plan, or the 1995 Plan prior to the adoption of the 2005 Plan, are generally determined by a formula established by the Committee
wherebyapplying several factors are applied to the salary and performance level of each participant and then related to the approximate market price of the stock at the time of grant. In awarding stock options to officers, the Committee considers individual performance, overall contribution to the Company,Molecular Devices, officer retention, the number of unvested stock options held by the officer and the total number of stock options to be awarded.
Section 162(m) of the Internal Revenue Code of 1986 limits the CompanyMolecular Devices to a deduction for federal income tax purposes of up to $1 million of compensation paid to certain Named Executive Officers in a taxable year. Compensation above $1 million may be deducted if it is "performance-based“performance-based compensation." The
Compensation” Stock option awards under the 2005 Plan, or the 1995 Plan prior to the adoption of the 2005 Plan in April 2005, are performance-based compensation within the meaning of Section 162(m) and, as such, are fully deductible. To maintain flexibility in compensating executive officers in a manner designed to promote varying corporate goals, the Committee has determined that stock options granted undernot adopted a policy requiring all compensation to be deductible. The Committee intends to continue to evaluate the Company's Option Plan with an exercise price at least equal to the fair market
valueeffects of the Company's common stock oncompensation limits of Section 162(m) and to grant compensation awards in the datefuture in a manner consistent with the best interests of grant shall be treated as
"performance-based compensation"Molecular Devices and anyits stockholders.
CEO Compensation. In setting Dr. Keegan’s compensation recognized by a Named
Executive Officer as a result offor 2005, the grant of such a stock options is deductible
by the Company.
CEO COMPENSATION. The Committee used the same proceduresapproach described above in setting the annualbase salary, bonus and long-term incentive compensation. In addition, the Committee considered the status of Dr. Keegan as Molecular Devices’ most senior officer, reviewed reported cash and incentive compensation for chief executive officers of certain peer companies in the life sciences industry, and evaluated the role he plays in achieving overall corporate goals. The Committee also believes that the bonus component of Dr. Keegan’s overall cash compensation should represent a higher percentage of cash compensation than is the case for the other executive officers.
For fiscal year 2005, Dr. Keegan’s compensation package consisted primarily of an annual base salary of $420,000, a cash bonus award and an award of a stock option awardsto purchase 52,500 shares of Molecular Devices’
23
common stock under the 1995 Plan at an at an exercise price of $21.32 per share. As indicated above, Dr. Keegan was awarded a cash bonus of $600,000 based primarily on Molecular Devices overall financial and corporate performance in 2005, as well as Dr. Keegan’s leadership in advancing Molecular Devices’ performance objectives in fiscal 2005.
The Committee also reviewed perquisites and other compensation paid to Dr. Keegan for 2005, which included $12,000 for the CEO. The
CEO's salary is determined based on comparisons with companies with a
capitalization similar to thatuse of the Company. Dr. Keegan did not receive a
bonusan automobile and $4,250 for the fiscal year 2001 as the Company did not achieve their performance
objectives.
- ----------------------------------
(1) The material in this report is not "soliciting material," is not deemed
"filed" with the SEC,professional service fees, and is notfound these amounts to be incorporated by reference into any
filing of the Company under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, whether made before or after
the date hereof and irrespective of any general incorporation language
contained in such filing.
27
SUMMARY.reasonable.
Summary. Through the planscompensation arrangements described above, a significant portion of the
Company'sMolecular Devices’ compensation program for its executive officers (including the CEO) is contingent upon the individual'sindividual’s and Company'sCompany’s performance, and realization of benefits by the CEO and the other executive officers is closely linked to increases in long-term stockholder value. The CompanyMolecular Devices remains committed to this philosophy of pay for performance,pay-for-performance, recognizing that the competitive market for talented executives and the volatility of the Company'sMolecular Devices’ business may result in highly variable compensation during any given annual period.
Compensation Committee
David L. Anderson
Andre
André F. Marion
J. Allan Waitz, Ph.D.
COMPENSATION COMMITTEE INTERLOCKS
CERTAIN RELATIONSHIPS AND INSIDER PARTICIPATION
As noted above,RELATED TRANSACTIONS
Molecular Devices has entered into indemnity agreements with certain officers and directors which provide, among other things, that Molecular Devices will indemnify such officer or director, under the Compensation Committee is comprised of three
non-employee directors: Mr. Anderson, Mr. Marioncircumstances and Dr. Waitz. Mr. Marion
served as an interim chief executive officer ofto the Company between October 1997extent provided for therein, for expenses, damages, judgments, fines and March 1998. No member of the Compensation Committeesettlements he or she may be required to pay in actions or proceedings to which he or she is or was formerlymay be made a permanentparty by reason of his or her position as a director, officer or employeeother agent of Molecular Devices, and otherwise to the Company. No interlocking relationship
exists between the Company's Board of Directors or Compensation Committeefullest extent permitted under Delaware law and the board of directors or compensation committee of any other company, nor has
such interlocking relationship existed in the past.
28
Molecular Devices’ bylaws.
24
PERFORMANCE MEASUREMENT COMPARISON(2)
COMPARISON(1)
The following graph shows the total stockholder return of an investment of $100 in cash on December 31, 19962000 for (i) the Company's Common Stock,Molecular Devices’ common stock, (ii) the NasdaqNASDAQ Stock Market (U.S.) Index and (iii) a peer group index comprised of all public companies using SIC Code 3826 (Laboratory Analytical Instruments) (the "Peer
Group"). All values assume reinvestment of the full amount of all dividends and are calculated as of December 31 of each year.
PERFORMANCE CHART
1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- ----year:
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
AMONG MOLECULAR DEVICES CORPORATION,
THE NASDAQ STOCK MARKET (U.S.) INDEX AND A PEER GROUP
AMONG MOLECULAR DEVICES CORPORATION,
THE NASDAQ STOCK MARKET (U.S.) INDEX AND A PEER GROUP
| (1) | This Section is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference into any filing of Molecular Devices under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. |
25
HOUSEHOLDING OF PROXY MATERIALS
The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.
This year, a number of brokers with account holders who are Molecular Devices Corp. . . 100.00 136.55 139.76 334.14 439.76 134.10
SIC Code Index. . . . . . . 100.00 118.63 148.98 241.03 378.77 222.76
NASDAQ Market Index . . . . 100.00 122.32 172.52 304.29 191.25 152.46
29
CERTAIN TRANSACTIONS
The Company has entered into employment agreements with certainstockholders will be “householding” our proxy materials. A single proxy statement may be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that it will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you notify your broker or Molecular Devices that you no longer wish to participate in “householding.” If, at any time, you no longer wish to participate in “householding” and would prefer to receive a separate proxy statement and annual report in the future you may (1) notify your broker, (2) direct your written request to: Investor Relations, Molecular Devices Corporation, 1311 Orleans Drive, Sunnyvale, California 94089 or (3) contact our Investor Relations representatives at(408) 747-1700. Stockholders who currently receive multiple copies of its
executive officers. See "Employment Agreements."
the proxy statement at their address and would like to request “householding” of their communications should contact their broker. In addition, Molecular Devices will promptly deliver, upon written or oral request to the address or telephone number above, a separate copy of the annual report and proxy statement to a stockholder at a shared address to which a single copy of the documents was delivered.
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for consideration at the Annual Meeting. If any other matters are properly brought before the meeting, it is the intention of the persons named in the accompanying proxy to vote on such matters in accordance with their best judgment.
By orderOrder of the Board of Directors
/s/
James C. Kitch
----------------------------------
James C. Kitch
SECRETARY
Secretary
April 22, 2002
The SEC has adopted rules that permit companies5, 2006
A copy of Molecular Devices’ Annual Report to the Securities and intermediaries, such
as brokers, to satisfyExchange Commission onForm 10-K for the delivery requirements for proxyfiscal year ended December 31, 2005, including the consolidated financial statements, schedules and annual
reports with respect to two or more stockholders sharing the same address by
delivering a single proxy statement addressed to those stockholders. This
process, whichlist of exhibits, and any particular exhibit specifically requested, is commonly referred to as "householding," potentially means
extra convenience for stockholders and cost savings for companies.
This year, a number of brokers with account holders who are Molecular
Devices stockholders may be "householding" our proxy materials. A single proxy
statement may be delivered to multiple stockholders sharing an address unless
contrary instructions have been received from the affected stockholders. Once
you have received notice from your broker that they will be "householding"
communications to your address, "householding" will continue until you are
notified otherwise or until you revoke your consent. If, at any time, you no
longer wish to participate in "householding" and would prefer to receive a
separate proxy statement and annual report, please notify your broker directly
or direct youravailable without charge upon written request to: Corporate Secretary,Investor Relations, Molecular Devices Corporation, 1311 Orleans Drive, Sunnyvale, CA 94089 or contact Corporate
Secretary, Molecular Devices Corporation at (408) 747-1700. Stockholders who
currently receive multiple copies of the proxy statement at their address and
would like to request "householding" of their communications should contact
their broker.
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A COPY OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001 IS AVAILABLE
WITHOUT CHARGE UPON WRITTEN REQUEST TO: INVESTOR RELATIONS, California 94089.
26
MOLECULAR DEVICES CORPORATION 1311 ORLEANS DRIVE, SUNNYVALE, CALIFORNIA 94089.
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30
MOLECULAR DEVICES CORPORATION
PROXY SOLICITED BY
| o | Mark this box with an X if you have made changes to your name or address details above. |
Annual Meeting Proxy Card
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ANNUAL MEETINGNOMINEES FOR DIRECTOR LISTED BELOW. THE BOARD OF STOCKHOLDERS
TO BE HELD ON MAY 23, 2002
DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2 BELOW.
| A | Election of Directors |
| Proposal 1. | To elect directors to serve for the ensuing year and until their successors are elected. |
| Nominees: |
| For | Withhold | For | Withhold | |||||||
| 01 — Joseph D. Keegan, Ph. D. | o | o | 05 — Alan Finkel, Ph.D. | o | o | |||||
| 02 — Moshe H. Alafi | o | o | 06 — André F. Marion | o | o | |||||
| 03 — David L. Anderson | o | o | 07 — Harden M. McConnell, Ph.D. | o | o | |||||
| 04 — A. Blaine Bowman | o | o | 08 — J. Allan Waitz, Ph.D. | o | o |
| B | Ratification of Selection of Independent Registered Public Accounting Firm |
| For | Against | Abstain | ||||||
Proposal 2. | To ratify the selection of Ernst & Young LLP as Molecular Devices’ independent registered public accounting firm for the fiscal year ending December 31, 2006. | o | o | o |
| C | Authorized Signatures — Sign Here — This section must be completed for your instructions to be executed. |
Please sign exactly as your name appears hereon. If the stock is registered in the names of two or more persons, each should sign. Executors, administrators, trustees, guardians and attorneys-in-fact should add their titles. If signer is a corporation please give full corporate name and have a duly authorized officer sign, stating title. If signer is a partnership, please sign in partnership name by authorized person.
Signature 1 - Please keep signature within the box
Signature 2 - Please keep signature within the box
Date (mm/dd/yyyy)
nn | / | nn | / | nnnn | ||||
Proxy — Molecular Devices Corporation
Proxy Solicited by the Board of Directors for the Annual Meeting of Stockholders
To be held on May 11, 2006
To be held on May 11, 2006
The undersigned hereby appoints Joseph D. Keegan, Ph.D., and Timothy A. Harkness, and each of them, as attorneys and proxies of the undersigned, with full power of substitution, to vote all of the shares of stock of Molecular Devices Corporation which the undersigned may be entitled to vote at the Annual Meeting of Stockholders of Molecular Devices Corporation to be held at the Company'scompany’s corporate headquarters, located at 1311 Orleans Drive, Sunnyvale, CACalifornia 94089, on Thursday, May 23, 200211, 2006 at 10:30 a.m., local time, and at any and all postponements, continuations and adjournments thereof, with all powers that the undersigned would possess if personally present, upon and in respect of the following
matters stated on the reverse side and in accordance with the following instructions on the reverse side, with discretionary authority as to any and all other matters that may properly come before the meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR ALL NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2, PROPOSAL 3 AND PROPOSAL 4, AS MORE SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
SEE REVERSE SIDE
Please vote, date and promptly return this proxy in the enclosed return envelope.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE SIDE
--------------------------DETACH HERE-----------------------------
PLEASE MARK VOTES AS IN THIS EXAMPLE: |X|
MANAGEMENT RECOMMENDS A VOTE FOR THE
NOMINEES FOR DIRECTORS LISTED BELOW
Proposal 1: To elect directors to hold office until the next Annual Meeting
of Stockholders and until their successors are elected.
NOMINEES: Joseph D. Keegan, Ph.D., Moshe H. Alafi, David L. Anderson,
A. Blaine Bowman, Paul Goddard, Ph.D., Andre F. Marion, Harden M.
McConnell, Ph.D., and J. Allan Waitz, Ph.D.
/ / / /
FOR all nominees listed above WITHHOLD AUTHORITY to vote
(except as marked to the for all nominees listed above.
contrary below).
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TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S), WRITE SUCH NOMINEE(S)' NAME(S)
ABOVE:
MANAGEMENT RECOMMENDS A VOTE
FOR PROPOSALS 2, 3 AND 4 BELOW
Proposal 2: To approve the Company's 1995 Stock Option Plan, as amended, to
increase the aggregate number of shares of Common Stock
authorized for issuance under the plan by 500,000 shares.
/ / FOR / / AGAINST / / ABSTAIN
Proposal 3: To approve the Company's 1995 Employee Stock Purchase Plan, as
amended, to increase the aggregate number of shares of Common
Stock authorized for issuance under such plan by 200,000 shares.
/ / FOR / / AGAINST / / ABSTAIN
Proposal 4: To ratify the selection of Ernst & Young LLP as independent
auditors of the Company for its fiscal year ending December 31,
2002.
/ / FOR / / AGAINST / / ABSTAIN
31.
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS
HEREON. IF THE STOCK IS REGISTERED IN THE
NAMES OF TWO OR MORE PERSONS, EACH SHOULD
SIGN. EXECUTORS, ADMINISTRATORS,
TRUSTEES, GUARDIANS AND
ATTORNEYS-IN-FACT SHOULD ADD THEIR
TITLES. IF SIGNER IS A CORPORATION,
PLEASE GIVE FULL CORPORATE NAME AND HAVE
A DULY AUTHORIZED OFFICER SIGN, STATING
TITLE. IF SIGNER IS A PARTNERSHIP,
PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
PLEASE VOTE, DATE AND PROMPTLY RETURN
THIS PROXY IN THE ENCLOSED RETURN
ENVELOPE WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES.
Signature: Date: Signature: Date:
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32.
SIDE.